August 9, 2022 | By David Masson, Chief Legal Officer at Scalefast
For original podcast click here.
Startup companies with disruptive technologies must safeguard their intellectual assets.
This is a process that starts from day one of a company’s formation, and not 15 years after launching several successful products. This is a key step that might decide the long term health and growth of any given organization.
But what legal frameworks can founders and entrepreneurs use to protect their intellectual property, navigate global regulations, and leverage their data to increase value?
I’ve been working for 20 years in the realm of intellectual property and would like to focus on two core questions for startup companies. First, how do companies protect their intellectual property? Second, how do startups manage all their data and leverage that information to increase value?
Protect your technology
In the realm of intellectual protection, there are four main areas to consider.
Trademarks protect signs and logos for 10 years and can be indefinitely renewed. Trademarks also protect a name within a certain geographic territory, as well as services that the business may offer. The main criteria for a trademark is that the name or logo be distinctive.
A patent covers an invention or a “technical effect.” The criteria for a patent is that the technology be new and “inventive,” meaning it must not be obvious for a skilled person to discern. There has been a lot of discussion in the legal community over whether software is patentable, but for the purposes of this discussion let’s assume it is.
Think of a patent as a deal between an inventor and wider society in which the former brings the invention to market for the latter’s benefit. A patent is valid for 20 years from the patent date (sometimes longer in certain cases).
Lastly, copyright protects an author or composer for a work in which the personality of the creator is clearly apparent. Copyright protection lasts 70 years.
As a founder or company executive, your primary mission is to protect the company’s unique intellectual property for all the time that the law allows.
Create a roadmap
Questions of intellectual property must be anticipated from the beginning of a company’s life.
In so doing, a founder or executive protects the value of a business, avoids breaching the rights of extant technologies, and attracts investors for long-term funding.
My advice is to create a roadmap. The name of the company or product is the most important early question to consider. Then think about how much can be disclosed to both the public and initial investors. A roadmap costs nothing but provides substantial savings down the road.
It is also vitally important to hire experts whom you trust. Meet with a patent attorney who can help with the preparation of the patent itself. I meet many people who believe that software is not patentable. It’s a mistake with huge costs.
Keep in mind that 18 months after the approval of the patent, third-parties can challenge the patent. Expect to spend anywhere between $5,000 to $20,000 to prepare and file a patent, and then future outlays in annual fees.
Match legal frameworks to data needs
This is a substantive area of business operations that must be addressed smartly.
When dealing with personal data, it is important to decide how your company plans to use the information it collects and how to abide by regulations governing the use of that data.
A general rule of thumb is that a company can not process any more data than it can legitimately use in its operations. For example, if a company does not sell shampoo there is no reason to know the color of a customer’s hair. The legal and technical design of the product must be built according to the data roadmap.
We live in a global world, so it’s also important to think about how to handle data when it crosses borders. Again, if this step is planned from the beginning of operations, it need not be overly complicated or technical.
At Scalefast, we deal with many e-commerce clients and therefore had to plan our data processes from the earliest stages. We established privacy policies that would allow us to share data with our clients and ensure conformity with regulators. With the proper policies in place, the roadmap for data protection creates a clear path.
As far as leveraging data, I would advise early stage entrepreneurs to anticipate those needs initially and match them with your legal design. If it’s not well designed, there will be future legal work to ensure that any given solution is in accordance with regulators. When your data is controlled and regulated, value is created. It can not be otherwise.
