Protecting Intellectual Property and Miscellaneous Other Considerations
Make sure EVERYONE (including all founders) is working under an employment agreement or a work-for-hire agreement that contains strong IP protection, often in the form of confidentiality and invention assignment provisions. This is probably the number one mistake we see with startups. Many entrepreneurs fail to realize that they are jeopardizing the value of their ultimate creation by working informally with friends, advisors, or consultants and only learn of their mistake too late when VC’s balk at the idea of investing in a company that does not have clean IP stacks.
Certain special situations may also necessitate a mutual nondisclosure agreement. These are generally appropriate for meeting with potential investors, potential strategic partners or potential service providers who have not yet joined the company and signed a full blown confidential information and invention assignment agreement. This will enable you to have fairly high-level discussions with third parties and share high level information about your company’s business plan and strategic direction.
If your company name, or the name you choose for your goods or services, will have any value to your business, you should consider federally registering them (including any logos you’ve designed) with the United States Patent and Trademark Office. You will also want to consider international protection of your trademark in any territories in which you sell (do business), manufacture or in which you fear piracy.
You need to ensure that you are complying with all business license and permit requirements. You should also review compliance with labor standards (from posting notices to employment policies regarding social media) as well as ADA requirements, inter alia.
Finally, your website should have proper copyright notices and should have both terms of service and a privacy policy, if applicable. These together serve two important functions: (1) they limit your company from unnecessary legal liability arising from user claims; and (2) document and demonstrate compliance with state and federal laws including “COPPA – the Children’s Online Privacy Protection Act of 1998.” These policies also delineate how your company collects and uses information collected through your website and other social media interactions—indeed, certain jurisdictions may have specific requirements regarding the disclosure of what information is collected and how it is used, e.g., California’s “Shine the Light” law.
This concludes our series “Starting Your Startup – Selected Legal Considerations.” There are, of course, countless other legal issues that arise during the course of a startup’s formation; however, we hope that these posts serve as a good starting point.