7 tips of IP Strategy for Startups.
Startups and innovative ideas usually go in pairs. Protecting Intellectual property is critical to foster innovation. Without protecting ideas, businesses and individuals would not reap full benefits of their inventions and would focus less on research and development. But for a Startup at an early stage protecting IP takes a back seat as there are numerous other issues involving product development, hiring qualified employees, raising capital etc that are important at that moment. So many of you can feel distracted and may find it expensive and difficult to see a return on investment or contrary to your goals of racing to get your product to the market before someone else does. However, irrespective of the nature of your business, you should have a strategy in place to protect any unique products or services that you own as competitors can essentially steal or piggy back on your success to take away market share. Also not considering your IP will adversely impact on your company’s ability to grow and consolidate its revenue stream. Losing market share early on in a business’s development can be devastating and time consuming if you have never thought about protecting your IP or what you should do if faced with an infringement.
So here we are sharing a few tips for formulating your IP strategy, irrespective of the size of your business.
- Identify your IPs.
Make a list of intangible assets you have. Determine if the IP rights need to be formally registered1 or can arise automatically2. (For example, Copyright and Trademarks need not be registered. Rights arise automatically at the time of creation and its use). So, keep a record of your ideas, the date and manner of its creation, date and manner of the use of IP, marketing photos, drawings, designs, code, people who are working with you to create your IP etc..
|Rule of thumb new technical inventions for products or methods can be protected by patents. |
the new shape of objects can be protected by designs.
trademarks protect brands, trade names, sound, colour combinations used to distinguish goods and services.
copyright is used to protect literary, artistic and musical works, but not the ideas they express.
and trade secrets protect confidential information.
Remember, all of these IP’s have limited time spans, except for Trademarks, provided the renewal fees are paid and the IP’s are used.
- Prioritize which IP, How and Where to protect.
Once you have a list, according to your business plan check which IP on the list will help the business at which stage. This will help you come up with a plan to limit or delay spending the money until you can afford it. When you’re looking at your business’s assets, intellectual property, including patents, trademarks, and trade secrets, all have an impact on your valuation. So have your priorities set. For example: (1) for any business, the first thing you would want to prioritize is protecting your Trademark. So choose your mark prudently. Conduct a thorough search before finalizing your mark to avoid duplicity and possible infringement. Also if you intend to do business in other jurisdictions then you should ensure that your marks are not conflicting with the marks in use in those jurisdictions as well. (2) Patent applications must be filed before the invention is disclosed to third parties unless effective confidentiality agreements are in place. So, if you are working on an invention and want to file a patent, but you are not sure about its feasibility or it is at a very early stage or sometimes the invention is conceived but not fully developed, then you can file a patent application with provisional patent specification3. The date of the first filing of a patent application is called the priority date4. This date is important to claim priority in the Countries that follow the patent system of first to file like in the USA. After filing a provisional specification you will have a 12 months period to evaluate your invention and decide whether or not to proceed with the application.
Remember IP rights are territorial. There is no International IP registration. You will have to seek IP protection in each country separately where you may have business interest. One can directly file a trademark or patent application in the jurisdiction of interest with or without taking priority of domestic mark.
If you want to seek protection in other countries you have interest in, you can apply for registration of Trademark facilitated through the Madrid Protocol which acts as a vehicle to enable registration in multiple countries taking priority of one of the countries. This priority has to be claimed within six months. A list of jurisdictions that can be accessed through Madrid Protocol for filing trademarks is available here.
For patent application in multiple jurisdictions, one may file an application facilitated through the Paris Convention for all members of the convention which includes India and all major countries within 12 months from the priority date. Or else you may file through the Patent Cooperation Treaty System (PCT). PCT is a vehicular system that allows an applicant to file in PCT contracting states within 30-34 months from the priority date (varies from jurisdiction to jurisdiction) instead of 12 months. The PCT system also provides for an International Search Report on the invention – giving the applicant a glimpse of the chances of the patent grant in multiple jurisdictions.
