Legal Mistakes Made By Startups: IP Issues
10 mins • 29 Mar 22
Intellectual property is the heart of many, if not most, startup ventures, and how it is safeguarded can make or break a company.
It’s not enough to have a revolutionary idea, you need to prove it and protect it. It is vital that a startup’s founders invest early in ensuring that their fledgling business not only protects its intellectual property but also avoids infringing on the rights of others.
Unlike traditional property, such as land or physical goods, intellectual property is often intangible and indivisible – that is, an unlimited amount of people can ‘consume’ a piece of intellectual property without depleting it. The very nature of intellectual property can therefore make protecting it complicated, especially as some countries recognize more types of IP than others.
Here are the most common and most commonly recognized forms of IP protection:
◼️Copyright - Covers original works of authorship, including art, books, articles, music, movies, software, advertising copy, etc. A copyright gives the owner the exclusive right to create copies of the work as well as derivative works like sequels or revisions. Copyright tends to be time sensitive and typically expires 50 or 100 years after the death of the author, depending on jurisdiction.
◼️Trademark or Service Mark - A trademark protects the symbolic value of a name, word, symbol or device that identifies or distinguishes a good from others. A service mark does the same except for services.
◼️Patent - Grants its owner the right to prevent others from making, using or selling a unique product or invention. To qualify for a patent, the invention must: be new or novel, have some useful purpose and must not have been patented or described in a printed publication previously.
◼️Trade Secret - Refers to a type of intellectual property that is: not known to the general public, confers an economic benefit on its holder because the information is not publicly known, and is the subject of efforts by the owner to maintain said secrecy. Trade secrets range from customer lists, product formulas, software programs, etc. The owner of a trade secret has the right to take legal action against anyone who misappropriates the secret through theft or other means.
◼️Non-Disclosure Agreement (Confidentiality Agreement) - Allows the holder to share confidential information, such as an unrevealed product or business idea, with another party, who is then prohibited from disclosing the information elsewhere. These types of contracts are the backbone of many startups.
◼️Confidentiality and Invention Assignment Agreement - Obligates the signer (usually an employee) to keep proprietary information of the business confidential both during and after employment. It also ensures that any inventions, ideas, products or services related to the business that the employee develops during the term of their employment belong to the company and not the employee.
Entrepreneurs are fueled by great ideas but many fall short of safeguarding them.
To give a startup its best chance, it is critical that the appropriate form of protection for your intellectual property is obtained.
If you have any questions or would like any assistance protection your business’s IP, CLICK HERE and a GLS legal expert will contact you to help.
Alternatively, you can CLICK HERE to access a whole library of world class contract templates specifically designed to address the needs of Startups.
Next Steps
When it comes to legal basics, it can seem overwhelming at first. But, it doesn’t have to be. GLS offers a host of free Startup resources to help set you on your way. You can also browse our list of over 200 Legal Templates and Tools, to choose the products your Startup needs at each critical stage of business.
We also offer a wide range of subscription based Legal Support Plans created specifically for Startups who want a 360 degree service in creating their own virtual legal dept.
*The above content does not constitute, nor is it offered as, legal advice of any kind. GLS Solutions Pte Ltd is not a law firm and any support provided pursuant to this entity is not regulated legal advice or legal opinion.
Observations and Tips
- Protect Intellectual Property Early: Startups should secure trademarks, patents, copyrights, and confidential information before scaling.
- Ensure Proper IP Ownership: All IP created by founders, employees, and contractors should be formally assigned to the company.
- Use Strong Confidentiality Protections: NDAs and confidentiality clauses help prevent misuse of sensitive business information.
- Review Third-Party & Open-Source Usage Carefully: Improper use of external code, content, or technology may create infringement risks.
- Register Key Brand Assets Early: Delays in trademark registration can expose startups to brand conflicts and infringement claims.
- Monitor Infringement Risks Continuously: Businesses should actively track unauthorised use of their technology, content, and branding.
- Align IP Strategy With Commercial Goals: IP protection should support licensing, fundraising, partnerships, and long-term growth plans.
- Avoid Informal IP Arrangements: Handshake understandings and unclear ownership terms often lead to founder and investor disputes.
- Prevent Reactive IP Management: Delaying IP protection can reduce valuation, weaken competitive advantage, and increase litigation risk.
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