A tech startup’s value lies largely in its intellectual property (IP). The first legal steps an entrepreneur can take when establishing a company or their idea are crucial in protecting the ownership of their IP.
Here are the basics for protecting your ideas when getting your startup off the ground:
Agreements with employees
“The critical issue is ownership and the [intellectual property] others are creating for you. Make sure you own it,” said Silvia de Sousa, a lawyer at Thompson Dorfman Sweatman LLP in Winnipeg who specializes in intellectual property and technology law.
“Most startups are relying on others to work with them. Make sure you own your own employee’s work and contractor’s work.”
De Sousa lectures at the University of Manitoba’s Faculty of Law on intellectual property and licensing matters and is a past chair of the National Intellectual Property Section of the Canadian Bar Association. She is also a member of the Technology and Intellectual Property Law Section of the Manitoba Bar Association.
When working with others, de Sousa recommends having clearly spelled out agreements with each employee or contractor to avoid legal issues down the line.
Protecting your ideas may involve setting up non-disclosure agreements (NDAs) with collaborators. While meeting other entrepreneurs in incubators or at networking events, startup founders are often participating in idea sharing with like-minded people. An NDA informs participants that they’re under a legal obligation not to share company secrets. Taking reasonable precautions through NDAs can help secure your ideas in a legal framework.
Andrew Buck, an e-commerce lawyer with Pitblado Law in Winnipeg, reminds entrepreneurs that their ideas are their business.
“Make sure people know what they can and can’t do with your ideas through a confidentiality agreement or non-disclosure agreement – it’s not expensive to do so,” he said.
Buck regularly presents and publishes on IP, social media and privacy law. He compares a startup protecting their ideas to a bank using a vault to protect their assets.
“The equivalent of that in tech is intellectual property assignments, waivers or confidentiality agreements. Ideas are your key assets as a tech or creative company. Protect your key assets,” he said.
Organizing your company
Entrepreneurs also need to structure their company from the outset. Determining whether you want to incorporate, establish a partnership, a joint venture or a sole proprietorship are also critical early steps.
“Choose a form of organization and set it up. Most startups incorporate,” said de Sousa.
“Organizing your company will involve filing incorporation documents, setting up by-laws, issuing shares, and documentation of IP,” said Buck.
Forbes recommends using clear language and graphics to support a digestible company procedural map:
“Procedures will only be read and followed if they are short. Lengthy procedures are hard to digest while shorter procedures with short, tight explanations, bullet points, headings, images, and even the checklists, graphics, and flow diagrams mentioned earlier are better than dense and wordy documents.” – Forbes.com
Use the Canada Business website here for steps on how to incorporate a business in Manitoba.
Canadian Intellectual Property Office
Both De Sousa and Buck recommend getting legal advice directly from lawyers. They also recommend the Canadian Intellectual Property Office (CIPO) as a resource.
“Getting started up with a limited budget can constrain your ability to obtain legal advice, but the CIPO website is easy to navigate,” said Buck.
The CIPO website is made available through the Government of Canada and exists to help entrepreneurs learn the basics of IP, including how to identify the type of IP you have and how to protect it. It also has information on the ways to protect your brand or innovation and help with the process of submitting applications for a patent, a trademark or a copyright.
Document, document, document
According to de Sousa and Buck, one of the most common mistakes entrepreneurs make when starting a company is a failure to document.
“Document everything. Most issues can be hard to foresee but legal advice can help with this. We can predict and be proactive rather than reactive,” said Buck.
De Sousa also recommends entrepreneurs take advantage of government programs and funding to help pay for IP protection.
“Startups [founders] should know that government programs exist with access to funds to pay for IP protection. Tap into those for funding,” she said.
Contact the CIPO office for information on everything available to entrepreneurs new to the process.
For Buck, simply being aware of the issues around IP and the law is a good start.
“Turn your mind to it – the most important thing is to be aware of the issues, and make sure that flags are raised. Do your research and contact your lawyer.”