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Navigating the Startup Journey: 5 Pitfalls to Avoid

Starting a new business venture is an exciting and often challenging endeavor. As you embark on your journey to success, there are numerous hurdles to overcome. As a patent attorney, I have witnessed businesses make easily avoidable mistakes with far-reaching consequences. Some of these mistakes could render your business less appealing to investors or even jeopardize its survival. In this article, we will explore five critical pitfalls that you should steer clear of.

1 Don’t Forget Transfer Agreements

If you hire an employee or an independent contractor, it does not necessarily mean that you own the rights to the intellectual property created by them. For example, under US patent laws, the person who invents something retains patent rights unless an agreement is signed transferring those rights to another entity. So, if your independent contractor or employee comes up with a groundbreaking idea, that individual would own potentially own patent rights unless documents are signed to transfer the rights to your business. Another example is that under US copyright laws, where an independent contractor who writes software code likely retains ownership of that code.

To avoid disputes and issues with uncooperative employees and independent contractors, you should have each team member sign agreements, known as assignment agreements, transferring their intellectual property rights to you or your business. An assignment agreement should include provisions that require team members to cooperate with you if you need them to sign other documents to protect your intellectual property rights. For instance, under US patent laws, inventors must submit certain documents to the patent office for a patent to be granted. Having cooperation provisions in assignment agreements makes it much easier for you to obtain these documents from your teammates, especially if they become uncooperative or are no longer part of your team. Paying attention to and taking these basic steps upfront will help you avoid unnecessary litigation and unwanted ownership disputes in the long run.

2. Don’t Disclose Your Invention Too Soon

Great ideas are meant to be shared with the world, right? Yes, but sharing your invention or idea prematurely can leave it vulnerable to being copied or stolen by competitors. In the US, if you don’t file a patent application within one year of publicly disclosing an invention, you are barred from ever obtaining a patent for it.  Before revealing any proprietary information, it’s crucial to determine the best way to protect it. Then, you can create a strategy to ensure you maximize your competitive advantage.

3. Don’t Forget About Trade Secret Safeguards

On the other hand, not every great idea is entitled to patent protection. Trade secrets can be a valuable asset for startups. These include confidential processes, algorithms, data, formulas, or proprietary technologies that give your business a competitive edge.  To establish a trade secret, you would need to take reasonable measures to ensure that the information is kept secret, such as having secrecy and non-disclosure agreements (NDAs) in place and implementing physical and cybersecurity measures to limit access from both internal and external threats.

4. Don’t Develop a Brand Without a Trademark Clearance Search

Being first to market with a distinctive and memorable brand is essential for startups in a competitive market. However, developing a brand without conducting a thorough trademark clearance search can be a costly mistake. If your chosen brand name infringes on an existing trademark, you could face legal battles, rebranding expenses, and damage to your reputation. To avoid these issues, invest time in researching existing trademarks and consult with legal professionals to ensure your brand is unique and protectable.  The last thing you want to be doing when you are trying to raise capital is dealing with a trademark infringement lawsuit, which could have easily been prevented.

5. Don’t Use Photos or Content Without Permission

In the digital age, content is king, and visuals play a significant role in attracting and engaging customers. However, using photos, graphics, or written content without proper authorization can lead you into an unwanted copyright infringement lawsuit. In fact, there is an entire cottage industry of lawyers and law firms that file lawsuits based on people’s use of photographs on websites without the photographer’s permission.

To avoid any copyright infringement issues, create your own visuals. Alternatively, if you use other people’s visuals, ensure you have written permission or a paid license to do so. Ignorance of copyright laws is not a valid defense, so pay close attention to what your marketing team is doing.

Your business journey is rife with challenges, but by paying attention and planning carefully, you can avoid common pitfalls that waste money, time, and resources. Seeking legal counsel and expert advice in these areas is an investment that can save you from expensive legal battles and reputational damage in the long run. Remember, prevention is always better than cure, especially in the complex landscape of entrepreneurship.

DEREK FAHEY, ESQUIRE – Derek is a registered patent attorney and one of managing partners of The Plus IP Firm, PLLC. Derek’s practice is focused on creating, monetizing and protecting intellectual property assets.
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