Failure To Establish Clear IP Ownership-What Every Startup Needs To Know Part 5

By Debby Winters

In the last blog post we looked at how the current employer of the founders might try to lay claim to the IP rights of the startup. In this post, we will look at the founders or stakeholders of the startup.

In many instances, multiple stakeholders contribute IP to the startup. As a general rule, IP rights belong to the individual who conceived of an invention or created the work first, absent any agreement to the contrary. Well-crafted written agreements between stakeholders and the startup can ensure all rights are assigned to the startup. For IP created before pre-incorporation, IP transfer via a written agreement, in exchange of company shares or for money, is recommended. If co-founders are involved in the formation of the startup, a founder agreement may be important in ensuring that the startup owns the IP. Such an agreement can prevent issues with respect to a departing co-founder later claiming IP ownership.

In our next blog post we will look at how independent contractors could try to claim IP rights.

 

Failure To Establish Clear IP Ownership-What Every Startup Needs To Know Part 4

By Debby Winters

Failure to establish IP ownership rights can be a deal breaker in many business transactions. Due diligence analysis generally seeks to verify not only the startup’s ownership rights to each piece of IP but also to determine if there are any restrictions on its use. Typically IP ownership issues can be averted if addressed early, sometimes even before the incorporation of the startup.

Here are a few of the places where ownership should be established:

  1. Current Employment for the Founders
  2. Employees of the Startup
  3. Independent Contractors
  4. Startup Founders

In this blog, we will discuss the first topic and take up the other topics in subsequent blog posts.

Founders of many startups continue to work for their current employer while they establish the new company. The employer may have required that the Founder/employee sign a confidentiality or invention assignment agreement in which the employee agreed to assign all new ideas and inventions related to the employer’s business to the employer. This is particularly problematic if the startup product or service is closely related to the employer’s business as the employer may try to claim rights to the startup’s IP.

Thus, it is important that founders carefully review their current employment agreements and fully understand employment obligations, including IP assignment clauses and non-compete language. Employees should also consider discussing personal projects/inventions with their employer upfront to avoid ownership issues later down the road. Generally, employer resources or company time should not be used to develop projects for the startup company without the pre-approval of an employer and without the employer’s agreement not to claim ownership rights.

In the next blog, we will look at establishing ownership of IP with employees of the startup.

IP Plan- What Every Startup Needs To Know Part 3

By Debby Winters

Startups, from conception, need to determine several things about their intellectual property (IP) including (1) the role that IP will play in their business, (2) the IP tools that support their business model, and (3) their overall IP strategy. In many cases, a startup’s intangible assets may be the only assets and failure to fully consider IP during launch is the source of many missteps and oversights. In contrast, a well-structured IP strategy or plan is a proactive step toward seed funding and avoiding loss of IP assets, while minimizing the risk of third-party IP infringement.

A good IP plan should identify existing and future IP assets; provide a strategy for maintaining and protecting these assets; outline a strategy for conducting freedom-to-operate searches; and establish an IP-related budget. The initial step of identifying existing and future IP is critical as it can help the startup develop a plan for allocation of resources and capital to support the IP assets. Importantly, the information can be cross-referenced against the startup’s business and product development plans to develop, maintain, protect, and leverage IP assets. For example, if the IP assets include trade secrets, the IP plan should include procedures to protect the information such as the proper marking of the documents, establishing check-in/out procedures, limiting access to documents, and storing the documents in a secure facility or network section.

The IP strategy should also include a plan for periodic review of all agreements that relate to the IP to ensure all necessary legal IP safeguards are in place for new and departing employees, consultants, developers, and contractors. It is common to review the license agreements, but many times employment agreements, independent contractor agreements, and nondisclosure agreement are overlooked. This is unfortunate since employees, contractors, consultants, and developers can know many secret IP details that you want to keep a secret or protectable.

Equally as important to the IP plan is that it needs to be continually reviewed and revised as the business evolves. Finally, although a strategically thought out IP plan may include a business’s conscious decision not to pursue registered IP rights, oversight resulting in failure to protect these IP rights can be devastating.

Next time we will discuss the potential failure to establish clear IP ownership.

 

 

Not Establishing Confidentiality Protections- Startups

By Debby Winters

Before publicly disclosing its intellectual property (IP), a startup should balance the risks with the rewards of allowing the confidential and sensitive IP information to get out into the public domain.  Startups often misstep and disclose patentable subject matter at investor meetings, pitch events, or on company websites prior to filing a patent application. Unfortunately, public disclosure of an invention prior to filing a patent application can limit or even destroy patent rights. Such public disclosure can also destroy a company’s trade secrets.

