Five Intellectual Property Considerations For Startups - Part I

A successful startup provides a solution to a market need. Typically, the solution involves a new or improved device or technique. As a startup defines and develops its solution, intellectual property (IP) becomes a core asset of the company. Indeed, after management members themselves, IP is often a startup's most valuable asset.

This is the first article of a Startup Intellectual Property Series to help startups understand how to identify and protect their IP. The first two entries in this Series introduce the following five threshold questions that every startup should consider:

Do you own all of your IP? How can you safely discuss your IP with others? How do you identify and protect your competitive differentiators? Do you have an idea or solution that is eligible for patent protection? What is your IP strategy? 1. Do you own all of your IP?

In the early stages of a startup, individuals typically collaborate informally to develop their ideas and a business plan. A company may not be formed yet. There may be no formal agreements among the individuals. Additionally, some of the collaborators may be employed by other companies while waiting for the startup to launch. As part of employment with such companies, certain collaborators may be obligated to assign his or her contributions intended for the startup to their current employer. Without any formal agreements or even a formal entity to own IP, any IP generated or derived from an informal collaboration may be owned by individuals personally or worse yet, depending on the circumstances, by another company. Every potential investor or acquirer will perform due diligence to make sure that all of the company's IP is owned by the company. From the outset, every startup needs to consider these ownership issues...