As a startup, understanding intellectual property (IP) isn't just an option — it's a necessity. And too often, IP development is treated as an afterthought and prioritized as one of many tasks that “just need to get done.” But by becoming familiar with the various types of IP protection available and strategic reasons for pursuing (or not pursuing) such protection, you can improve your startup’s chances of success.
This article aims to establish a footing on which all startups can start integrating IP into their business plans. Specifically, we focus on:
The common types of IP protection that are available, along with key strengths of each,
Strategic factors to keep in mind when building an IP development roadmap, and
Ways in which IP can ultimately be used to support broader business objectives.
Readers should keep in mind that the information in this article is intended to be a starting point for discussions. When building an IP development roadmap — regardless of whether you are founding a local bakery or an AI-focused tech company — everyone should consult experts (including IP attorneys or other qualified individuals) who can offer tailored advice for the specific goals and needs of their startup. This is particularly important for startups operating in the national or international markets. By getting a jump start, not only can founders and managers establish IP protections that support sustainable growth, they can also prepare for risks posed by other companies’ IP that lay ahead.
Common types of intellectual property
IP protection can help virtually every startup. For example, a local bakery can spend significant time and energy developing a unique brand and recipes. As a result, they may benefit from a stronger focus on trademark and trade secret protection to protect against others moving into their space with brands and recipes that mimic their own. However, a tech startup dedicating time and resources to develop software may benefit from a focus on patent, copyright, or trade secret protection. And, indeed, some startups (“stealth startups”) may want to avoid public attention, including attention inherent in establishing trademark protection.
Regardless of the type of startup you are involved with, it’s important to understand some of the key types of IP protection that are available, as well as how to weigh their benefits against their costs.
Trademarks
Trademarks guard a startup's brand identity, and can be used to protect a variety of marks such as logos, names, and slogans that distinguish the source of products or services from those of competitors. For example, a tech startup that is ready to launch a new app might establish a trademark or service mark for its unique name or slogan that indicate the products and services are provided by the developer. This trademark can then be used to protect against others using confusingly similar marks to provide the same goods or services.
Patents
Patents protect inventions, often defined in the context of a startup’s products or processes. For example, a startup developing a new type of battery might patent the unique chemical composition or the manufacturing method that makes their battery more efficient or longer-lasting. This type of patent (referred to as a utility patent) can then be used to prevent competitors from creating, importing, or otherwise selling products that use the same technology without permission for the life of the patent.
Trade secrets
Trade secrets protect a startup's confidential business information, which can include formulas, processes, customer lists, or any proprietary information that gives that startup a competitive edge. For instance, a biotech firm might keep the exact recipe of a new drug compound secret. That same biotech firm may keep other proprietary information such as customer lists, product deployment plans, and so on, as trade secrets. And unlike patents or trademarks, trade secrets require no formal registration.
However, to establish and maintain a trade secret, startups need to deliberately protect their secrets through measures like confidentiality agreements and secure information handling. And while trade secrets offer the potential for indefinite protection, once the secret is lost (e.g., obtained through legal means or independently developed) it cannot be recovered.
Copyrights
Copyrights protect original works of authorship, such as software code, literary works, or certain designs (not covered by design patents), providing the creator exclusive rights to its use and distribution. For example, a startup developing a new software application might copyright its source code to prevent others from copying or modifying it without permission (think open source code). And unlike the other forms of protection described, copyrights arise automatically upon the work's creation (though registration with the U.S. Copyright Office significantly enhances these rights).
Factors to weigh when developing an IP development roadmap
Focus on core assets
Startups should focus on protecting IP that is critical to their business as early as possible. This can mean making carefully-considered tradeoffs. For example, while a highly-innovative and fast-moving tech startup can view their brand as important, it may make more sense to protect the brand early using cost-effective means (e.g., by establishing common law rights to their trademarks) while focusing a greater amount of time and resources on obtaining patent protection for their technical innovations.
Remain flexible
Resource constraints can require an initially conservative approach to establishing IP protection. But startups should prepare to pivot toward building comprehensive IP portfolios as sales grow and new products or services are developed. This might mean allocating resources in anticipation of a shift from reliance on trade secret protection to patent protection, particularly as the startup’s market position improves and investors start to require patent-based security. This can also mean moving from lower-cost common law trademark protection toward federal registration.
Always use IP as a tool
At the end of the day, a startup’s IP needs to support the business. Carefully-developed portfolios can be pivotal when attracting investment, serving as a tangible demonstration of a company's innovation and market potential. These portfolios can similarly reduce risk of misappropriation of a startup’s brand or technology by others and deter lawsuits from competitors looking to control corners of the market. By ensuring that your IP development roadmap aligns with your goals, you're not just protecting your brand or ideas; you're actively crafting a competitive edge that can lead to partnerships, licensing opportunities, and an increased valuation.
Key takeaways
IP protection can be an extremely powerful tool. It can attract investors and financing by demonstrating that a startup is proactive about protecting their investments. It can also guard against other companies (at any size) from encroaching on the startup’s brand, technology, or secrets. By carefully aligning your IP development roadmap with your startup’s evolving business objectives, you can effectively balance formal IP assets, such as patents and trademarks, with informal ones like trade secrets and common law rights, enabling your startup to thrive.
Comments