As a corporate lawyer advising start-ups, it almost goes without saying that locking down ownership of intellectual property is a threshold issue for start-ups and emerging businesses.
An insightful and very practical article by Womble Carlyle's Jack Hicks and Stephen Shaw, Key IP Questions for Emerging Businesses got me thinking about the topic and how important it is to answer some very basic questions about IP ownership before a company gets too far along in its development. As the authors note in the article, the much-publicized Winklevoss case against Facebook and founder Mark Zuckerberg, which inspired the movie The Social Network, offers a cautionary tale, even though most observers would say that Facebook won that particular war.
So how can a founder and a start-up's executives head off costly fights about IP? The first step is to be very clear about where your idea came from in the first place. Jack and Stephen note that in those early days of a new venture significant issues can arise as to who is responsible for conceiving a particular idea, product, feature, or design. Here is their advice:
"Founders should identify early on who specifically is involved in conceiving the idea and should arrange for those parties to be involved in the company from either an equity position or to have made assignment of all rights to another founder or member. Essentially you want to be able to rule out the issue of having someone who was at the table early but has since departed coming back later and claiming that your 'good idea' was actually their idea."
Once you've clarified where the idea came from, it's time to turn to an experienced IP lawyer to ensure that you have all the legal documents in place that are necessary to protect the company. The authors ask:
"Do you have the appropriate assignment or transfer documents in place to ensure that either the appropriate founders or the company itself (or a holding company if advisable) is the record owner of all title in the IP? Or does the company have an exclusive license from a third-party, which may be necessary to do what it wants?"
Once you've answered the key questions asked above, your lawyer can proceed with some of the practical steps necessary to ensure IP protection relating to patents, trademarks, and/or copyrights.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
