Many founders don’t realize that they default to owning very little, and the steps to secure actual ownership are often non-obvious. Likewise, the default protection for anything you don’t know is valuable (or that anyone can take without paying you for it) is very low. For software, for instance, copyright protection is automatic. But contracts over that code are another matter.
The tricky part is that the solutions depend on personal, specific details of your company – both its technology and its goals. That’s why you want to have a plan before anyone else asks. If you’re not sure what you need or when, you have lots of company. But first, let’s go over some basics.
The Three Categories You Need To Keep Straight
Trademarks ensure that brand identity is protected: your name, logo, and the indicators that customers rely on to identify you from competitors. Copyrights protect original creative works: content, code, design, copy. Patents protect inventions: new processes or products that meet specific legal definitions. These forms of protection aren’t interchangeable, and incorrectly thinking you’ve got the right protection in place is risking your startup. On the flipside, filing too many patents can be a waste of money when you should actually be filing trademarks or copyrights.
This is also where the concept of a provisional patent application comes in. It won’t grant you a patent, but it’s a lower-cost, simplified way of staking a priority date for your invention. You then have 12 months to prepare and file a full patent application, during which you’ve technically already got “patent pending” status. Most valuable, this buys you time to adapt and learn more about what exactly your commercial invention will be.
The Ownership Problem Nobody Talks About Early Enough
Disputes over IP ownership frequently emerge from early-stage collaborations. Co-founders, early employees, freelance developers – if there’s no written agreement stating that any IP developed during the relationship is owned by the company, then you might not have ownership rights over the product you believe you’ve built.
Assignment of invention clauses are something that we believe should be included in every founder agreement, employment contract, and contractor agreement starting from day one. The work-for-hire doctrine provides protection in certain cases, but it’s limited, and it gets very expensive to dispute those limits down the line.
This is also where a formal IP audit pays off. A thorough check of what the company actually owns, who built it, and whether proper ownership documentation was put in place will often turn up holes that the formation documents never caught. Working with Cohen Schneider Law P.C. or another firm of business attorneys to conduct this type of audit before a fundraise or acquisition is a lot cheaper than doing so when the other side is breathing down your neck.
Your Brand Lives In A Trademark, Not A Domain Name
It is possible to secure a domain and social handles for your startup name. But those steps are part of your overall Intellectual Property (IP) strategy. And securing those is not the same as protecting your brand name, especially on a global scale.
Locking those properties down is akin to choosing the right locks for your office building. You’re not installing the vault that ultimately holds your most valuable assets (your brand and technology). A real, registered mark is that vault. It’s the legal protection you need to prevent someone else from moving in and taking over the joint. A real lock can help unlock funding, investment, and potential purchases.
When A Trade Secret Beats A Patent
Patents require you to publicly disclose exactly how your invention works. Once granted, the underlying details of what you’ve done are legally required to become a matter of public record. In the case of many software, internal processes, and proprietary workflows, that’s a bad trade – the potential value in your patent is far less than the straight dollar value of keeping your process under wraps.
A trade secret strategy, in contrast, doesn’t expire every twenty years – as long as the information is kept genuinely confidential. This means strict access controls, clearly documented security practices, and NDAs with anyone who comes within a country mile of anything sensitive. A trade secret isn’t protected if you let it leak, and “I said ‘shh!'” isn’t a good defense. If you can demonstrate that you treated the information with the seriousness it deserved, surprised though you might be, plenty of courts will get out the six-figure checkbook.
Client lists, pricing models, supplier relationships, unique operational workflows – these are the assets that founders almost always overlook when they decide that something “doesn’t look like intellectual property”. They don’t look like IP until someone takes them and builds a competing business with them.
Cease And Desist Before Litigation
Most IP enforcement doesn’t start in a courtroom. It starts with an audit. What, exactly, is being infringed? Was it ever registered? Do you have records of inventorship and use? Is it being properly marked with your ownership? The next step is to take a look at what you want to achieve overall. For some, blocking the infringer from continuing is the result they need. In many cases, however, that’s only going to be the start. You’ll want both damages for what they’ve done and a plan for continuing revenues if you settle with a license rather than a lawsuit. The companies that protect IP well aren’t necessarily the ones with the most filings. They’re the ones who know exactly what they own, kept the documentation clean from the start, and built enforcement options into their strategy before they needed to use them.
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