Many startups are born because they offer a new way of solving an old problem, or simply a more efficient way of doing something.
Nearly all innovations or new ideas contain an element of intellectual property (IP).
IP can be defined as intangible property that is the result of creativity.
This creativity can be legally protected in a variety of ways.
Intangible property can also be your startup’s most valuable asset … and is of great interest to investors.
Unfortunately, most founders I’ve worked with fall into two categories when it comes to their approach to IP.
1. This group has given IP little or no thought, claiming they will worry about it later when their revenues rise and they’re no longer operating hand-to-mouth.
2. This group is kept awake at night by the thought of somebody stealing their idea(s) – but are at a loss as to how to protect it.
Both approaches carry significant risks for founders.
For example, waiting for revenues to rise before acting is a risky approach if not strategically thought through. In effect, you could be providing proof of concept for a competitor to simply swoop in and appropriate your tested idea.
[Almost nobody remembers Antonio Meucci, who developed the design for a talking telegraph in 1849 and spent the next 20 years perfecting it while trying to secure investors. Due to financial hardship he wasn’t able to afford to apply for a patent. Enter stage right of the patent office in 1879 – Mr Alexander Graham Bell. Historians are still arguing over who’s the true father of the telephone … presumably most of these discussions now occur via email, but you get the point.]
And simply taking out a patent or a trademark isn’t enough to protect your idea.
Many angel investors or government departments will expect that you’ve looked deeply into your IP – in order to gain an understanding of the thinking behind it. Without this knowledge and understanding, it’s becoming increasingly likely you’ll be ineligible for government grants, for example.
What to do?
My advice is simple: prepare an IP strategy.
This only need to be the proverbial ‘one pager’ but it needs to contain the following as a minimum.
1. Identify all relevant IP contained within the startup.
2. Identify which IP is ‘mission critical’ to the business, and which isn’t, and why this is the case.
3. Compile this information for your board of directors (assuming you have one) to set the risk appetite for the business.
4. (Based on the board’s appetite) Set about securing all critical IP as your revenues permit.
If you can’t afford to secure critical IP all at once, there are still other steps you can take.
Non-disclosure agreements (NDAs) are a good way to limit knowledge leaking from your business.
If you’ve no idea what I’m talking about, don’t freak out as there are people who can help you with all of the above (insert gratuitous plug here).
This article does not constitute legal advice or a legal opinion on any matter discussed and, accordingly, it should not be relied upon. It should not be regarded as a comprehensive statement of the law and practice in this area. If you require any advice or information, please speak to practicing lawyer in your jurisdiction. No individual who is a member, partner, shareholder or consultant of, in or to any constituent part of Legally Yours Pty Ltd accepts or assumes responsibility, or has any liability, to any person in respect of this article.