Importance of IP For Start-ups and Entrepreneurs (Part VI): IP Risks

More often than not, start-ups focus on protecting their intellectual property, but ignore risks from intellectual property of third parties. IP of third parties may kill a business if appropriate risk clearance measures are not taken at the right time. While protecting IP is very important for start-ups and entrepreneurs, avoiding or mitigating risks from IP of third parties is even more important.

A start-up company must take necessary steps to avoid the risk of infringing IP of third parties. Avoiding or mitigating risks is some times more important than protecting a start-up company’s intellectual assets because one instance of infringement may destroy the company. Some of the basic steps that must be taken by every start-up to mitigate IP risks are:

  1. Perform a due diligence on potential problems for the business from intellectual property or patents of third parties. A good IP attorney will be able to do this due diligence and provide an opinion on IP risks and ways of avoiding or mitigating them;
  2. Technology driven start-ups must carry out a freedom to operate analysis before launching the business in each country. If the business is online and has international reach, the FTO analysis must cover all important markets. Else, the start-up always faces the risk of road blocks from blocking patents, which may put an end to the business, and in the worst case require the start-up to pay millions of dollars in damages for infringement;
  3. Implement a system that will spot, process and mitigate IP risks on a continuous basis. For online businesses and e-commerce businesses, take down policies, and licensing strategies will help substantially.

The aforesaid steps are very general, and the nature of actions to be taken to minimize damage from IP or Patents of competitors vary from business to business. Though it may be slightly costly, it is advisable to get an attorney’s opinion before  investing heavily in the business. Most attorneys having a business sense will provide business options rather than simply giving legal opinions on questions asked.