How Startups Can Protect Their IP Rights

by Revision Legal

For businesses that are just starting out, intellectual property (IP) rights can be immensely valuable. Your IP rights could be the business asset that sets your company apart from your competitors. Equally important to growing a fledgling startup is entering into strategic and valuable business relationships with mature companies that can offer synergistic benefits for the startup.

IP and business relationships are so important to a new startup’s goals of achieving growth and ultimately business success, it is important to take steps to protect your startup’s IP when entering into new business relationships.

Start by Speaking With an Experienced Intellectual Property Attorney

Protecting your startup’s IP rights when entering into new business relationships starts by having a conversation with an experienced intellectual property attorney. The legal options that are available to your startup depend on your specific circumstances, and the concepts might seem overly complex at first.

When it comes to protecting your startup’s valuable IP assets it is imperative to have a firm understanding of how the agreement you are planning work, what specific rights and responsibilities you have under the terms of your agreement, and what protections are afforded to you and your startup under the agreement.

An experienced business lawyer can help by explaining your options to you, and how each one works, which empowers you to make the best decisions possible while protecting your startup’s IP rights.

There are a number of useful business agreements that a startup can use to grow through partnership with another company. Below is a brief discussion of the four main types of business agreements that involve intellectual property rights and are commonly encountered by startups entering into business relationships with other companies.

These four main types of business agreements include: IP licensing agreements, technology licensing agreements, joint venture agreement, and collaborative R&D agreements.

Using IP Licensing to Protect Your Startup’s IP Rights.

Entering into a licensing agreement with a new business partner concerning your startup’s IP is a good way to protect your invaluable IP assets, and the deal could potentially result in licensing revenues for your startup. IP licensing is the most commonly used mechanism by which startups protect their patents, trade secrets, trademarks, copyrights, etc., when entering into a collaboration or partnership with another company or entity.

IP licensing agreements afford the startup a lot of control over who can use their IP assets, how those assets can be used, and for how long they may be used. Licensing agreements can be versatile and put a definitive end date to when the license expires and are often difficult to extend, forcing the parties to renegotiate a new IP licensing agreement.

Entering into a Technology Licensing Agreement

Sometimes it makes sense to enter into a technology licensing agreement by which the startup either gains access to another party’s technology or grants another party access to its own technology. Technology licensing is a common tool used by companies in the technology sector to gain access to useful and innovative technologies, such as proprietary hardware, software, or technological processes.

In addition to being granted permission to use the technology, licensees are usually also granted access to guidance or instruction on how to use the technology. The parties agree to mutually acceptable terms of how the technology will be used and royalty rates, and will also include a license to use the respective IP rights associated with the technology.

Entering into a Joint Venture

Sometimes in business it makes sense to enter into a long-term partnership with another company. This is called a joint venture. Joint ventures are a common tool used by larger companies that are interested in the work that a startup is doing. Larger companies often use joint ventures with startups to expand their business into new markets and new product areas.

Each party to the joint venture brings with it its own intellectual property rights and from those intellectual property rights new intellectual property rights are likely to be created as the joint venture sets to work creating new products. A joint venture agreement should detail which parties are contributing IP rights to the joint venture, how those rights are to be used, and how any future IP rights generated by the combined efforts of the joint venture will be shared.

Participating in a Collaborative Research and Development Agreement

For some startups, the best collaborative approach for engaging in a specific new endeavor is to partner with a larger company via a collaborative research agreement. An agreement to collaborate in the development of a new product or technology is a narrow form of a joint venture.

The purpose of such agreements is to develop a new product or technology and then to share in the revenue generated by the commercialization of the new product or technology. It is common for the startup to contribute substantially to the research and development of the product or technology while the larger company often bankrolls and provides resources and support for the research project, but other arrangements are also possible.

Business Contracts Play an Important Role in Protecting IP

Business contracts are supremely important in business, especially when a startup is looking to join forces with a larger, more experienced business partner. An experienced business lawyer who has a solid understanding of intellectual property rights and licensing will be able to advise your startup on any agreements you may be considering.

When You are Concerned That Your Trade Secret has Been Misappropriated

Business partnerships can have immense value to a startup, but when valuable intellectual property rights are at stake, it is critically important for the startup to make sure that the business agreements it is entering into provide specific protection for the startup’s IP rights. It is always a good idea to have a skilled business lawyer review any business agreement before you sign to make sure that your rights are protected.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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