One of the main, and sometimes only, assets of a new business, and particularly a startup, is its intellectual property: code, algorithms, design, brand, domain, and so on. Nevertheless, many new companies postpone dealing with intellectual property issues until a later stage, with the perception that it is a "technical detail" or something that is only handled before fundraising or an exit.
In practice, it is precisely in the early stages of the business that the correct legal structuring of intellectual property is critical. Proper steps in protecting intellectual property are important, as they ensure that all products belong to the company, enable it to build a protected brand, and significantly reduce the risk of a third party (former employee, freelancer, business partner, or competitor) claiming ownership of them.
To properly regulate the business's intellectual property, the following steps are required:
- Explicit clarification of ownership of deliverables and confidentiality. To ensure that the products and business ideas generated during the company's operations are exclusively owned by the company, clear and explicit contractual arrangements are required, including in founder agreements, employment agreements, and freelancer agreements. These agreements must include explicit provisions stating that all creations and business ideas stemming from the activity for the company belong entirely to the company, and that no employee or freelancer has an independent right to use them after the termination of the engagement. Furthermore, the agreements must include confidentiality clauses.
- Working Correctly with Open Source and Development Tools - Using open source is an important and fast tool for product development, but it has legal implications. Careless integration of open source components can lead to licensing liabilities that restrict the company. Therefore, in the initial stages, it's advisable to:
- Establish clear rules for using open source (which licenses are allowed to be combined and which are not);
- Document significant use of open source components.;
- Avoid integrating open-source code components into company products without proper legal review.
3. Brand name, logo, and domain protection – Prior to launching the product on a wide scale, it is advisable to check whether the brand name you have chosen is available in terms of trademarks and domains, and that there is no similar use that could create confusion or legal exposure. It is important to emphasize the establishment of guidelines for brand usage – for employees, marketers, and collaborations. In addition, the relevant trademark, if it exists (logo), should be registered.
4. Defining clear rules for the use of information and files within the company – Protecting intellectual property isn't just about signing agreements – it also requires organizational order and internal procedures. It is recommended to establish:
- Using code management systems (like Git) with permissions and controlled access;
- Storing business files, designs, contracts, and deliverables on the company's centralized systems – not on personal computers or private drives;
- Creating clear rules for sharing information with suppliers, consultants, and investors, including after signing appropriate agreements with them.
5. Non-Disclosure Agreements (NDAs) with external parties In the early stages, many companies share their ideas or prototypes with external parties – potential investors, early customers, suppliers, or consultants. Well-drafted confidentiality agreements allow for clear definition of: what constitutes confidential information; who may receive it; how it may be used; what the consequences are in case of leakage or unauthorized use, and so on.
6. Organized Documentation - "IP Binder" for Due Diligence From the perspective of investors and strategic partners, it is important that the company's intellectual property is properly regulated and well-documented, including in the founders' agreement, employment agreements with clear rights and obligations, trademark registrations, and so on.
7. Adapting arrangements to the business model and future planning There is no one-size-fits-all solution for every company. A tech startup, a design studio, a content company, or an online platform – each has a different intellectual property structure, different needs, and a different scope of exposure. Therefore, it is important that legal arrangements in the field of intellectual property are tailored to the specific needs of each company.
Taking the right steps to protect intellectual property early on can prevent future disputes and save significant legal costs – and most importantly, ensure that the company actually holds the rights to the products it develops, rights that can be worth a great deal.
Our firm assists founders and new companies from the initial stages of product development and incorporation, helping them build a proper and complete legal framework for intellectual property – from employment and freelance agreements, through confidentiality agreements, to trademark registration and preparation for due diligence. We would be happy to help you ensure that your new business's intellectual property is legally protected and regulated, so you can focus on what truly matters – growing the company.