Startup Law

Intellectual property tips for startups

Too often, startup founders neglect intellectual property law, which can lead to big problems further down the road.

Here are some intellectual property law tips for startups from Madgwicks Intellectual Property expert Dudley Kneller.

1. Remember: a registered business name is NOT intellectual property

A common mistake made by founders is they start their business, incorporate it with ASIC and register a business name, then assume they are then afforded some IP protection.

“Unfortunately that’s not the case,” Kneller says.

“When you obtain a registered business name you’re only obtaining a right to trade under that name and to use that name in the state you registered it in. It doesn’t give you any IP rights at all.”

2. Always check the fine print before entering a hackathon

With an increasing number of corporates turning to hackathons as a way to improve their businesses, it’s important startup founders are aware of the terms before entering any hackathon or similar competition.

“We’ve seen an increasing number of larger corporates sponsoring events, encouraging startups to attend and to work on developing new ideas in innovation, new strategies, relating to their business,” Kneller says.

“What we worryingly see is a lot of those events encourage businesses to sign waivers to enter the competition and by doing that they agree to assign IP rights to any ideas they create, to the company sponsoring the event.”

3. Don’t forget to do a trademark search

Trademarks are the number one intellectual property right that allows founders to start building goodwill and brand awareness in their businesses, Kneller says. So before you begin building that branding head over to IP Australia and ensure it isn’t already taken. 

Kneller tells founders to pick something unique and unusual to have the best chance of it being approved by regulators.

“To grant exclusivity, IP Australia will look at the applications and think - is this a mark that we’re happy to prevent other people from using? Is it commonly used? Is it original and distinct enough that it’s not going to prevent other people from using it.”

4. Employees are different to contractors

The legal relationship your workers have to with your business can have serious implications when it comes to intellectual property. So it’s important to understand the capacity in which you are working with people, Kneller says.

“Are they employees, are they performing work in the course of their employment? If so then you’re likely to have that IP come back to you as the owner of the company,” he says.

“If they’re contractors or third parties, unless you’ve shored up that relationship with a services agreement then you’re going to attract some risk.”

5. Get a non-disclosure agreement in place before disclosing important information about your business

The only way to truly protect confidential information is by keeping it to yourself, Kneller says.

“At the end of the day the rule with NDAs is if you can have a conversation in very high level terms, without disclosing information that you view as confidential, proprietary and important, then great have that conversation,” he says.

“As soon as you start to disclose that information, then you should do so under the protection of an NDA.

“They can be difficult to enforce at times. So the number one rule is if you want the information to remain confidential, then don’t tell anyone.”