Startup intellectual property

Why protection of Intellectual Property rights is crucial for startups?

Startups, while starting the business and entering into the markets with the products or services, may find the protection of their Intellectual Property (IP) rights costly, and thereby, often willing to avoid or keep such costs down. Such position may be often short-sighted and may involve certain risks, if not paying attention to IP protection. For instance, the startups, like well-known businesses, may find themselves in trouble while learning about their copied or imitated products or even learning about its IP right protection by a competitor. It should be mentioned that protection of IP right is territorial and mainly the ’first-to-file’ principle exists, meaning that the first person filing has the right over that IP on that territory. So, even if willing to avoid such costs at the beginning of the business (e.g. during the development stage), the protection of the IP rights might be crucial at some point of time, especially as you enter into the market and make your IP public. There will always be those who seek to get around your rights. At the heart of each startup is usually a specific technology and attractive name or logo, which may attract the competitors - unprotected IP right (e.g. patent, design, trademark) is an easy ’catch’ for the competitors who can copy it and steal a market share. An unprotected IP right, when copied and protected by a competitor, can make the use of such right by its originator difficult, if even not possible at all, while at the end you may find yourself in a litigation process (+ possible damage claims) for the infringement of the IP right you have actually designed and developed on your own. So, unprotected IP right may result in kicking you out from the market, not to mention the other possible described harms it may bring.

On the contrary, the protected IP right is a useful tool! As soon as registered, you get the exclusive right of your IP right on that territory, allowing you to be the only one to use it on that territory (e.g. manufacture, sell, etc.), and thereby, having a privileged position on that market. The protected IP right also gives you the main legal ’weapon’ to defend yourself against any copying or other unauthorized use of your protected IP right on that territory. Moreover, the protected IP right increases the value of your business, is likely to attract investors and provides guarantees for your partners by indicating that their investments and interests are secured. Hence, protection of your IP rights is crucial to the success of a startup.

Therefore, it is relevant to identify your IP assets and protect your IP right as soon as possible in your potential markets! Late studies within the European Union show that brand-oriented companies are 40% more profitable than others. Something to keep in mind!