5 THINGS YOUR LAWYER SHOULD INFORM YOU ABOUT YOUR INTELLECTUAL PROPERTY

STARTUP 101: 5 THINGS YOUR LAWYER SHOULD INFORM YOU ABOUT YOUR INTELLECTUAL PROPERTY

INTRODUCTION

‘’Intellectual property is the oil of the 21 century. Look at the richest men a hundred years ago; they all made their money extracting natural resources or moving them around. All of today’s richest men have made their money out of intellectual property’’ ………MARK GETTY. 

The euphoria of developing an idea; building a mobile application and website to implement the new idea can be summed up as the formation of a startup. The excitement of getting customers to use the product and investors to write cheques top the list of concerns for a first-time founder forgetting he needs to safeguard the creation of his mind he is about to commercialize. 

Intellectual Property is the ‘property of the mind’, the brain behind the startup. The conversion of the idea into reality is what gives us a multibillion-dollar corporation, safeguarding this idea should be a founder’s priority.  Early safeguard of this property would put a legal check on your competitors and prevent others from infringing on and making an illicit profit from your property.  

The essence of protecting your intellectual property is best described in this quote;

‘’In the startup economy more than anywhere else, it’s an innovation that will differentiate you from competitors. That ‘intellectual property can come in many forms: ideas, algorithms, names, business methods, designs, and more. You must understand how to protect that IP or risk seeing the value of what you’ve built go up in smoke’’………….JULIA 

Every founder has to understand that ‘Intellecutual property is the intangible knowledge and know how that separates an entity from what’s widely known in a certain field’……DEEPAK GUPTA. Intellectual Property must be treated as a valuable asset and duly registered or otherwise protected. A classical example of ignoring IP protection is the famous Mark Zuckerberg rift with the Winklevoss brothers over who owned Facebook and he ended up settling with them for $65million. 

5 THINGS YOUR LAWYER SHOULD INFORM YOU ABOUT INTELLECTUAL PROPERTY

1. The Categories of Intelectual Property: Intelectual property falls into four major categories;

a. Patents: This implies a legal check on others from making, selling, or using your inventions that include algorism to your design or operation of a piece of hardware, a manufacturing process, a business model even a game.

In other words as a startup founder when you discover a novel way of making something or product, before taking it into the market, you should consult your lawyer to patent the idea.  

b. Trademarks: This is best described as a brand identifier for your startup or product. It covers words, symbols, slogans, colors, design, or a combination of all that distinguishes your startup from others. These distinguishing features can be registered and serve as a legal check on your competitors from using the same features. 

In other words as a startup founder, when you conceive these distinguishing features, you should consult your lawyer to protect them as they form your business asset and gives you the tool to prevent your competitors from taking advantage of the goodwill that your startup would gather over the coming years. 

c. Copyrights:  This is can be described as the protection of the expression of your ideas melted into books, music, art, photographs, even software, etc. Although you enjoy traditional copyright which exists at the point of creation of these ideas, it is necessary that you also enjoy legal protection by registering these ideas.

As a startup founder concerning software, the patent protects the idea while copyright protects the written code. You need to consult your lawyer to ensure you copyright your work and guide you on how people can contact you so they can use your work with your permission. 

d. Trade Secrets:  This comprises confidential practices and processes that have inherent economic value thereby giving one’s business a competitive advantage over other competitors. 

As a startup founder, it’s very important to take reasonable measures in keeping trade secrets, one of the measures is consulting your lawyer to draft a non-disclosure agreement to be executed by partners, visitors, service providers employees, and also job candidates coming into the office premises. 

2. Develop an IP Strategy: Startup founders devise different strategies for their emerging business ranging from how to raise funds, marketing entry, product fit, recruitment, etc but ignore having a plan for their intellectual property. 

IP strategy comprises the following;

• Plans align with the company’s business objectives to acquire IP assets and how they intend to get value from existing IP assets. 
• Discussing with the founding members on the startup intellectual property to ascertain who owns what or assigning such rights to the company. 
• Making IP discovery a part of startup culture; team members need to understand that as they are developing a new product or new ideas, IP is continuously being generated. 
• Diligent use of open source software by startup developers in developing software, open-source licenses must be read and adhered to. 

