It is important for the founders of start-ups to devise a long-term development strategy for their new business, that should include the strategy for the implementation of protection of the intellectual property rights of the start-up as the necessary element, if not one of the first ones.

So what should the founders of a start-up know about the protection of the intellectual property rights and what do they have to take care of?

To make sure that the intellectual property rights of other persons are not being infringed.  When using and – as we will see below- registering a trademark, design, patent or company name, it is important to find out and verify in advance whether the rights of other persons would be infringed or not. It is important for any new business to consider the risks involved in potential legal disputes over the infringement of the intellectual property rights of other persons. For example, upon having come up with a trademark, one should check in the databases whether or not any identical or similar trademarks, legal entity names, etc. have been registered in the particular country where the protection for the trademark is sought. Upon starting development of technology, it is necessary to check for patents already granted for technologies of such kind. A thorough search could greatly reduce the likelihood of future disputes. Under no circumstances should you intentionally use the intellectual property of third persons – such acts will not go unnoticed and could incur sizeable expenses.

To take proper care of the registration formalities that pertain to the obtaining of protection of the intellectual property.  In addition to the trademarks, the intellectual property of a company includes designs, patents, legal entity name, trade secrets, know-how, and copyrighted works such as computer programs, databases and other objects. In other words, any tangible result of a person’s creative endeavors constitutes intellectual property. The protection of copyrighted works comes into effect as soon as a work is created, so it is important to document the fact of creation. For other intellectual property objects, such as trademarks, patents, designs, etc., legal protection will be granted only from the moment the application for registration of that object is submitted to the competent authority. Only the registration of the said objects of intellectual property can lead to safe disposal of the exclusive (proprietary) rights (under exclusive ownership of the proprietor) and enable to defend them against the third parties in a particular territory, as is the case with the trademark registration in Lithuania, the entire territory of the European Union, the United States or China. Important: a trademark is valid and protected only in the territory for which it has been registered.

Transfer of the intellectual property rights to a start-up. For the start-up company to be able to use and dispose of the exclusive property rights, arising from the intellectual property objects, on its own, it is necessary to agree on the transfer to the start-up, as the rightsholder, of all the intellectual property objects, along with any property rights therein, of the start-up founders and other persons having contributed to the development of the start-up’s activities or the creative process. It goes without saying that employment contracts of start-ups must state that all the proprietary rights, arising from the results of intellectual activity (e.g., copyrighted works, patents, trademarks, etc.), created by an employee in the performance of his/her employment or official duties, shall belong to the employer, namely the start-up, for an indefinite period of time. Persons with whom the start-up does not have employment contracts should sign the agreements on the transfer of rights.

Protection of intellectual property objects in relations with the third parties. Legal protection granted to the objects of intellectual property constitutes, inter alia, a basis for deriving financial benefits from them. The holders of exclusive rights in the objects of intellectual property, such as trademarks, patents, designs, copyrighted works, have the right to enter into licensing agreements with other persons and allow the persons to use the property in exchange for the agreed remuneration for such use. Thereby a start-up could not only become eligible to extra revenue but also increase the awareness and value of both, its business and the object of intellectual property.

Protection of the start-ups’ trade secrets and other information of value. Every business is in the possession and using in its activities the information that is specific and of critical importance to the activities of the company. Various trade secrets, know-how or other confidential information is of particular importance to start-ups, whose activities are often based on new, previously unknown, innovative ideas and various processes of implementing them. Therefore, it is highly important to ensure legal protection of such information and inform those involved in the activities of the new business, such as the employees of a company, of the obligation to protect such information, even after the termination of the employment relationships. Every company should have a list of trade secrets, that would specify valuable and sensitive information, and have the employees notified of their duty to protect it. The protection of such information should also be taken into consideration in relations with partners, by including the confidentiality clauses in contracts.

The article is written by Vilija Viešūnaitė, Attorney at law, Patent Attorney at TRINITI.