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Dear Kinglsey Napley,

I’m a founder of an early stage tech start-up and things have been going well so far. Having deferred certain matters whilst bootstrapping and starting a family, i’m starting to worry about whether the IP rights in the software platform we’ve spent so long creating are protected. What should I be thinking of in terms of protection – is it too late and who owns the IP? I also have a friend whose been helping me to develop some code. Do they have any IP rights in our code?

Yours sincerely,

Copycat Issues


Dear Copycat Issues,

It’s not too late to take steps to protect your IP. Your IP is your most valuable asset, so it’s great that you’re thinking about how best to look after it. The first thing to do is to carry out a ‘stock check’ of the IP you have created. Key types of IP include:

  1. Copyright – this covers new/original literary and artistic works and includes things like the code in your software platform and the designs for the look and feel of your platform. The great thing with copyright is that you don’t have to do anything to register it, as original works are automatically protected by copyright. Just FYI, copyright can only protect the expression of something, not the idea itself. Copyright therefore prevents a copycat from copying the specific code used by your platform, but not from independently developing code which produces the same functionality as your platform.

 

  1. Design rights – design rights exist in, and protect, new/original designs of the appearance of a functional product, such as the new texture and material of the strap of a wearable device (think Apple’s new titanium design). While unregistered design rights, much like copyright, arise automatically on creation, you will get better protection by registering an original design with the Intellectual Property Office (IPO). Instead of protection ending when your children are teenagers (10-15 years’ protection, as would be the case with an unregistered design right), you’ll have a monopoly rights over use of your registered designs at least until your kids finish university (25 years).

 

  1. Trade marks – a trademark is probably the most well-known type of IP and protects names and symbols used by brand owners to differentiate their goods/services from those of others. However, you have to register trademarks with the IPO to gain protection. The hassle of going through the registration process is worth it as, if your application is successful, no other person may use an identical, or similar, brand signifier (e.g. a name or logo) to yours in the same field as the goods/services you’ve developed.

 

Your next step should be a check on who actually owns the IP used by your start-up. Is it you (in your capacity as a founder) or your company? As the default position is that IP vests in the person who created it, as a founder you may actually own your company’s IP, rather than the company itself. As a lot of the value of a tech start-up arises from its IP, if you haven’t already, you should seriously think about assigning to the business ownership of all the IP you’ve created. This can be done by you entering into a deed of assignment with your company. If you seek investment in the future, your investors are likely to insist that your company holds of all its IP, so stay a step ahead of the game and keep those investors sweet before you’ve even met them.

Finally, regarding the code your friend developed, bear in mind what we mentioned above regarding the default ownership position in respect of IP. If you don’t have a legally binding agreement with your friend which states otherwise, it’s likely that they still own the copyright in the code that they developed. If that’s the case, we appreciate it will be awkward, but you should ask your friend to sign a deed of assignment transferring ownership of the code to your start-up. And please, the next time you benefit from the creative talents of a friend (or anyone else), get them to sign a consultancy agreement with your business  which clearly states that all of the IP they create is automatically assigned to the business on creation!

Your sincerely,

Kingsley Napley

Contact: level39@kinsleynapley.co.uk

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