Intellectual property is often most critical asset for an early-stage company. Developing a strong, cost-effective IP strategy and risk management strategy to avoid costly IP litigation can make the difference in a company’s survival. Investors or potential acquisition entities are well-versed in the importance of a strong intellectual property portfolio and strategy, and typically value early-stage companies on the strength of their IP rights. It is essential to protect intellectual property at early stages in the company’s life cycle in order for any startup to be successful. However, many early stage companies face the dilemma of how to finance intellectual property on a tight budget, while also maximizing their IP protection and being diligent to avoid third party intellectual property. This article will describe some basic, cost-effective practices for early stage companies to protect essential intellectual property assets and develop strategies avoid IP disputes.

IP Agreements

Individuals in early-stage companies often informally collaborate when discussing a company’s direction. At the early stages, it is often the case that there are no written agreements among the individuals, some of which are employed by third party entities and may have obligations to assign their inventions or improvements to their current third party employer. Even founders or employees of the company may have different understandings over IP ownership and assignment obligations during the start-up phase. Without any written agreements in place, a company’s inventions, improvements or know-how can end up being owned, or partially owned, by individuals or a separate company.