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IP Issues for Startups in 2018

By William Vogeler, Esq. on January 07, 2018 | Last updated on March 21, 2019

With every new year comes a new startup. Then another. And another.

It's the heritage of American industry to start a business -- from a $1 mousetrap to a $1 billion ABCmouse. With all that history, you would think entrepreneurs would have learned something about how to trademark and protect intellectual property.

That's where in-house counsel has to be creative. This is about helping startups avoid IP issues in 2018 and beyond.

Trademark

Too often, entrepreneurs get a great business idea only to discover later that someone else already thought of it. It happens with products as well as business names.

Mark Davis of Davis & Leonard said one of the top mistakes he sees is when startups fail to conduct a proper trademark search. They common believe the myth that it's not necessary if they already registered a corporate name.

"The Secretary of State's name approval process uses criteria different from trademark law and only checks against corporate and limited liability names registered with that state," he told VC-List. "It does not consider federally registered marks, partnerships, sole proprietorships, business entities in other states, or even state trademark registrations."

Intellectual Property

Another common IP issue for startups is protecting intellectual property created by their workers. Davis said the companies should have their employees and independent contractors sign contracts to ensure the business retains creative rights.

"To make sure it owns the rights in all of the intellectual property in works it pays for, a business should enter 'work made for hire' and assignment contracts that explicitly confer rights in the works to the business," Davis said.

He said the problem occurs often when startups hire web developers to create a company website. The developer agreements typically are silent on the issue, and when disputes arise they claim rights to the code and hold companies hostage for changes or payments.

Because startups inherently involve new business concepts, IP issues come up in branding, licensing agreements, and other ways that companies fail to identify intellectual property. In-house counsel can anticipate those problems with a protection plan.

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