By: Srinidhi Akkur
Intellectual property is the lifeblood of any tech start-up. Yet, it is often overlooked among the endless challenges emerging start-ups face. Below are three common mistakes tech start-ups make and why you should avoid them.
1. Overlooking the Importance of Trademarking Your Start-Up’s Name
Naming a start-up is like naming a child. It is a uniquely personal experience that requires careful consideration. The name you choose for your start-up has lasting implications for your brand’s identity and can either make or break your business.
Given the importance of your start-up’s name, it is not enough to simply register the name federally (Corporations Canada), provincially, or territorially. Registration alone will not stop infringement by others. It is recommended that you additionally register the name as a trademark.
The benefits of obtaining trademark registration are immeasurable. The registration serves as proof of ownership and provides you with exclusive Canada-wide rights for 15 years (subject to indefinite renewal). Apart from shielding against imitation and misuse, acquiring trademark registration protects your trademark’s value and provides you with licencing opportunities to fully realize its commercial potential.
2. Failing to Understand the Fundamentals of Copyright Law
Like many other businesses, you may have hired a web designer to create your start-up’s website from scratch. Since you have paid for the web designer’s services, you likely think that you are the owner of the website. This common assumption, however, is incorrect. Merely paying for the website does not mean you have copyright in it.
According to Canada’s Copyright Act, the person who created a work is the author of the work, and is consequently the first owner of copyright in the work. The only exception is when an author creates a work during the course of employment. In that scenario, the employer would be the first owner of copyright.
Suppose you have hired a web designer as an independent contractor to design your website. The web designer would have copyright in your website. You would not be able to claim the website as one of your assets unless you enter into a written agreement to transfer copyright ownership. As a rule of thumb when working with independent contractors, always enter into a written agreement assigning all rights in their work to you.
3. Neglecting to Acquire Patents Until It Is Too Late
The patent process can be costly and time-consuming, and for cash-strapped tech start-ups, it may be the least of their concerns. The value of patents, however, cannot be overstated. Patents represent the assets of a company to potential investors, and when investors undertake due diligence, they will want to know whether your start-up’s intellectual property is or can be protected by patents.
A number of elements factor into a start-up’s decision to patent an invention, including, most importantly, whether it is eligible to be patented. According to Canada’s Patent Act, patentable inventions must be new, useful and non-obvious.
Aside from the issue of patent eligibility, the timing of your patent application is crucial. In Canada and the United States, once you have disclosed your invention to the public, you are granted a one-year grace period to file a patent application. Europe, in contrast, offers no grace period—once you have publicly disclosed your invention, it can no longer be patented.
The bottom line is this: patents can be immensely valuable, but complicated to acquire, so it advisable to start thinking about them within the context of your IP strategy sooner rather than later.
“Fortune favours the prepared mind,” Louis Pasteur notably said. When it comes to intellectual property, a proactive approach is essential for tech start-ups. By conducting your IP due diligence before the investor does, you can better position your start-up for success.