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IP and Startup Companies

A startup is a company, either nascent or early stage, that is just forming. It is primarily concerned with the development of a product or service deliverable and gaining traction. A startup's growth is contingent upon the founders' ability to find product-market fit and/or investors interested in their innovation.

However, having either of these two without IP protection would expose a unique invention to uncontrollable exploitation. Getting a basic domestic IP protection would be a good starting point as a means of protecting any and all intellectual property.

Intellectual property (IP) is any knowledge, information or creativity — such as inventions, literary and artistic works or symbols — that is protected by the law. IP includes many things, from paintings and inventions to computer software and business methods.

Startups would seek IP protection for their inventions, logos, business names, and software. Different types of IP protection apply to these various works. For example, patents would protect an invention, copyrights would protect software, and trademarks would protect a startup's brand name and logo.

A company’s Intellectual Property is most often its most valuable asset. The products and services (based on its) Intellectual Property (that a startup) brings to market will help it secure market share and earn revenue. Neither of these will be secure unless the company can prevent other companies from stealing its concepts, brands, and inventions.

The Reasons and Setbacks of Delaying IP protection

Many startups have an inclination towards delaying the protection of their IP rights, stemming from the perception that "ideas are a dime a dozen; only execution matters." However, the realistic reason is that they often have limited resources and small budgets, which puts their ability to protect their intellectual property at risk. Often, Startups’ sole justification for not seeking IP protection is a lack of financial resources.

The delay in securing a startup's IP can do severe and sometimes irreversible harm to the startup, both from a legal and business standpoint. If companies like Apple, IBM, Google, and other tech giants spend billions of dollars to bring lawsuits against infringers, it would substantiate that IP matters.

Investors want to see that startups have IP protection because it’s the number one way your startup has control over all the ideas, code, and branding you'll need to develop and market your products and services. Obviously, without IP, a tech startup would not have any control in the market, thus making it vital to protect these rights as quickly as possible to capture market share and investors.

The importance of securing their IP increases as startups begin to give their information to customers, partners, vendors. This is especially true in the fintech area as it is routine for API integrations and access to each other’s systems occur frequently. Accordingly, the use of Non-Disclosure Agreements is essential to safeguard the misappropriation of confidential information regarding their inventions. It’s essential to initiate the process of registering patents and trademarks as soon as possible to prevent others from getting ownership by registering them first.

Other benefits of acquiring IP protection are:

  • It earns your company a competitive edge.
  • It protects you from counter infringement lawsuits.
  • You have the right to presumption of ownership.
  • Preventing other companies from unfairly profiting off your material.

It is of utmost importance to protect IP rights that are infringed upon by other companies. Acting swiftly with a demand letter from your attorneys to the infringing party may be all that is required to get them to stop. It may be necessary to recover damages for losses their violation may have caused. This IP defense can include a lawsuit to enforce your rights.

Important Deadlines for IP Registration

Failure to get IP ownership assigned to the company is one of the most common errors startups make. This can be exceedingly difficult to correct if not resolved quickly and may result in another company securing the rights in question.

Protection of IP has to be an integral part of every startup's business strategy to accelerate growth, prevent infringement and increase revenue. A startup is unlikely to survive unless it has its IP firmly under its control.

In 2013, the USPTO moved from a first-to-invent system to a first-to-file system. In the United States, patent applicants must apply for a patent within one year of publication or public disclosure of the invention. The grace period is intentionally brief, since the benefits of exclusive rights in an invention by their inventor can be delayed.

Patents grant inventors exclusive rights to their work for a period of 20 years from the date that they are issued, or sooner if an application is filed within one year of making the invention public.

As with other forms of intellectual property, federal law does not obligate you to register your copyrights, trademarks, or trade secrets before you publish or release products but you should register in good time. A Trademark protects the uniqueness of your business as soon as you begin using it, if it's not already being used by someone else.

Protecting your startup’s IP from the beginning will help you stay on the path to success. Protecting your brand name, images, logos and slogans prevent competitors from using them. In addition, incorporating technology into your business is especially important as it is more secure and makes running a startup easier.

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