- Learning to protect your intellectual property is critical: your company’s success or failure may depend on it.
- Patents on algorithms, designs, business methods and other inventions may drive revenue and add to your company’s valuation.
- Confidential information is only valuable if it remains confidential; take steps to protect it.
Understanding and protecting your intellectual property
Innovation and fresh thinking are what lies at the heart of any founder’s business plan; these are the big ideas that power startups. In legal terms, these are your “intellectual property” - an important business asset. Intellectual property can come in many forms: product or service details, design, business names, logos and customer lists. Protecting your intellectual property is critical to protecting your competitive differentiation.
Take a proactive approach
Imagine the following scenario: You come up with an idea, develop a prototype and get ready to turn it into a product that customers will pay for and investors will be willing to bankroll. Then, you realise you can’t prove that the idea, prototype or product are actually yours. Perhaps someone else — a former employer, a rival, a contractor you hired — will say it was all their idea or work. Perhaps your blueprints leaked and someone else beats you to market with your own invention.
Sounds like an entrepreneur’s nightmare. And yet, it happens all the time: Mark Zuckerberg famously spent years battling the Winklevoss brothers over who owned Facebook and ended up settling with them for millions of dollars. In the UK, a study by the Federation of Small Businesses revealed that 25% of the organisations it surveyed have had their IP rights infringed in the past five years.
To avoid these headaches — or to protect yourself when they arise — you must understand how to safeguard your intellectual property (IP).
Perhaps because IP covers so many things that can seem abstract, founders often treat it as an undervalued asset — or fail to recognise its value at all. But ignoring or failing to claim, register or otherwise protect your IP can have dire consequences that can range from damage to your company’s reputation and bottom line to its destruction.
Common categories of IP are patents, trademarks, copyrights and confidential information. We’ve set out some of the basics but you should consult with a lawyer on how each applies to your company, as all information here is for general informational purposes and not to be construed as professional advice or to create a professional relationship, and none of the information is not intended as a substitute for professional advice.
A patent protects an invention, and you can find more information on patents here. Founders seem to understand their overall importance: one in five startups told SVB in 2020 that they consider patent litigation a top public policy priority.
In the UK, patents are administered by a government body called the Intellectual Property Office (IPO). Getting a patent approved can be a long, costly and complicated process.
You’ll almost certainly need to hire a patent lawyer to steer you through the process.
Still, the deep, wide protection that comes with a patent can make it worth the time, energy and money of seeking approval. Amazon’s early “1-click shopping” patent, gave it an edge over its rivals, and was widely considered a game-changer in the world of eCommerce.
Patents, or even patent applications, also serve as a signal to potential investors that your business is worth backing. Investors like to see barriers to entry, and could be turned off by founders who don’t know how to protect their inventions from rivals.
Before registering a trademark it’s important to research if someone else is already using something similar or identical to the one you are considering. In the UK guidance on how to search for trademarks can be found here. Once you narrow your company and product name down to a few options, you need to ensure that you get the application process right. The IPO has this guide available, but the best option is to enlist legal support; the process can get complicated.
Copyright covers original works of authorship. That includes works in the form of print and music, lyrics and dance, photography and painting. It can even cover software, so long as your software is sufficiently original.
Copyright is important for software businesses as it stops people from replicating your work and distributing it, whether free of charge or for sale. The good thing about copyright in the UK is it starts as soon as your software is created; you don’t have to file for copyright protection in the UK. And, while it isn’t a requirement in the UK, you can mark your work with the copyright symbol (©), your name and the year of creation.
As to whether you should patent or copyright software: you should seek legal advice on what is the best protection.
There is plenty of information within your company that you don’t want the outside world to know about. Your product or marketing plans for next year. The pricing of an unannounced service. Plans for a new device. A list of existing or potential customers. They are your trade secrets or confidential information.
In the UK a common route to protect your confidential information is to require key partners to sign non-disclosure agreements. It is worth considering using these with co-founders, job candidates, contractors, service providers, and employees.
Protecting your IP means safeguarding your success
Intellectual property sits at the heart of what makes startups so special. It comprises the ideas, products, services, branding and client lists that success is dependent on. However, protecting this IP can take a back seat to more ‘exciting’ activities such as product development, marketing and sales enablement. But fail to look after your IP and you are at risk. For any founder, protecting IP is often a top priority, and one for which legal support is often enlisted.