{"id":39968,"date":"2023-10-20T15:05:32","date_gmt":"2023-10-20T15:05:32","guid":{"rendered":"http:\/\/startupsmart.test\/2023\/10\/20\/how-to-protect-your-million-dollar-idea-six-legal-tips-on-intellectual-property-for-startups-startupsmart\/"},"modified":"2023-10-20T15:05:32","modified_gmt":"2023-10-20T15:05:32","slug":"how-to-protect-your-million-dollar-idea-six-legal-tips-on-intellectual-property-for-startups-startupsmart","status":"publish","type":"post","link":"https:\/\/www.startupsmart.com.au\/uncategorized\/how-to-protect-your-million-dollar-idea-six-legal-tips-on-intellectual-property-for-startups-startupsmart\/","title":{"rendered":"How to protect your \u201cmillion-dollar idea\u201d: Six legal tips on intellectual property for startups – StartupSmart"},"content":{"rendered":"
\"Legal<\/div>\n

An intellectual property assignment agreement is as important\u2014if not more important\u2014than a confidentiality agreement for startups, according to LegalVision general counsel Ursula Hogben.<\/p>\n

Founders should automatically think, \u201csomeone\u2019s just created intellectual property for my business, I\u2019ve got to get them to sign an IP assignment agreement\u201d, she tells StartupSmart.<\/em><\/p>\n

\u201cTo me, an IP assignment agreement can be as straightforward as a confidentiality agreement.\u201d<\/p>\n

This is step number one, she says, for startups looking to protect IP<\/a>.<\/p>\n

So with every co-founder, developer or individual you work with, or involve in creating new intellectual property for your venture, Hogben says, start with an IP assignment agreement.<\/p>\n

And it need not be an expensive exercise, with free examples of agreement templates readily available online.<\/p>\n

Here are five more tips for protecting your startup’s intellectual property.<\/p>\n

Structure your company to protect IP<\/h3>\n

Companies, especially \u201cintellectually rich\u201d startups, should consider separating IP into a non-operating company,\u00a0Hogben says, because holding IP in one entity alongside employee agreements and the operational side of the business can be risky.<\/p>\n

“At the startup stage, we usually see one of two main structures,” explains Hogben.<\/p>\n

“We see a two-company structure where you have a holding company that holds the assets, including the IP and the cash, and the shareholders own the holding company.<\/p>\n

“The holding company owns the subsidiary company, and the subsidiary company is the operating company …\u00a0that employs staff.\u201d<\/p>\n

This\u00a0can keep IP safe\u00a0and separate from the operating company, Hogben says.<\/p>\n

\u201cIt\u2019s for legal separation of assets so if one company is sued, the IP is safe in a different company,” she says.<\/p>\n

Some startups even\u00a0use a triple company structure, with one holding company and two subsidiaries.<\/p>\n

\u201cOne subsidiary is the operating company and the other subsidiary is a non-operating IP company\u2014all that company does is sit there and hold the IP,” Hogben says.<\/p>\n

These structures are commonly used by startups with lots of IP and high growth plans, she says.<\/p>\n

Protect equity<\/h3>\n

As a founder or early contributor to a startup, the above measures, including setting up an IP assignment agreement, can also help you protect your equity share in the venture, Hogben says.<\/p>\n

Pay attention to what has been assigned to the company and what hasn\u2019t, she says, and avail yourself to all IP protections under the law.<\/p>\n

\u201cRegister your trademarks, apply for a patent, register a design,\u201d she says.<\/p>\n

Keep trade secrets a secret<\/h3>\n

\u201cBe very careful how [intellectual property] is stored, be very careful about who can access it,\u201d says Hogben.<\/p>\n

Some startups, she says, work with manufacturers in different places to ensure the full product can\u2019t be replicated.<\/p>\n

\u201cThey assemble the entire product in Australia to save it from any one manufacturer seeing it whole,\u201d Hogben explains.<\/p>\n

Remember there are always risks<\/h3>\n

Building a successful startup is a risky business\u00a0so always read the fine print and get credible advice, Hogben says.<\/p>\n

\u201cA savvy IP developer for example will draw a distinction between three types of IP; what they consider their own proprietary code, they will not want to assign that to you,” Hogben says.<\/p>\n

\u201cIf using open source code, [the IP assignment agreement] should also refer to the open source code and explain they\u2019ll use it in open source licensing and will not assign that to the company.<\/p>\n

\u201cAgree to the definition of what that creator is developing and what will be assigned to the company.”<\/p>\n

In a lawsuit, Hogben says lawyers will usually interpret these laws and definitions to protect their client\u2019s best interests.<\/p>\n

\u201cLawyers will approach these to make this as broad as possible to help the company [they represent],\u201d she says.<\/p>\n

In part one of this story<\/a>, StartupSmart explored the number one lesson for startups in explosive legal battles like those against\u00a0tech giants like Facebook and Snapchat. \u00a0<\/em><\/p>\n

Follow StartupSmart on<\/em>\u00a0Facebook<\/a>,<\/em>\u00a0Twitter<\/a>,\u00a0LinkedIn<\/a>\u00a0and iTunes<\/a>.\u00a0<\/em><\/p>\n","protected":false},"excerpt":{"rendered":"

An intellectual property assignment agreement is as important\u2014if not more important\u2014than a confidentiality agreement for startups, according to LegalVision general<\/p>\n","protected":false},"author":2,"featured_media":61230,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[20,1],"tags":[],"_links":{"self":[{"href":"https:\/\/www.startupsmart.com.au\/wp-json\/wp\/v2\/posts\/39968"}],"collection":[{"href":"https:\/\/www.startupsmart.com.au\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.startupsmart.com.au\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.startupsmart.com.au\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.startupsmart.com.au\/wp-json\/wp\/v2\/comments?post=39968"}],"version-history":[{"count":0,"href":"https:\/\/www.startupsmart.com.au\/wp-json\/wp\/v2\/posts\/39968\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.startupsmart.com.au\/wp-json\/wp\/v2\/media\/61230"}],"wp:attachment":[{"href":"https:\/\/www.startupsmart.com.au\/wp-json\/wp\/v2\/media?parent=39968"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.startupsmart.com.au\/wp-json\/wp\/v2\/categories?post=39968"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.startupsmart.com.au\/wp-json\/wp\/v2\/tags?post=39968"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}