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Wright Lindsey Jennings

startups and intellectual property laws


startups and intellectual property laws

Technology is the driver of development in many different industries—financial, medical, retail. It makes sense then that a lot of the entrepreneurs I see these days are CEOs and founders of tech/software-related companies.  These companies develop all kinds of interesting products, like platforms for allowing traditionally “unbankable” consumers apply for loans and mortgages, programs built for integrating voice control into everyday life, and systems for making supply chain processes more efficient.  An all-too-common problem I see with these innovators is the failure to take very basic steps to protect their work product, such as (a) using copyrights to protect software code; (b) using patents to protect business methods; and (c) making sure that they have the proper agreements for the business to own the IP rights (and not the employees or contractors they might hire):

  • Copyrights are useful for protecting the specific expression of the software code itself. This protects against your competitors or other third parties taking your software, directly copying the code, and pawning it off as their own. It also protects you from unauthorized downloading or selling of your own program.  Copyright applications are fairly inexpensive, so there’s really no good reason to forego applying for a copyright on your code.   While the copyright protection extends to the expression of your software (the actual text of the code itself), a patent can be used to protect the functional method carried about by your program (i.e. “steps A, B, C and D”). This means that patent infringement claims can extend to competitors who perform your steps even if they don’t use the exact text of the code of your program.  Design patent protection also is available for user interfaces, giving you protection on the way your user interface looks.
  • While it’s important to seek and obtain copyright registrations and patents on your software, these IP rights will not do any good if they aren’t owned by your company, and it’s important that you have the proper agreements in place to make sure that your business owns the IP in works that the people you hire make or invent. In copyright, for example, the initial author (and therefore owner if no transfer has occurred) of a copyright is typically the person who actually creates the work.  One exception is the “work made for hire” doctrine, which means that in some situations the hiring party (business, for example) is the author of the work.  The big problem is that the employee/independent contractor distinction can have dire consequences in the work made for hire scenario—as independent contractors will likely be the author (and therefore owner) of the copyrights in the works they create (whereas employees’ works will be owned by the business). For this reason, I encourage the use of written agreements with anyone you hire (employee or independent contractor) to absolutely make sure you own the copyrights.

Intellectual property is a vital asset to any business, as IP can provide your business exclusive rights to produce or provide the protected process or products.  For a new business looking to grow, IP is an important factor in achieving that goal.