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Start-ups And Intellectual Property – What You Need To Know?

Posted by William P. Ramey III | May 27, 2020 | 0 Comments

Start-ups And Intellectual Property – What You Need To Know?

Today Startups are on the rise with diversified opportunities and markets. It has become comparatively easy to set up one's own business. Globalization and Privatization present an opportunity for the willing to reap immense benefits and make more money.

During the early stages, a business can derive huge value from the intangible assets it owns. These assets are called the intellectual property (IP) of the business. Unlike jobs, a business makes money from its assets and thus IP proves to be of utmost importance. It also gives the brand a unique identity and sets it apart from the rest.

Thus an entrepreneur should be learned about the IP laws and seek professional counsel for intellectual property protection to obtain maximum possible benefits and avoid IP infringement by other businesses.

Intellectual Property Types Start-Ups Should Know About

As discussed earlier, Intellectual property is the most important asset for any start-up. Before getting involved with IP laws and the challenges that need to be addressed relating to IP, first let's learn more about the types of IP and its benefits.


To put it simply, patents prevent others from making, selling, and using an invention that includes products and services. Even though patents are the most expensive and time-consuming asset to obtain, they provide the utmost value and best protection. It is important to understand the different kinds of patent protection.

  • Utility Patents

Utility patents can be obtained for discovery or improvements of a new and useful machine, manufacture, composition of matter or process. It covers the tangible technical inventions that could include client-server systems, radios, computer chips, etc.

  • Design Patents

Design patents deal with the protection of non-functional designs such as a visually creative interface. It protects inventions that state the visual qualities of the functional items.

Trade Secrets

It is an intellectual property on confidential information that could be sold or licensed. Trade secrets comprise of secret practices and processes that have inherent economic value. The best example of a trade secret is the Coca-Cola recipe.


A trademark mainly deals with the branding of a particular business. It protects the words, symbols, and designs that are used to make your brand stand out. A simple example of a trademark is the company logo. Commonly, trademark rights are acquired through its regular use. You can use the symbols “TM” or “SM” even without registering the trademarks. The “®” symbol can be used only after registering the trademark.


Copyrights mainly protect the expression of ideas. These include books, music, art, photographs, etc. Traditionally copyright exists from the moment of creation but one needs to register it to be legally protected. As soon as the ideas are made tangible it will be eligible to be copyrighted. Registering your asset as copyright gives you the authority to modify, distribute, and copy your works.

Why It Crucial For Start-Ups To Protect Their Intellectual Property

For most businesses, intellectual property is not just the ideas, innovation, or products. It protects the genuine business assets that may be the essence of the core products /services and important for longterm viability.

Intellectual property encompasses various elements like logos, original ideas, innovations, etc. Protection of intellectual property comes into picture when someone uses these ideas without permission which can cripple the entire business.

It proves to be important for entrepreneurs to begin protecting intellectual property in the early stages of a business. This will help them to be in a better position for business success and avoid any misuse of business assets. Let's now take a look at why IP protection is crucial.

1. Protection of assets

Intellectual property is the product of one's determination and creativity that makes him or her stand out from the rest. People may sometime want to copy the idea and duplicate the success by making the ideas their own. Thus, protecting your intellectual property will forbid others to copy or use it and give you the sole ownership. IP protection applies to the business of all sizes.

2. Attracting investment

Investors love intellectual property and will be willing to invest in your business. These are the major reasons,

o IP has no limit on its value

o IP can be leveraged in multiple ways (Example – licensing, sale, etc.)

o IP portfolio reduces operational risks

o A business that protects its IP is seen as more trustworthy

o IP can boost marketing and sales

3. Economic Growth

Intellectual property proves to be a growth-driving aspect of SMEs. Let's have a look at how protecting the IP yields huge financial gains,

o Intellectual property may increase profit margins of the business through licensing sale of the IP protected products/services

o As discussed, protected IP can increase the worth of the start-up in the eyes of the investors

o In an event where the business undergoes sale, merger, liquidation or acquisition, protected IP can significantly increase the valuation of the business.

Intellectual Property Mistakes Start-Ups Should Avoid At All Costs

Doing All By Yourself

It is understandable that in the initial years of the start-up it is difficult to manage everything in limited working capital. This compels founders and entrepreneurs to on task that is not their cup of tea. Moreover, due to eased conditions many start-ups are coming up. This obviously increases the competition to dominate the market. Many people may choose risky methods to achieve success rather than adopting a more methodical approach. More experienced entrepreneurs have the knowledge to manage these tasks. However, for young and less experienced companies it can quickly prove to be a bad decision. It is important to get qualified IP counsel and get things in perspective.

Failure to plan an IP strategy

For entrepreneurs it is their dream to own a flourishing and profitable business. Young companies device all kinds of strategies that include how to obtain capital, marketing, recruitment, etc. However, they may forget or purposefully decide not to have a plan for their intellectual property. The main reason for this is that they may be in a hurry to commercialize their product and start generating revenue.

As said earlier the intellectual property is the most valuable asset of a company. But what they don't understand is if the idea behind the product is copied or stolen, they could lose the authority and exclusiveness over the product and also the money. Thus, having a clear and precise IP strategy will save you a lot of bucks and keep the assets safe.

Failure to keep documents in order

This could be the most fatal mistake a company could commit. Let's take a scenario where the developer is in talks about software with higher authority in the company. Since the discussion will encompass all the details of the idea, the developer is in a position where it knows the secrets and could misuse it. In such scenarios, you won't realize your mistake until it's too late because you were having just a conversation.

Thus it is always advisable to use a non-disclosure agreement (NDA) with the developer. Generally, NDA defines “confidential information”. It states the terms, what it includes and excludes, etc. An entrepreneur should always learn about the laws to protect confidential information and how important and sensitive it is.


Intellectual property is the most valuable asset of the company. IP is not just a product or an idea; it is a medium to make more money and an instrument to dominate the market. It is of utmost importance that start-ups should reserve a small capital to protect their IP and manage all the underlying work. It may seem an overhead and an unnecessary thing to do but ignoring it could lead to failure of the company.

About the Author

William P. Ramey III

Managing Partner; Office: Houston


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