Intellectual Property for Startups 101

When you start a company, intellectual property, or IP as we’ll call it for the rest of this post, is something to think about from the moment you have the idea.

IP is your work product. IP can cover everything around your company – including, but not limited to your software code, your name and logo, the formula and application of the algorithm you use, right down to your marketing content.

I’d like to prime all of this with one simple suggestion that will save you a ton of headache later: Your company should own all of your intellectual property. Make sure this is the case before you raise a round, or try to exit. Do this by making sure every founder and employee signs the appropriate agreements handing over their work product to the company.

I’m sure you’ve heard the terms “Copyright”, “Trademark or Service Mark”, “Trade Secret” and “Patent” get thrown around a lot – and you’ve Googled them all. How do you differentiate between each? What’s the governing body of law? How does your IP relate? Fear not, this article will give you a very high level primer of IP 101 for Startups. Let’s begin:

Copyrights

Governing Law: Title 17 of the United States Code and the Copyright Act of 1976.

What can be Copyrighted? (taken directly from the Copyright.gov Basics Circular):

  • Literary works
  • Musical works, including words
  • Dramatic works, including music
  • Pantomimes and choreographic works
  • Pictorial, graphic, and sculptural works,
  • Motion pictures and other audiovisual works,
  • Sound recordings, which are works that result from the fixation of a series of musical, spoken or other sounds
  • Architectural works

What can a Startup Copyright?:

  • Content – marketing and otherwise – in written, photographic, or video form.

Do I Have to Register my Copyrighted Material?

  • Technically, no. As soon as you create something, you own the copyright. Registration is voluntary. However, if you wish to bring a lawsuit for infringement of a United States work – then you should register.

How do I Register my Copyright?:

What is Fair Use of Copyrights?:

  • The Fair Use doctrine allows limited use of copyrighted material without Examples of fair use in United States copyright law includes commentary, search engines, criticism, parody, news reporting, research, and scholarship.

Trademarks and Service Marks

Governing Law: The Lanham Act of 1946.

What can be Trademarked?

  • Phrases
  • Words
  • Symbols
  • Devices
  • Colors
  • Logos
  • Slogans

What can a Startup Trademark?

  • Your name, logo, slogan, and and product names.
  • Keep in mind, there are already millions of registered trademarks with the United States Patent and Trademark Office, and even more internationally.
  • It’s VERY important to do proper research on what is already registered, and what you can use – before you get slapped with an infringement claim.

How do I Register my Trademark?

Trade Secrets

Governing Law: Uniform Trade Secrets Act

What is a Trade Secret?

  • Forms
  • Formulas
  • Practices
  • Processes
  • Designs
  • Instruments
  • Patterns
  • Commercial Methods
  • Compilation of Information not generally known or reasonably ascertainable by others by which a business can obtain an economic advantage over competitors or customers.

What can a Startup Consider to be a Trade Secret?

  • Anything that sets you apart, really. Your application code, algorithms, pricing structure, business model, or even the unique setup of your compensation plan can be considered trade secrets.
  • Trade secrets are part of what you transfer over as IP when you form a company – from your founders and employees to the company itself. The company should own the trade secrets.
  • Trade Secrets have two main elements:
    • The value of the information to the business owner and competitors, and
    • The amount of effort made to maintain the secrecy of the information.

How do I Register Trade Secrets?

  • There is no registration of trade secrets.
  • The whole point of trade secrets is that they are ‘secret’.
  • Trade secrets are protected by legal agreements such as an employment agreements, non-disclosure agreement, work-for-hire agreement, and non-compete clauses – between the company and the employee, contractor, or business partner.
  • You as a startup also have to take measures to protect your trade secrets – keep them safe, and not just laying around office or an open DropBox folder.
  • There are also laws around it. If a trade secret of your company is acquired by another company by illegal means, or ‘espionage’ if you want to sound cool, then the secret is deemed to be “misappropriated”.

Patents

Governing Law: The U.S. Patent Act

What can be Patented?

  • Inventions can be patented if it has a useful purpose, has patentable subject matter, is novel, and is non-obvious.
  • Patentable Subject Matter, also known as patent eligibility, is defined by the U.S. Patent Act as follows: “whoever invents or discovers any new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof may obtain a patent therefor, subject to the conditions and requirements of htis title.”
  • Some examples of patentable subject matters include:
    • pharmaceuticals
    • electronics and machines
    • computer hardware
    • business methods and processes
    • fabrics and design
    • computer software
    • sports equipment

What can a Startup File a Patent?

  • Basically anything mentioned above applies to startups.
  • Should you choose to patent, know that there is a time and cost intensive process around patent research and registration.
  • Keep in mind that Patents are publicly available – whereas trade secrets are entirely private.

How do I Register a Patent?

Licensing

Licensing is always something you want to think about when running any type of business. Whether it is licensing out your trade secrets, patents, name and logo, or if you’d like to license the IP of another company – licensing either gives you a way to collect on use of your IP, or has you pay another to use their IP. Have the appropriate documents drafted and reviewed to make sure your use is covered and liabilities limited.

Let Us Help

This is a very high level overview, and there are many more intricacies to each type of intellectual property.

At the very least, you should figure out what kind of IP protection is best for your startup. Most often, it is a combination of copyrights, trademarks, trade secrets, and if applicable – patents.

Let’s connect to set up an initial call about what applies to your business.

This post is not legal advice, and does not establish any attorney client privilege between Law Office of K.S. Kader, PLLC and you, the reader.