Five Intellectual Property Considerations for Startups - Part II

In Part I of this article, we introduced two of five threshold Intellectual Property (IP) questions that every startup should consider:

• Do you own all of your IP?
• How can you safely discuss your IP with others?

In this article, we introduce the remaining three considerations:

• How do you identify and protect your competitive differentiators?
• Do you have an idea or solution that is eligible for patent protection?
• What is your IP strategy?

3. How do you identify and protect your competitive differentiators?

Time and time again, many startups tout their solution as better, faster or more user friendly than their competitors’, not realizing that the competitors also make the same claims. By doing so, they sound like every other startup with what seems like a good idea, but without a tangible or functional explanation of what really makes the company or solution different. Investors, partners, advisors and potential customers have heard these high level claims of a startup’s potential competitive differentiators before, and are not easily impressed. Before a startup can provide IP protection for competitive differentiators, the startup must be able to specifically identify the functional features of their solution that differentiate them from the competition, and provide or enable such features. Once doing so, the startup then needs to consider which tools in the toolbox of IP protection (trade secret, copyright, trademark, patent, contractual) to deploy to protect its competitive differentiators.

4. Do you have an idea or solution that is eligible for patent protection?

Far too often, startups highlight their competitive differentiators and claim they are first movers or the only ones to possess an effective solution, but then claim that it is not eligible for IP protection. Those statements usually contradict each other, because unless a startup is a “me-too” company that is more of a pure execution play, the company most likely has something worthy to protect via patent protection. Many startups struggle with understanding and finding what is patent protectable. Their solution may appear to be an integration of existing building blocks known in their industry. However, many startups create an innovative functionality that did not exist before. The company should consider whether or not such functionality is patent protectable.

5. What is your IP Strategy?

Every startup should have an IP strategy that is aligned with its business goals and objectives. An IP strategy is much more than filing a patent or trademark application. An IP strategy maps out how a startup will pursue and protect its intellectual property in a manner that fits into the short and longer-term plans of the company. An IP strategy should support a company’s growth and exit strategy. An ideal IP strategy is one that creates value, reduces risk, and is realistically achievable.

The next articles in this Series will delve deeper into each of these five primary considerations.  We will also suggest best practices. Check back soon!