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Startup pulls Kickstarter campaign due to concerns over intellectual property

Friday, 31 October 2014 | By Broede Carmody

A Perth-based entrepreneur cancelled his startup’s Kickstarter campaign, which had raised its target in three days, after the crowdfunding platform insisted he disclose detailed technical information that exposed his product to being copied.


Aurora Labs launched a crowdfunding campaign last month for what it called the cheapest 3D metal printers in the world. The startup met its $100,000 target within three days, hitting the $300,000 mark before cancelling the campaign on October 9.


David Budge, the startup’s founder and chief executive, told StartupSmart he pulled the crowdfunding campaign in favour of selling directly from his startup’s online store, after Kickstarter put pressure on him to disclose more information.


“They essentially wanted us to give them and everyone else a tour of every inner working of our machine. After various discussions back and forth it just wasn’t enough. I understand they have to protect their position and model… but I decided to pull the site down,” Budge says.


Budge advises entrepreneurs who are looking to crowdfund their product to double-check with Kickstarter that there is enough information about their product before going ahead with the campaign.


“We just jumped on onboard and said, ‘Woohoo away we go’. There is a process where you can get moderated – so check your model before you launch.”


Budge says he wishes there was clearer upfront communication about what he was required to reveal about his product, but he has no regrets about using Kickstarter as it had “helped us a lot.”


“It is a fantastic model for getting new businesses and products up and running,” he says. “The way they phrased it, we weren’t disclosing enough information about what the product could do or how it worked.”


Budge says he understands that Kickstarter wants to protect its users and ensure that people have a clear idea of what they’re getting, but it came down to the risk that someone might steal his idea.


“I’m well aware of the fact as of four weeks ago when I first launched this program there would be a lot people out there trying to copy what we’ve done,” he says.


“We’ve quite deliberately limited what we’ve shown because it’s going to take us a little bit of time to put these things onto the market properly.”


Brian Goldberg, intellectual property lawyer at Premier IP Ventures, told StartupSmart the main concern in this instance relates to the intellectual property rights, or potential intellectual property rights, that may be put in place to protect an innovator in the marketplace.


“Both patents and designs registrations need to be new and not disclosed or shown to the public,” he says.


“So there is definitely a risk that showing one’s product with the technology exposes that product to the public and if there’s no IP in place, then unfortunately the public can do what it chooses with the information and there’s little action available.”


Goldberg says he understands the potential costs and time associated with filing for intellectual property rights, and so can understand why investing in a patent is not good for every project.


“However, I do strongly recommend that before publically disclosing elements of the innovation that consideration has been made of the intellectual property rights,” he says.


“So if you review and choose not to file any, at least an informed decision has been made. But just to publicly disclose it hoping that no one will copy it and you’re not quite wanting others to do it is a high risk.”


StartupSmart attempted to contact Kickstarter for comment but did not receive a response prior to publication.


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