Third-party conversations with those not under legal obligation to maintain confidentiality, such as a public pitch or presentation, a trade show, or publication are common examples of what can be considered a public disclosure to the patent office. If such disclosure is necessary, the startup should file a provisional patent application prior to the disclosure or at the very least have the third parties sign a written Non-Disclosure Agreement (NDA).

One caveat to that rule is that venture capitalists generally avoid signing NDAs because they deal with many startups and believe confidentiality obligations limit their contact and investment opportunities.  Furthermore, while speaking at trade shows or making a pitch, securing an NDA may not be feasible. In such instances, to avoid disclosing confidential information, the revealed information should be limited to generalities.

In the next part of this series we will look at the IP plan.

What Every Startup Needs To Know: IP Pitfalls- Part One

By Debby Winters

On their path to success startup companies often face significant risk and liability with respect to Intellectual Property (IP). The failure to adequately address IP issues can potentially lead to the permanent loss of these rights and could possibly create a litigation risk. Insufficient or nonexistent IP protection can also hamper business transactions, including seed funding and status as a desirable acquisition target.

In a series of blogs, we will look at some of the common IP pitfalls startups face and possible steps that startups can take to avoid those pitfalls and protect their valuable IP assets while at the same time reducing the risk of litigation.

Let’s start out by defining what an IP asset is.

The term “intellectual property” can be thought of as creations of the mind that are given legal rights commonly associated with real or personal property. These rights can and do have real economic value. These property rights are generally a result of either federal and/or state laws and include the commonly understood rights belonging to patents, trademarks, copyrights and trade secrets.

All businesses have some form of IP that provides a competitive advantage and helps generate profits. Many companies mistakenly believe that patent protection is the only form of IP protection and ignore the value of non-patent IP. However, startups should identify both patent and non-patent related IP assets when evaluating their IP portfolio.

Startups, no matter whether small or large, should develop an IP plan. This IP plan should identify both existing and future IP assets. In the next of this series, we will talk more about the IP plan; what it should include and how to put it together. Stay tuned!

 

Reminder: Today is the filing deadline for people with extensions

Anyone who requested an extension of time to file their 2017 tax return must file today. Taxpayers filing today who also owe should pay as much as possible to reduce interest and penalties.

Here are links to three resources on IRS.gov that will help these last-minute filers:

Heads up for taxpayers who requested an extension: The deadline is Oct 15- TODAY!

Today, October 15, is the filing deadline for taxpayers who requested an extension for their 2017 tax return. Here are a few things to help you get filed!

Try IRS Free File or e-file. Taxpayers can e-file their tax return for free through IRS Free File. The program is available on IRS.gov through Oct. 15. IRS e-file is easy, safe and the most accurate way to file taxes.

File by Oct. 15. Taxpayers with extensions should file their tax returns by Monday, Oct. 15. If they owe, they should pay as much as possible to reduce interest and penalties. IRS Direct Pay allows individuals to securely pay from their checking or savings accounts. These taxpayers can consider an installment agreement, which allows them to pay over time.

There is more time for the military. Military members and those serving in a combat zone generally get more time to file. These taxpayers typically have until at least 180 days after they leave the combat zone to both file returns and pay any taxes due.

There is also more time in certain disaster areas. People who have an extension and live or work in a disaster area often have more time to file. The disaster relief page on IRS.gov has more information. Hurricane Michael victims have more time.

Taxpayers owed a refund should use Direct Deposit. The fastest way for taxpayers to get their refund is to combine direct deposit and e-file.

There are IRS online payment options for taxpayers who owe. Taxpayers who requested an extension should have paid the tax they owed by the deadline back in April. Taxpayers who find they still owe taxes can pay them with IRS Direct Pay. It’s the simple, quick and free way to pay from a checking or savings account. For other payment options, taxpayers can visit the Paying Your Taxespage on IRS.gov.

Keep a copy of tax return. Taxpayers should keep a copy of their tax return and all supporting documents for at least three years.

Taxpayers can view their account information. Individual taxpayers can go to IRS.gov/account and login to view their balance, payment history, pay their taxes and access tax records through Get Transcript. Before setting up an account, taxpayers should review Secure Access: How to Register for Certain Online Self-Help Tools to make sure they have the information needed to verify their identities.