There are times where the best IP strategy is not to file right away. Then, the answer is to keep it a secret. Because if you start filing, people are going to start trying to invalidate what you’re doing because you’re playing in a sandbox way bigger and the players don’t want you there. So strategize accordingly. Seek help from an IP lawyer.
- Have your contracts in place. Don’t let other people claim ownership of your IP.
IP asset ownership can be a real struggle for start-ups where there’s usually more than one founder or where a third party is involved in creating or developing the IP. You must define and agree on the terms of your relationship in a founder agreement. This will give protection that your co-founder will not walk away with the ideas, concepts or other intangible assets. It is absolutely necessary for the Company to own or control all its IP. Have contributors assign their IP to the Company. Ensure that you have set clear boundaries dealing with the ownership and exploitation of IP. You also need to have the appropriate language in place with your employment contracts to ensure your intellectual property is protected if an employee leaves and goes to one of your competitors.Generally the company will own the IP in whatever produced by its employees during their employment, subject to anything contrary agreed. Therefore it is important to make sure there is a clear chain of title for any IP brought to the table. We have largely discussed the importance of the contracts here.
- Confidentiality Clause
Include confidentiality provisions in your contracts to protect against disclosure of confidential information or trade secrets including in employment agreements and consultancy agreements . To avoid breaches of your confidentiality, make sure you have employees, partners, and suppliers sign non-disclosure agreements (NDAs). You’ll also want to password-protect all computers, limit which employees have access to certain information, and limit the type of information employees can access on personal devices.
- IP strategy is business strategy.
You should consult your team to determine where you spend your money, where you think you actually need protection. Involve your entire leadership team, marketing, sales etc in creating IP Licensing agreements. If your team doesn’t know what’s going on with IP, they’re gonna muck it up for you. Your Salesperson and Service team should be aware of the IPs owned or licensed before committing anything to the customer or else, they’re going to make mistakes. There should be a clear written Licensing agreement specifying how long the license runs for, who can use the IP, where they can use it, what they can use it for, how it can be ended, and whether it can be forced to share it with other people.
- Protecting IP is part of your Company culture.
Make intellectual property discovery part of your company culture. Formulate and set up an IP Policy. Create awareness and educate your employees that intellectual property is an asset, and it has value. As you’re coming up with new ideas, as you’re developing the product, as you’re doing more code, as you’re doing more drawings, make sure that any new IP is identified. Follow a procedure to maintain the record of the IP created and maintained.
- IP audit and Landscaping .
Remember, to revisit the list that you have made above to check if you are still working as per your business plan. Conduct an IP audit periodically and maintain the registered IPs. Intellectual property can also be a tool for competitive research for your startup in the form of IP landscaping.IP landscaping is a way of using global IP filings to discover what competitors are protecting, where they’re protecting it, and what litigation is happening there. This can help you make a decision.
So do not underestimate the role of IP protection in the growth of your company. When looking for funding, IPO, or sale, the investors will assess your IP strategy.
We are sharing a questionnaire that will help you know the IP situation of your business. It has questions from different sections dealing with IP. After you complete, we will share a report that gives you recommendations and further information on IP and business competitiveness to your email address .Click here to know https://forms.gle/8hjNhkLXpkB8juKq8
This article contains general information only. It does not constitute legal advice. You should consult a suitably qualified lawyer on any specific legal matter or issue.
- Registration helps you secure exclusivity over your IP throughout the country/region of registration. It gives you legal rights of injunction and compensation over third-party infringers, and in turn, helps you create a brand value.
- No suit can be instituted for the infringement of unregistered trademarks. Registration is the prima facie evidence of the proprietorship of the trademark or copyright under registration. For unregistered marks, action can be brought against any person for passing off goods or services as the goods of another person or as services provided by another person.
- A provisional specification is required to give only the key novelty and inventive aspect of the invention in an abridged form and may not have claims provided.
- This date becomes important, since if there are two patents/ patent applications with the same/substantially similar subject matter, the earlier priority date patent application/patent survives the other. If you are filing an application in other countries, the subsequent applications shall have the same priority date as the parent application.