Startup Evolution / A Year-Long Journey through A Founder’s Toolkit: Protecting Your Startup’s Intellectual Property – Key Steps to Safeguard Your Innovations

Welcome to the fourth installment of our “Startup Evolution: A Year-Long Journey through A Founder’s Toolkit.” In our previous article, we explored early-stage funding essentials. Now that you have secured some capital and built your initial team, it is time to protect the lifeblood of your venture—its intellectual property (IP).

Founders often focus on product development and growth, leaving IP protection on the back burner. But, safeguarding your ideas, inventions and brand is critical. Studies even show that startups with strong IP attract more investor funding and growth than those without. Moreover, investors will check in due diligence that your company owns its IP—any gaps can raise red flags.

1. Know Your IP: Patents, Trademarks, Copyrights & Trade Secrets

Intellectual property comes in several forms, each guarding a different aspect of your business. The main categories for startups include patents, trademarks, copyrights and trade secrets:

• Patents – Protect novel inventions or processes. A patent grants exclusive rights, preventing others from making or selling the same innovation. It is a powerful shield for core technology but involves a rigorous, time-consuming application process.
• Trademarks – Protect brand identifiers like names and logos. Registering a trademark on your company or product name ensures you own your brand and can stop others from using similar names.
• Copyrights – Protect original creative works. For startups, this includes software code, designs, content or media. Copyright protection exists automatically upon creation, but make sure anything created by founders, employees or contractors is formally assigned to the company – otherwise an individual creator might hold the rights.
• Trade Secrets – Protect valuable business information that derives its value from secrecy (e.g., formulas or algorithms). Unlike patents, trade secrets do not involve registration—you must actively keep them confidential (through NDAs, limited access, etc.). If a trade secret is not properly safeguarded and leaks out, you lose exclusive rights to it.

Each of these IP types plays a role in your startup’s success. Patents and trade secrets safeguard innovation (choosing between them depends on whether you prefer a published patent portfolio or indefinite secrecy), while trademarks and copyrights secure your brand identity and creative assets. Most startups will employ a combination of these protections.

2. Common IP Pitfalls for Startups

Even well-intentioned founders can stumble when it comes to IP. Here are some frequent mistakes to avoid:

• Failing to Secure Ownership – A common error is not having clear agreements that the company owns all IP. If a co-founder or early developer leaves without an IP assignment in place, they could claim rights to core technology or content. Likewise, hiring contractors without a written IP assignment means the contractor might retain ownership of crucial code or designs.
• Delaying Trademark Protection – Many startups defer trademark filings, only to learn too late that their name is already taken or face a cease-and-desist after launch (leading to a costly rebrand). Do not wait to lock down rights to your name and logo.
• Public Disclosures Undermining Patents – Enthusiasm about your product can backfire if you reveal invention details too soon. Publishing technical specifics or demoing your technology publicly before filing for a patent can jeopardize your patent eligibility.
• Neglecting Confidentiality – Treat your startup’s sensitive information as strictly confidential. Informally sharing code, formulas or business strategies without confidentiality agreements is a recipe for losing trade secret protection. If proprietary information slips out without an NDA, the law may consider that you failed to protect it. Ensure all employees and contractors sign NDAs and understand what information is confidential. Build a culture where keeping trade secrets truly secret is part of the routine.

3. Best Practices to Protect Your Startup’s IP

Taking a proactive approach to IP will pay off immensely. Here are foundational steps every founder should implement:

• Sign IP Assignment Agreements Early – From day one, have every founder sign an agreement assigning any pre-existing inventions or code to the company. Likewise, use offer letters or contracts with employees and freelancers that clearly state any IP created on the job belongs to the startup. This way, the company – not the individual – owns the technology and content.
• Implement Rigorous Confidentiality – Use NDAs whenever appropriate – with employees, contractors, advisors, and even potential partners or beta users – at least before sharing sensitive details. Internally, label and limit access to “for internal use only” information. By taking these precautions, you maintain the legal enforceability of your trade secrets.
• Plan and Execute Your Trademark Strategy – Choose a strong, distinctive name and conduct a trademark search early to avoid unwittingly infringing someone else’s mark. Secure relevant domain names and social media handles, then file for trademark registration in the jurisdictions where you will do business. Early registration establishes your rights and deters others from attempting to use confusingly similar branding.

By putting these best practices in place, you will create a strong IP foundation for your startup. Down the road, when due diligence requests roll in, you can confidently show that every critical invention is protected, every brand name is secured, and every team member has signed the necessary agreements.

How We Can Help You Move Forward

Protecting your startup’s IP is an ongoing journey, but you do not have to navigate it alone. Leverage these insights to safeguard your venture’s secret sauce as you grow. If you found this article helpful, stay tuned for the next installment of Startup Evolution. In the meantime, feel free to reach out for personalized legal guidance to ensure your startup’s innovations are protected every step of the way.

Author Jason Acevedo is a partner in the Venture Capital & Emerging Growth practice group in the Corporate and Securities Department at Klehr Harrison.

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