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Technology Law Experts
The Practical Tech Lawyer: Why Start-ups Shouldn't Skimp on IP Documentation
You run a technology company. Imagine for a moment that I am a prospective investor or buyer of your company. As I perform my due diligence, among a lot of other questions, I want to find out if I can trust your intellectual property chain of ownership. By that I mean, can I trace a contractual link between your company and all the sources of the technology that you use and distribute, and can I verify that you haven't given away ownership or destructively broad rights to someone else?
Step one: Is there a strong link between your company and the people who actually create your IP -- the employees, consultants and third-party partners who get paid to conceive, design and build your products? Patent and copyright laws are too complex to simplify like this, but without written agreements between your company and every single one of these people and partner companies, there's a broken link in this part of the chain. You have someone or perhaps many people who might come out of the woodwork one day, likely when you're on the brink of a huge deal and their leverage is at its highest, to claim that they own a part of your IP. This, of course, is very bad. It's bad even if the law ultimately favors you. Just having to argue about your IP ownership is a terrible situation to be in. To avoid this, make it your company's strict policy that every employee must sign a standard non-disclosure and inventions agreement, and every independent contractor must sign an agreement containing the same protections.
Step two: Do you take steps to make sure your developers and scientists don't hand you IP that someone else owns? Software developers might bring code with them from old employers, then slip it into your products. Or they might copy open source software and use it in your products without following the open source license terms, which is just as bad. Scientists working for you in pharma, biotech, energy or other technology environments can also infringe on the IP rights of others. You need to prevent this. Policies, handbooks, standard employee contracts, annual certifications and training are all part of this effort.
Step three: Do you protect your IP sufficiently after you develop or acquire it? Copyright law protects the tangible expressions of ideas, not the ideas themselves. Your documents and software code fall under this copyright shield, just by virtue of being written down or saved in a computer. Using the © is not strictly necessary, but it helps to have it when you try to enforce a copyright, so use it whenever appropriate. Patent law protects ideas, but only if they actually receive a patent, and only for a limited time. Unpatented ideas -- drug formulas, software features, manufacturing methods, future product roadmaps, hiring strategies, financial results, soft drink formulas -- fall into a gray zone that can only be protected as "trade secrets," a state law concept that has served innovative companies well for over a hundred years. To protect IP as a trade secret, you must actually treat it as a secret. That means: (1) keep it out of the public domain, of course; (2) only share it with people, internally as well as externally, who have a need to know; and (3) use non-disclosure agreements whenever you share the idea with anyone. If your employees and consultants sign confidentiality agreements, you can share the idea with them and still keep trade secret protection; sharing the idea with your lawyers, accountants and other professional advisors generally does not require a written confidentiality agreement, since these professionals are presumed to be under professional duties of confidentiality. You can share an idea with a customer, even with a competitor, as long as you get an adequate promise of confidentiality from them. Brand names are the subject of trademark law, which can't be summarized in a few sentences. But when you successfully register your trademark or service mark, you can and should use the ® symbol next to the mark; until then, claim your ownership of the mark with a TM symbol.