Copyright, trademark, patents, and licensing — all words that are important knowledge for startup founders with innovative products, but ones that are often used in the wrong context. That can be dangerous, as your intellectual property, the ownership right on ideas or creations from somebody’s mind, may not be as protected as you think.
If your startup has specific branding and/or unique technologies that are essential to your product and growth, it’s time to explore options to protect your intellectual property. Adding legal counsel early on can help you skip some of the pitfalls that may stop your business on its tracks.
One of those big, easy-to-miss intellectual property pitfalls? Your company’s name, says John Lyon, a senior associate at Thomas Horstemeyer, LLP, an Atlanta-based intellectual property law firm.
“It’s easy and cheap to re-brand before you launch,” says Lyon. “Not so after. If you’ve already launched your company and then a year later, after you’ve built up a customer base and received funding, you receive a letter saying, ‘Please stop doing this under this name because I’m already using that company name and I have a federal trademark,’ — I can’t tell you how many times that’s happened.”
Lyon’s main focus is electrical/computer patent prosecution, litigation, and open source software licensing. Here, he breaks down the importance of exploring copyright issues and trade secrets as you scale your company and what you should keep in mind.
Intellectual Property concepts
Trademark: Branding falls under trademark. It can be a word, name, or symbol or any combination which is used to identify the goods or products of one company from others. For example, you know when you see the Nike ‘swoosh’ on a t-shirt, it will conform to Nike standards and quality. It’ll probably have certain designs and certain features. That’s valuable.
Copyright: Copyrights are the rights granted to creative types regarding the ability to control who can make copies of their creation or expression, whether it be art and marketing materials, written code, computer code, or music.
Patents: Government-sanctioned monopolies protecting an inventor’s rights to make use of their invention. With a patent, your invention receives 20-year protection from the government in exchange for revealing the inner working to the public.
Start by searching Google for your prospective company name
“I can’t tell you how many times someone has come up with a great company name or logo, become emotionally attached to it, and they don’t look to see if anyone else is already using that name or a similar logo,” says Lyon.
It’s cheaper to re-brand before you launch, shares Lyon. He suggests googling every prospective startup name you have in mind before landing on one and checking available trademarks.
Don’t skip the copyright, software startups
Avoiding admin costs and legal fees can become an issue down the line if you have an informal partnership in place and haven’t taken the steps to make sure your product is formally protected by copyright. While product development or launching may be at the top of your to-do list, Lyon warns founders about forgetting to copyright their intellectual property.
“Things like who owns the copyright to the code gets overlooked,” says Lyon. “You can get into an awkward situation where the startup ends up not owning the copyright for the code that forms their product.”
“It may be that a contractor or developer owns it and it was never assigned to the company because they didn’t do all the paperwork that needed to be done. Or, one of the co-founders owns the code instead of the company itself, so if you have a falling out between cofounders, the company can go under because the company doesn’t own the copyright and the code for their program or their product.”
It’s an easy fix, says Lyon. All you have to do is complete a one-page, form document assigning the copyright and the code from the developer or a co-founder to the company. You can grab this form off of Legal Zoom or via your legal counsel.
Be aware of the patent timeline
“Everyone’s aware of what patents are, but not very many people are aware of all the rules that surround patents and how you could forfeit your rights accidentally,” says Lyon.
“If you think you might want to patent this, pull up a calendar and start highlighting some critical dates here. If you want to file a patent application, you may want to wait before you start offering it for sale, or you may want to wait before you go do a demo.”
If you wait until after it goes public, you have 12 months to file a patent application. However, the lengthy process includes several steps such as finding a patent lawyer, doing a disclosure, and several rounds of edits.
Patents are not a one-time done deal
Often startup founders make the mistake of thinking that patents are a one-and-done deal. This is not true, as products are always evolving and improving.
“As their product evolves, they need to ask themselves whether or not any of those new features they’re adding might be worth trying to protect with a patent,” says Lyon.
“A lot of companies, when they’re small and growing, they may file one patent application, based off of their prototype. Two years later, they’re at version 4.0 and things have changed quite a bit. That’s something to consider so they don’t overlook things and can make sure they’re always protected.”
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