For a startup, intellectual property (IP) is of the utmost importance. Everything a startup does is focused on building around that IP, and that’s ultimately their main asset and what sets them apart.
Intellectual property is a broad term for a set of intangible assets. These assets are intended to be legally protected from any outside use without permission. The idea behind the legal concept of intellectual property is that products of intellect should be given the same rights of protection as tangible assets. Developed economies have legal measures in place to protect property that’s intellectual in nature, just like they do tangible, physical assets.
With that in mind, the following are some things startups should know about protecting their intellectual property.
Protections aren’t just legal. Protecting your IP and your startup as a whole relies on having an understanding of threats, including cybersecurity risks. For example, by building a culture of cybersecurity, you’re adding another layer of protection to your intangible assets and continuing to build a business with a unique competitive advantage.
An Overview of Intellectual Property
As a startup, if you aren’t already doing so, you need to be diligent about understanding your intellectual property to know what to protect. We live in a knowledge-based economy and world, highlighting this importance even more.
While it’s, in general, an intangible asset, the specifics of IP can vary widely, and ultimately, as was touched on, it is your core competitive advantage.
Examples of IP include:
- Patents that a government agency grants. Typically, it’s the U.S. Patent and Trademark Office granting patents. The patent gives an inventor rights to the invention, which doesn’t have to be a product, but instead could be a processor design.
- Copyrights are intended to protect creators of original content such as books.
- Trademarks are phrases or symbols that represent a product and give it a legal distinction.
- Trade secrets are information about the processes of a company that aren’t public knowledge and have an economic benefit to the company. Trade secrets typically stem from research and development, and they’re used to create a distinct business model that’s different from that of the competition.
Why Is IP Importance for Startups?
We’ve touched on some of this above, but again, as a startup, your IP is probably the most important thing you have. That IP is ultimately what turns you from a startup into a potentially huge company. To have not just a competitive advantage but also to be appealing to investors, you have to show your IP is well-defined and protected.
There’s also a sense of protection on your end, depending on how you manage your IP. During your own research and as part of your IP process, you’ll research to make sure you’re not infringing on anything else that’s already out there.
If you find out early on during your initial IP research that companies already have rights to certain trademarks, then you can save yourself a lot of money and potential heartache down the line after you’ve invested time and money.
Why You Need to Secure Your IP
Some startups will argue against securing their IP, primarily citing the cost. When you’re an early-stage business, you may not have a lot of cash to pay to secure your IP, and it does take not only money but time and other resources. However, if you don’t do it properly, the costs are likely to end up being much more significant.
Some of the reasons any startup needs to secure IP include:
- You can prevent other people and businesses from profiting from material that’s yours.
- If you have legal rights of any type of IP, then you’re creating what’s called a rebuttable presumption the property belongs to you. That means that if someone were to infringe on your intellectual property and you file a lawsuit, a court is going to presume that IP belongs to you unless it’s proven otherwise.
- If you don’t secure your IP rights, you don’t know if you’re using something belonging to someone else, and infringement litigation can be costly if you end up doing that.
- If you don’t secure your IP, it’s very possible that someone else can patent your work.
Cybersecurity and IP
More established companies may operate with the understanding that a cybersecurity attack could severely damage their company. Even these enterprise-level organizations don’t always consider the risks to IP that can happen if they’re targeted.
Last year, the CEO of the U.S. Chamber of Commerce released a statement about the importance of protecting IP during the pandemic, as new drug patents were being filed. The CEO, Thomas Donahue, went on to say that more awareness needs to be placed on the importance of patents and also intellectual property and cybersecurity.
General cybersecurity tips to protect IP include:
- Know what needs to be protected. IP takes many forms, and only you’re going to know what your startup has. If you aren’t sure you have a comprehensive picture, do an audit to figure it out. For example, even something as simple as a spreadsheet or employee training documents can contain trade secrets that could provide competitors with insight into how you do things. Your internal documentation and white papers you create for investors similarly could be a vulnerability, as can your customer list, which the SEC considers to be a trade secret.
- You need security policies that consider access controls and give everyone the least privilege access. Users need to have access only to what they need to do their job directly. This isn’t just good for protecting IP—it’s also valuable for your general cybersecurity strategy. We’ll talk a little more about cybersecurity and a culture of security below.
- Ensure every employee is well-trained on IP, why it matters, and how you protect it. Employees need to be trained on cybersecurity because human error is one of the most significant risks as far as a data breach happening. You also need to have a device use policy, and all employees need to sign non-disclosures or IP agreements as soon as they come on board.
- Use monitoring software that will give you a real-time, centralized view of network traffic. You don’t want to put so much surveillance in place that employees feel uncomfortable, but what you do use as monitoring should be well-communicated to them, and they should understand why you’re using it.
- Have an offboard plan for employees in place. This is a huge yet often overlooked issue, especially in startups that might not have a lot of official policies in place in general. You need to make sure if an employee leaves and especially if you have BYOD policy that there’s a way for you to wipe any confidential information. Employees also need to give you any physical materials they could have.
We touched on the importance of cybersecurity and general security culture, and it’s crucial in so many ways even beyond IP.
As a startup, your employees and even your contractors need to understand their role in cybersecurity and the protection of intellectual property. It has to become ingrained in all that you do.
Final Thoughts
The following are the key steps that, as a startup, you should make sure you follow to protect IP.
- Identify: You can’t protect what you aren’t aware of. You need not just identify your IP, but understand even the tiniest details about it. You want to have a running list of everything including your concepts and inventions, business and product names, taglines, web copy, and logo. Once you have an idea of your IP, it’s much easier to create specific protection strategies.
- Own It: This was talked about above, but don’t put off making sure you get ownership of your IP. File for patent applications as soon as possible and research products and services already in your industry.
- Protect: These are the more specific steps of ownership that you can take for your IP. You can again file for patents, and you’re probably going to need to hire an experienced attorney because it can be a complex process. Another way to protect it is a trademark, which is more straightforward than a patent. For trademark protection, you just have to register your design or brand, giving you legally protected use.
Overall, as a startup, you have a lot on your plate and competing priorities, but potentially none should come before the protection of your IP, both through legal means but also cybersecurity strategies. With that, you can’t forget the human element either, which includes training your employees to understand how important the protection of your research and trade secrets is.
Have a plan for bringing employees onboard and preparing them to protect IP, and also what you’ll do to protect it when they leave.
Without taking the essential steps above, you might not be able to get your startup to where you want it to be, or you could face severe financial repercussions. Being proactive when it comes to IP is always the best option.
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