Today I met with the managing director of one of the most important start-up accelerators in Buenos Aires. When I introduced myself as a lawyer working with Intellectual Property and Startups, he was surprised. “IP and Start-ups – How do they intersect, if at all?”
It was a great question. As an investor in early-stage companies, he did not immediately see the need for an IP lawyer in most startups. It was even a bit funny for me – Was I speaking about a need that never comes up?
So here was my answer to him:
- IP is not just patents. Many equal IP lawyer with patent lawyer. Patents are expensive and time-consuming – and for early-stage investors, they can be seen as a distraction. But a startup IP needs do not only revolve around patents. Trademark registration adds value when the company starts to take off and to make a name for itself in the market (it is the best legal backing for protecting domains, usernames and in general, controlling a distinctive term online). Copyright registration may be valuable for certain companies who deal with a lot of innovative content. Non-disclosure agreements may be needed for protecting some key developments or securing partnerships. Special review of standard terms and conditions may be valuable if the company works in a highly-regulated space, or in a field where IP infringement is likely.
- For successful start-ups, early-stage is a short stage. Successful startups grow quickly, and you want to consider IP aspects before it’s too late. In most countries, the span from launching the product to the public to patenting is 1 year at maximum. Moreover, some start-ups get acquired quickly and IP registrations can help with valuation and with legally structuring the transfer of the company’s intangible assets. So as a start-up, you do not want to have the IP conversation when it’s too late. Even if you end up not pursuing registrations from the beginning, it’s useful to become familiarized with patents and other IP aspects, even if the “IP protection” item does not become part of the immediate to-do list.
- Patents are especially common in some fields of technology: In line with my research at Stanford , patents are most common in some areas for start-ups, such as biotech, medical devices and hardware. In such fields, patent portfolios are especially relevant and investors are frequently expecting them. But the need for patents is not apparent in software. And in countries like Argentina, where it is my impression that the vast majority of startups are software-oriented, or are local implementations of successful business models from abroad, then patents do not stand out that much. But if the startup is in one of these fields (biotech, medical or hardware), then as a rule of thumb, it is valuable to consider IP aspects early on
And he added:
- Sometimes IP lawyers are needed early on to avoid infringement. Many companies, such as those in gaming, use content or characters for inspirations that may be considered “copies” of other’s works. In those cases, a professional evaluation by an IP lawyer is fundamental to minimize legal risks and avoid future headaches that distract the company founders.
So I hoped these answers helped to clarify what an IP lawyer can do for startups.
As he and I spoke, I thought of the Y-Combinator legend: “Make something people want”. While IP may not be the first product that all start-ups want, IP can add value to many early-stage companies, and for some of them, IP counsel will be just vital to capture the value of their innovations or avoid infringement.