A lack of legal strategy, however, can cost your company big bucks down the road and may even obliterate it.
Picking the wrong type of legal entity for investment or screwing up your securities can be expensive to fix. Although it may slow down funding and cost you a chunk of cash for legal fees, you can usually clean up the mess later.
Screwing up your IP, however, can devastate the value of your company forever. It may be difficult if not impossible to repair the damage. For example, incorporating code that legally belongs to your current or former employer can make you and your startup liable for trade secret misappropriation claims and copyright infringement claims. Your employer may claim it owns all of the IP built on top of the old code. It is kind of like fruit of the forbidden tree. You may lose ownership of all of the IP of your key technology.
Moreover, failure to make sure your brand doesn’t infringe another’s can cost you dearly when you have to start over from scratch with a new name.
Disclosing an invention prior to filing a patent application can prevent you from obtaining foreign legal rights.
We’ve also seen startups delay getting critical IP assignment documents in place and spend over a hundred thousand dollars for development of code that they don’t own the IP rights to. And these are just a few examples of the problems startups face when they delay dealing with legal issues.
It pays to think about IP law early and develop a strategic IP plan.
The next few posts will discuss the first steps.
Jill Hubbard Bowman is an intellectual property lawyer who helps startups increase the value of their company with the strategic use of IP.
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