Intellectual Property for Start Ups and Entrepreneurs
First Publication Date: 25th November 2009
Intellectual Property protection provides business and competitive advantage to a company. While IP is important for all companies, its value for A Start Up Company, especially, a technology or knowledge based company, is very high. In addition to providing business and competitive advantage, IP can play a very important role in enabling a Start Up company to build business relationships, raise funds, face cut throat competition and so on. In the light of the value that can be derived by a Start Up company from IP, its protection and management is very important. Despite the value IP can provide to Start Up Companies, the lack of financial resources in such companies poses challenges for protecting and managing IP.
The following are the most important steps to be taken by a Start Up Company:
Protection of Patentable Inventions
The first and the most important step for a Start Up company is to protect its inventions. Patent protection is the most important step for Technology Start Ups.
Once a decision on patent protection is made, the Start Up company must file a patent application as soon as possible. Depending on the status of the invention and financial resources, the company may file a provisional or a complete patent application.
Filing of a provisional application provides the following advantages to a Start Up company:
•The application can be filed in a day or two as claims need not be included in it;
•The cost for drafting a provisional application is much less than that of drafting a complete application; and
•Filing a provisional gives twelve (12) months time to the Start Up company to file a complete application, nationally and internationally, during which time the Start Up company can take necessary steps to raise funds or test the business value of the invention.
Filing of a complete application provides the following advantages:
•The patent application will be examined earlier than if a provisional application is filed;
•The patent application would be granted earlier and legal action maybe taken against competitors violating the Start Up’s patent rights on grant; and
•The value given to a complete application is higher than that of a provisional application.
A Start Up Company may also file a PCT application if the company wishes to acquire international patent protection at a later stage. The PCT process is an international filing process, which allows the applicant to file national applications in chosen countries after twenty or thirty months. Filing a PCT application is more expensive than the Indian national filing but provides the following advantages:
•It Gives the Start Up twenty (20) or thirty (30) months time to test the business or market value of the invention and also to make a decision on the countries in which the company wishes to file patent applications;
•Provides the Start Up company with a formal search and patentability report that can enhance the value of the patent; and
•Gives additional time to raise funds or make business decisions.
Based on the financial resources of the company and the strategy, a Start Up company may safeguard its rights over the invention by choosing any of the aforesaid filing options.
Trade Mark Protection
It is very important for a start Up Company to protect its company’s name or product’s name. The first step towards effective protection of the name or logo is the choice of name or logo. The Start Up company must choose a name that is coined or arbitrary, which does not have any link with the business to get strongest form of protection. Choosing suggestive names would also accord protection but such protection would not be as strong as a coined or arbitrary name.
After finalizing the mark to be protected, a trade mark application must be filed by the Start Up Company. On filing an Indian application, a foreign application may be filed within six (6) months in other countries in order to claim priority of the Indian application. Filing of a trade mark is generally quite cost effective and must be taken up at the earliest.
Confidential Information Protection
Protection of confidential information by a Start Up company is very important but is generally neglected. More often than not, entrepreneurs take decisions or make disclosures based on good faith and trust without any legal measures, which may result in loss of confidential information. The following measures have to be taken by a Start Up company to protect confidential information and gain business advantage:
•Agreements with co-founders and employees must have stringent confidentiality clauses;
•Disclosure of any confidential information to any person must be made only under non-disclosure agreement;
•Appropriate physical and information security measures such as restricted access, encryption and so on must be taken to protect secrecy; and
•Confidentiality notices must be incorporated on all confidential documents and materials. The notice must indicate the confidential nature of information, purpose of disclosure and limitations of use.
A Start Up company may protect its marketing materials, documents, websites and so on under the copyright law. Copyright protection over a work starts from the date of creation of the work and registration is not mandatory. However, registration gives certain benefits such as presumption of ownership. A Start Up company may protect copyrightable works by taking the following steps:
i. Incorporating copyright notices on copyrightable materials such as websites, presentations, software, interfaces, brochures and so on. The format of copyright notice is: Copyright, xxx (Name of the company), xxx (Year of creation of the work).; and
ii. Registering important copyrightable works such as interfaces of software, code, artistic works and so on. Registration of a copyright is very cost effective and application may be filed very fast.
Avoid IP Risks
A Start Up company must take necessary steps to avoid risks of infringing third party’s IP. 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. Appropriate due diligence must be carried out by a Start Up company to ensure that infringement risks are mitigated. Technology driven Start Ups must carry out freedom to operate analysis before launching their products.