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Protect Your IP! What Startups Need To Know




The Intellectual Property (IP) of your startup may be more valuable than its physical assets and is most vulnerable to leaks, theft, and other threats. You need to use a combination of legal strategies and strong business practices to ensure the integrity of the IP is not compromised.[1] Any delays can cause serious and possibly irreversible harm to your startup from a legal and business standpoint.[2]You need to protect the IP of your startup because:

  • If you cannot prevent others from stealing your startup’s IP, you can face disruptions in securing a market share and revenue generation,

  • As your startup grows, it is more vulnerable to IP leaks and theft, so taking measures to protect its IP can help avoid litigation or potential legal action, and

  • Investors appreciate startups with a well-developed IP strategy, as it advertises stability and security.

Some types of IP require rights granted by a government agency to receive legal protection, while others receive protection by law from the moment of creation.[3]Depending on the type of IP in the name of your startup, you can take the following steps to protect it:


1. Register your IP:


If the IP in the name of your startup requires registration, such as patent and design, you need to register it in order to claim protection under its respective statute. The registration process can also act as evidence of use before courts as well as enforcement agencies.[4] Whereas if the IP does not require registration, such as trademark and copyright, you need not register it.


2. Conduct Due Diligence:


You must make careful decisions and conduct proper due diligence of IP Rights, which your startup uses or intends to use, in the initial phase itself. This is extremely important, as the IP rights of any other person or entity must not be violated. Any litigation or legal action against your startup can affect the amount set aside for activities and processes such as manufacturing, marketing, etc and can also affect its brand image.[5]


3. Use Non-Disclosure Agreements:


From the early stages of the life cycle of your startup, you may disclose valuable ideas and business information of a confidential nature, to multiple parties, such as customers, contractors, investors, etc. As a result, you must ensure that each party enters into Non-Disclosure Agreements with the startup. This allows you to specify who can use your startup’s IP, under what conditions, and for what purpose. You can also take legal action to recover damages in the event of a breach, and prevent a further breach.[6]


4. Use IP Assignment Agreements:


You must have proper documentation to ensure that anything created on behalf of the startup is in the name of the startup and not the founder, key employee or the third party who developed it.[7] This is necessary to prevent any IP leaks, whether accidental or intentional.


Furthermore, you should have agreements with all such employees, co-founders and third parties regarding IP assignment, licensing or even user agreements with relevant provisions, for all post-termination IP rights issues.[8]


Any errors in the initial stages of IP protection can be difficult to fix at a later stage, for example, if you don’t adhere to timeline-based registrations, or conduct proper due diligence, you can face issues in the future. Therefore, IP protection should be made an essential part of your startup's business strategy, to ensure an increase in its revenue and growth, and prevent infringement and litigation.


[1] Henry, M., 2017. 7 BUSINESS BEST PRACTICES FOR PROTECTING INTELLECTUAL PROPERTY - Henry Patent Law Firm. [online] Henry Patent Law Firm. Available at: <https://henry.law/blog/7-business-best-practices-for-protecting-intellectual-property/> [Accessed 16 December 2021]. [2] Adekunbi, A., 2020. How and Why Startups Must Protect Their Intellectual Property at All Costs. [online] Entrepreneur. Available at: <https://www.entrepreneur.com/article/361671> [Accessed 16 December 2021]. [3] UpCounsel. 2021. Intellectual Property for Startups: Everything You Need to Know. [online] Available at: <https://www.upcounsel.com/intellectual-property-startup> [Accessed 16 December 2021]. [4] Vaish, V., 2016. Intellectual Property Rights (IPR) For Startups - Intellectual Property - India. [online] Mondaq.com. Available at: <https://www.mondaq.com/india/trademark/456442/intellectual-property-rights-ipr-for-startups> [Accessed 16 December 2021]. [5] Sheth, S., 2019. How can startups protect their Intellectual Property using their IPR. [online] www.startupindia.gov. Available at: <https://www.startupindia.gov.in/content/sih/en/reources/startup_india_notes/industry_insights/protecting_Intellectual_Property_using_IPR.html> [Accessed 17 December 2021]. [6] Indian Contract Act, 1872, No. 9, Acts of Parliament, 1872, S.73. [7] Ibid. [8] Supra at 8.
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