My text by the above title is approaching publication hopefully by February 18th. The following is the 4th “Primer” from the text  which will be available from Amazon.com and my website www.premierinsightsllc.com I hope you find this curated information  useful.

Tactical Considerations

  1. Your primary asset is your IP. Protect it before you do anything else.
  2. IP Assignment and Nondisclosure Agreements
  3. Create a culture of IP awareness
  4. Decide who owns the IP
  5. Make sure you have a good non-disclosure/confidentiality agreement in place
  6. Make sure you own what you think you own
  7. Don’t give away your IP
  8. Don’t forget about international IP protection
  9. Have an exit strategy

All emerging companies can and should take basic steps to protect their uniquely valuable IP. For many companies, especially startups, IP often represents an important component of a company’s value, perhaps the single most significant component. Investors and acquirers are often interested in such companies primarily for the potential embodied in their IP. Defects and deficiencies in a company’s IP portfolio can raise significant concerns for investors and acquirers, and in extreme cases may drive them away entirely. Yet, despite the apparent centrality of IP to a company’s value and potential, many companies fail to take basic steps to preserve such important assets. This article will describe a few basic steps in five key areas that any company can take to protect, preserve and enhance its IP.

Your primary asset is your IP. Protect it before you do anything else.

Hire an IP attorney, a specialist who’ll be able to tell you what you have, and how best to protect it (e.g., with patent, copyright, or trade secret law).  If you can’t afford an IP attorney, look for firms that give seminars at university incubators, or those with startup-oriented practices. Find a law school with an IP clinic. Learn about and understand the various types of IP you have. Have an attorney search the patent office and trademark office records to determine whether you have the right to use your IP, and most importantly, protect it before you start engaging with third-parties. File your patent, trademark, and copyright applications; and establish an internal trade secret/confidential information protection program. The first things a potential investor wants to know is what IP you have and how is it protected. Don’t make the mistake of failing to protect your IP because “the company” doesn’t have the money. Put your own money into it if you have to. But get those applications filed. You’ll regret it if you don’t, because the first things a potential investor wants to know is what IP you have and how is it protected.

IP Assignment and Nondisclosure Agreements

One of the simplest steps any company can take to secure its IP is to require all founders, employees, and other third-party service providers to enter into IP assignment and nondisclosure agreements. These agreements are short, straightforward and usually contain standard terms. Accordingly, most parties readily understand such agreements, so they should not result in substantial delays or increases in transaction cost. Despite their ease of use and general accessibility, many companies fail to obtain these agreements, often simply through lack of vigilance. Failure to obtain these agreements can result in the company not owning, not owning exclusively, or otherwise lacking rights to key portions of the IP required to drive its business. In certain cases, such omissions can derail financing or commercial transactions and even threaten the company’s ongoing viability. IP assignment obligations should provide that all IP that a person has created or may create in connection with the services provided to the company and/or derived from the company’s proprietary information shall be the property of the company. However, certain states (including California) restrict the scope of what works can be assigned to the company by an employee. Companies should work with counsel to ensure that their assignment agreements comply with applicable state laws regarding the ownership of IP created by employees.

The agreement should also include affirmative current assignment language (e.g., “so and so hereby assigns to the company…”), as opposed to simply stating that the company shall own any IP created during the course of the services, to ensure that all IP rights are effectively assigned under the agreement and that the company will not have to obtain another assignment to secure ownership of IP created after the agreement is signed. Founder IP assignments should be executed at the time the company is formed and should also cover any IP the founder has previously created that relates to the company’s business (if the intent is to use such IP in the company’s business). Companies should also obtain standard non-disclosure agreements from all parties who may have access to any of the company’s confidential or proprietary information, including all founders and employees.

