There are many, many reasons why it’s smart for an entrepreneur to learn about intellectual property law. Here are ten of my favorites:
1. To keep the intellectual property that you create for your new company free of ownership claims by your former employer
Watch out if you’re working on your new venture while employed by another company in the same industry. Later claims by your former employer to your startup’s IP can land you in court and ruin your new company.
Knowing how to carve out and keep the intellectual property rights to what you create for your new company can be critical for your success. It’s important to learn about trade secret law and what you can use from your prior jobs.
There are key steps you can take to narrow the net of what your former employer may claim, especially if you live in California.
2. To increase the odds that you can use your company and product names without being stopped by another trademark owner
After picking names that you love for your business, products and services; incorporating your company; building a website; and working hard to promote your brand,
IT SUCKS TO HAVE A TRADEMARK OWNER CLAIM THAT YOU ARE INFRINGING!
Warning. Just because the dot com domain is available, it doesn’t mean that you can freely use the name.
Just because the Secretary of State for one state allows you to use a business name, it doesn’t mean you can freely use the name nationally or on the Internet.
And no, your corporate lawyer probably didn’t check for conflicting trademarks.
Learning about trademark law and doing some basic groundwork before starting your business can save you from big headaches and expenses down the road.
If you love your name, think about registering your mark so you can increase the odds of being able to use it. Few people want to start over from scratch.
3. To make sure your startup owns the intellectual property created by its founders, employees, vendors, and independent contractors
This is where many startups screw up if they don’t understand basic IP law. Some of the legal rules about IP ownership are counterintuitive and complicated.
You should be aware that you may not own what you pay others to create for your new company if you don’t take precautions.
It seems so wrong but it’s true.
I’ve spent years doing intellectual property ownership clean up. Some startups were able to make some basic changes and turn things around. Others got burned — to the ground.
4. To own the rights to your logo
Your logo is the symbol of your company. Your hard work and promotion make it valuable and it’s usually worth the trouble to protect it. If you don’t have a written copyright assignment by the person or company who designed it, you don’t own the copyright. You need an assignment to register a copyright or trademark.
Professional design studios will assign the copyright to you without a hassle. Beware of designers who won’t do a copyright assignment or balk at the suggestion.
5. To own your company website
This is similar to number 4. If you don’t have a written, signed copyright assignment for the design of your website, you don’t own the copyright to the site. This may create problems in the future and it will prevent you from registering your website with the Copyright Office.
Bizarrely, if you don’t own the copyright and you change your site, you may be guilty of copyright infringement.
If you already have a site, check on the footer to see if the design company is claiming the copyright. Does their name appear after the copyright symbol?
Pragmatically, caring about IP ownership to your website depends in part on how much you spent for the design; the complexity of the design; your commitment level to the look of your site; your type of relationship with the designer; and how hard it would be to build a new site.
If it was expensive, design intensive, hard to replicate and you love it, pay attention to copyright ownership.
Further, to avoid infringement, make sure you have a license to use or own the copyright to every element on your website.
If your site is expensive, it’s important to be aware of what software was used as the foundation for your site and the related licenses.
6. To minimize the chance of liability for IP infringement
Ignorance is not bliss. It can get you sued. And as some unfortunate software developers have learned, trade secret misappropriation can land you in jail.
7. To get legal protection for intellectual property that is created for your startup
Different laws have different requirements for obtaining legal protection. To get protection, you must follow the rules and take specific actions. You don’t want to blow it and lose protection for your million dollar invention or product because you didn’t know what you needed to do.
8. To understand open source licenses
Many technology companies incorporate open source software into their products. What you can do with the new work you create that incorporates the open source code can vary dramatically. Some open source licenses prevent you from selling your new product. Beware unless you plan to give your product away for free.
9. To protect your IP when you are doing a joint venture
When you work with another company or developer on a joint project or product, it is important to use more than a handshake. It’s important to know what to do to keep the lines of IP ownership clear or you may end up with the default legal rules that create a mess you never intended.
Arguments because of an initial lack of clarity can ruin even the best friendships.
10. To not scare off potential investors because the ownership of your startup’s intellectual property is a mess
The core assets of many technology startups are based on intellectual property. I’ve done due diligence for venture capitalists and other types of investors and I’ve seen some horrible, dirty messes. Don’t scare off potential investors because you haven’t taken the time to do what you need to do to have clear lines of intellectual property ownership.
Right now, you may not care about potential investors or buyers. But if your startup is wildly successful, you may care when it’s too late to fix things.
Later posts will explain each category above in detail. I will share valuable information about intellectual property law and some concrete steps that you can take to help your business succeed and increase the value of your work.
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