Intellectual Property: First Things First

I have founders come to me all the time and ask “What is the first thing I need to do to protect my intellectual property? Do I apply for a patent or register my trademark and logo or what?” Listen carefully: The first thing you need to do to protect your intellectual property is to own your intellectual property.

What? Let me explain. First, intellectual property is not just patents and trademarks, trade secrets and copyrights. Intellectual property is essentially anything that comes out of a brain. And if it doesn’t come out of your brain, it doesn’t belong to you. (There are some presumptions that are counter to this but check back next week for more on this.)

So the first thing you should do, before anything else, is get all intellectual property assigned to the company. This includes your partners’ IP and even your IP. With a start-up  there is no intrinsic value. The company has no assets, nothing to add value to it, except its IP. Therefore, if you want and expect to create value in your company and attract funding, you need to get all of the IP assigned to the company.

This can be done easily with a non-disclosure, confidentiality and assignment agreement. This agreement should have each of these components and every member of the company should sign one as part of them coming on board. This includes interns, whether paid or not. We had a company who brought on a very skilled student intern to help them develop their product. When the intern had completed a working beta version, he refused to turn it over to the founders until they gave him an equity stake in the company. The founders were able to get it worked out, but not without some tough times, maneuvering and hard feelings.

Bottom line is that you should not let anyone do any work in your company until they sign a non-disclosure, confidentiality and assignment of intellectual property agreement. Protect your company! Own your IP!

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