[Guest Post] Steps to create Legally Strong Intellectual Property (IP) Based Companies

The post has been contributed by Ms. Rajalakshmi V Nesargi who specializes in Intellectual Property related matters. She holds most of her professional experience working as an IP professional in the US. She has completed LLM(Intellectual Property Law), Franklin Pierce Law Center (now University of New Hampshire), US. She relocated to India in the year 2014 and now heads Nesargi Law Group Intellectual Property Law Services, Bangalore. She may be reached at rnesargi@nesargilawgroup.com.

A company is born through the idea of a single person or a team of people who then take the concept to the product stage. The question that arises on daily basis is: how much to share with the team. Too much leads to the risk of having a competitor and or an infringer and too little brings the risk of underperformance.
To make it simple, by identifying the intangible property at an early stage startup, one is forced to give it a structure and this structure falls into one or more of the IP category: patent, trademark, trade secret, copyright or an overlap. This structure, in turn, helps in creating an IP portfolio that creates assets and which in return creates returns.
For example – Coca-Cola earlier in the days decided that their formula that gives flavor to their beverages should be kept a trade secret and hence only two people in the entire company were allowed to know the formula. These two employees are not allowed to travel together for the fear that the trade secret will be lost should they meet with death at the same time!!!
Apple develops its idea of prototypes in secret rooms and buildings where only the right stakeholders are allowed to enter. The company also follows the culture of following a hierarchy within departments where work is assigned. In this manner, no one knows the bigger picture and this helps in keeping the IP and working prototype within the company and controls damages should employees join competitors.
It helps to have some kind of writing with everybody involved with the company including directors, investors, employees, consultants, scientists, board members etc. Lack of writing can and often times gives rise to IP related fights.
A classic example would be Mark Zuckerberg, had to pay millions of dollars to ex-classmates who claimed that he stole the idea, design and other IP from them when they were all together developing the algorithm for Facebook during their Harvard school days. Had Mark Zuckerberg got into any kind of written documentation or had he applied for IP protection, he would not have faced this issue.
The best practice is to have written data on an everyday basis which helps companies in long term especially in areas where there is stiff competition such as in the areas of smartphones and other electronic items.
Every company has a log-in and log-out logbook for employees and each employee puts in detail of their daily activity including any ideas that they come up with during their work time. If there is any IP related idea brought up by employees then that is taken up for potential R&D else is kept as a trade secret. Further, the employee is given awards for such invention. This helps the company retain the employee, keep the IP with them and use it for their benefit or stop other companies from stealing it as their property.
These steps keep companies clear of legal issues while developing their team and product at an early stage.
We will discuss IP and strategy for early-stage startups in our next post.

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L&P Editorial Team

The Law & Practice Blog's editorial team.

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