EU companies can compete globally only by creating high value products and services, strong brands and innovations. This means that many EU based startups operate in intellectual property intensive environment. Here are some 5 intellectual property considerations for an early stage startup company.
1. Transfer pre-incorporation intellectual property to your company
Good things happen when people get together, innovate and create new things. If that leads to patentable inventions or creative works, these belong to the inventors and creators personally, especially if the company has not been incorporated yet. Problems arise if one of the inventors or creators leaves the company and claims ownership of a crucial invention or creation. To avoid this, the creators should transfer all intellectual property to the company. Failure to do that may be a red flag for investors.
2. Choose a great name and make sure you can use it
Choosing a good name is difficult. From legal point of view there are two aspects that make a good name. Firstly, the name must be one that can be actually used without infringing prior trademarks. You should use an intellectual property attorney to do proper availability searches before committing to a name, but failing that, check this brief blog post on how to do a basic search yourself. Secondly, the name must be one that can be protected and owned. The criteria for protectability varies from country to country, but generally speaking the name must be “distinctive”. For practical tips and examples, on choosing a distinctive name check out this post.
3. Protect your name with trademark(s)
Choosing a good name is not enough. You only have rights to that name if it is protected as a trademark. Company registration can give limited protection, but in many countries they receive weak or even no protection against the use of later trademarks. Trademark protection is a relatively inexpensive form of intellectual property protection, and failing to do that may lead to a situation where the name must be changed later. Trademark should be protected in those countries where you intend to do business. You can apply for EU trademark here.
4. To patent or not?
The decision to patent or not to patent should be done before your invention is disclosed publicly. For example, pitching in a startup competition may lead to the loss of patentability of your invention. Same applies to designs (e.g. product’s shape or user interface). If in doubt, you should consult an intellectual property attorney. Remember also that patent application will eventually become public and provide crucial information about your invention to competitors. Another option is simply keep the invention secret. The advantage of trade secrets is there is no registration requirement and the protection is not limited in time. The most notable disadvantage is that you are not protected in case of reverse engineering.
5. Remember intellectual property when hiring and contracting
In many countries transfer of intellectual property is not automatic from employee or contractor to the company. For example, if an employee or contractor creates a brochure, logo, user interface or other materials, it is possible or even likely that copyright belongs to the creator, not the company. The easiest way to make sure that all intellectual property belong to the company is to include intellectual property assignment provisions in employment and procurement contracts.