3. Execution of Intellectual Property/Invention  Assignment Agreement: Startup founders have found themselves on the web of who owns what concerning the IP of the company, which could have been avoided if there was a well-crafted agreement that assigns ownership of what any party creates while working for the company to the company. 

Also, all concerned stakeholders must sign a mutual non-disclosure agreement; a written record of every person involved in the startup IP signing a confidentiality agreement. 

Startup founders in addition to having their employees sign the aforementioned documents must also ensure they set password-protect on all computers, limit which employees have access to certain information and the type of information employees can access on personal devices. 

4. Financial Security: The best description of intellectual property use case is best summed up in the words of MICHEAL NESMITH:

‘People recognize intellectual property the same way they recognize real estate. People understand what property is. But it’s a new kind of property, and so the understanding uses new control surfaces. It uses a new way of defining the property

Nesmith’s opinion on IP is one of the foundations in which IP has been regarded as a form of financial security which aligns with WIPO’s recent online magazine that notes that;

‘Intellectual property is now the most valuable asset class on the planet, and yet establishing IP value and exploiting the economic potential of IP assets remain much of a mystery to businesses, financiers, and investors

In May 2017, Kenyan President Uhuru Kenyatta signed into law a bill allowing borrowers to use intellectual property to secure commercial loans in a move aimed at boosting access to credit. A Singaporean show maker Masai borrowed money using its IP as collateral, the first of its kind approved in Singapore. 

Startup founders need to realize that IP is a valuable asset that should be protected at all costs as it can give them an upper hand when applying for grants, and loans and even be sold at a reasonable price during exit. 

5. International Protection of IP: It is important to note that having a global strategy mindset at the early stage of a startup would make startups consider international standards of protecting their IP. Although we all know that IP protection is territorially limited and it is required to protect one’s IP on a country-by-country basis. 

Startup founders that have plans of expanding their business overseas need to consult with their lawyer at the early stage and offer advice on how to gain foreign protection of their IP rights. This would prevent the startup from getting stuck when expanding into international markets. 

CONCLUSION

We have seen a plethora of mistakes made by startup founders which are sourced from significant business and legal challenges faced at the early stages of growth. Intellectual Property is one of the vital issues startup founders need to deal with at the early stage preferably at the ideation stage before development. 

However, when an infringement of intellectual property occurs, a startup founder can claim the following remedies through the judicial process:

1. An order of Injunction: This can either be in form of perpetual injunction, Mareva injunction, Anton pillar injunction, and interlocutory injunction all aimed at preventing the aggrieved party from not reaping from his fruit of litigation by maintaining the status quo pending the determination of the trial. 
2. An order of Inspection and Seizure: The court has the power of authorizing the inspection and seizure of infringing documents or related material within the custody of the defendant alleged to have infringed on the litigant intellectual property right. 
3. Award of Damages: An aggrieved party can be awarded pecuniary monetary value for his financial loss as a result of the infringement of his IP rights
4. Delivery Up: This is an order of the court in favor of the plaintiff instructing the defendant to hand over all infringement documents to the plaintiff. 

It is worthy to note that startup founders must invest in planning and obtaining expert advice at the early stage of their business to avoid pitfalls concerning their intellectual property. They need to protect what is their own and consider it as their first act of priority, ignoring it could lead to a great loss for the company. 

REFERENCES 

1. What Every Startup Founder Should Know About Intellectual Property
2. Protecting Intellectual Property: What Every Startup Founder Needs To Know
3. Start-ups And Intellectual Property – What You Need To Know? – Ramey & Schwaller
4. Intellectual Property for Startups: Everything You Need to Know
5. Forms & Enforcement Of Intellectual Property Rights In Nigeria – Trademark
6. New Horizons: Utilising IP As Security For Financing Transactions In Nigeria – Trademark
7. IP Strategy for Startup Founders – What You Need to Know to Protect Your Idea | The Accelerator Centre