These nondisclosure agreements should contain both restrictions on disclosure of the company’s confidential information and also prohibitions on the third party’s use of the company’s confidential information for any purpose other than as contemplated in the nondisclosure agreement. Companies should enter into IP assignment and nondisclosure obligations at, or prior to, the time a given third party commences providing services to, begins employment with, and/or first receives confidential information from the company. Although such agreements can sometimes be effective retroactively, in other cases they may not. In certain states, the promise of future employment may be insufficient consideration to support the assignment by an employee of an invention that was created prior to the signing of the IP assignment agreement, and additional consideration would have to be paid to the employee to effect the IP assignment. Even where retroactive assignments are enforceable, the third party may simply not be willing to sign the agreement, or may attempt to extract a price from the company in exchange for executing the agreement. Such actions are especially likely if relations with an employee or other third party have become strained or if an investor or acquirer has required such an agreement as a condition to closing a transaction. To help avoid these issues, companies should establish simple, quick, and clear protocols that provide employees who deal with commercial counterparties access to company officers who understand and have authority to negotiate and sign such agreements.

Create a Culture of IP Awareness

The suggestions described above will be less effective if a company’s management and employees are not working attentively to implement them. Adopting simple but relevant corporate policies, publicizing them internally, enforcing them consistently, and especially training personnel on them will help increase focus on the matters described above. Increased focus will bring increased efforts and vigilance. For example, companies will benefit from training human resources managers and heads of business units regarding the importance of not allowing new employees to begin employment without signing appropriate employee agreements, training new employees regarding document retention and IT security policies, and training sales teams and other personnel who interface with vendors and commercial partners on the necessity of routine nondisclosure agreements and what information is, and is not, subject to such nondisclosure agreements. Conducting such training repeatedly and regularly will help ensure that new personnel are trained quickly and will continually help remind existing personnel of the importance of such matters.

Conclusion: A company’s IP is often a distinctively valuable and critical asset to its business and is therefore worth taking affirmative and thoughtful measures to protect. There are many basic, and often inexpensive, actions that companies can and should take to preserve, protect and enhance their IP.

While the suggestions above are by no means exhaustive, taking the steps described below will help emerging companies strengthen and secure their IP and position them to leverage their IP portfolios for growth and success.

Conclusion: A company’s IP is often a distinctively valuable and critical asset to its business and is therefore worth taking affirmative and thoughtful measures to protect. There are many basic, and often inexpensive, actions that companies can and should take to preserve, protect and enhance their IP.

While the suggestions above are by no means exhaustive, taking the steps described below will help emerging companies strengthen and secure their IP and position them to leverage their IP portfolios for growth and success.

Decide who owns the IP

Presumably one or more of the members/shareholders developed the IP. The IP is originally owned by the inventor(s)/creator(s). If the company is going to own it, the inventor(s)/creator(s) need(s) to assign it to the company. If the inventor(s)/creator(s) will continue to own it, they need to grant a license (preferably exclusive) to the company. Your IP attorney can help you with this. Just remember, you’ll have a better chance of attracting investors if ownership is clearly addressed.

Make sure you have a good non-disclosure/confidentiality agreement in place

Before you discuss your products with anyone outside your company, including prototype manufacturers, designers, independent contractor programmers, potential customers, interested investors, etc. Without one, you may unwittingly give away your IP and confidential information. And there may be nothing you can do about it. GET IN WRITING. GET IN WRITING. GET IT IN WRITING..

Make sure you own what you think you own

Maintain your chain of title and ownership. If you hire independent contractors, get a written assignment. “Work for hire” is a term of art that does not equate to an assignment, and generally has no application to the tech industry (no pun intended). Whatever you do, GET IT IN WRITING. In fact, make that your mantra: GET IT IN WRITING. Make sure your employees sign IP assignment agreements, or have such provisions in written employment agreements.

Don’t give away your IP

Make sure you have good license agreements in place if you’re going to allow others to use your IP. Make sure you understand what the agreement says, and what you’re actually allowing the other guy to do. Make sure you retain control over the IP. GET IT IN WRITING.

Don’t forget about international IP protection

If you’re going to be manufacturing overseas, or if your customers or licensees are located internationally, think about protecting your IP in those countries as well. IP protection is territorially limited and you’ll need to protect yourself on a country-by-country basis. There are exceptions to the rule, so again, be sure to retain a good IP lawyer who can help you with all of the nuances of foreign protection.

Have an exit strategy

Plan for the disposition of the IP in the event the company doesn’t work out. Will one person own it? Will more than one share ownership? With IP ownership come obligations and responsibilities.

For more information, visit the following links:

https://www.lw.com/practices/EmergingCompanies

http://www.jdsupra.com/legalnews/7-things-startups-should-know-about-88649/