Intro

As a founder, one of the most valuable assets you possess is your intellectual property: your ideas, technology, inventions, business practices, and branding. Early on, this is often all a startup really has, and it’s often the basis of your pitch to potential investors.

Understandably, smart founders want the maximum level of protection for their IP. However, not all IP can be protected under the same methods, and not all IP protection is right for every founder. The best strategy for IP protection is usually choosing the right mix of protections that fits your business. Patents, Copyrights, Trademarks, Trade Secrets, and Mask Works each have their own distinct advantages and tradeoffs.

Patents

Patents cover useful and novel inventions, including processes; machines; manufactured goods; chemical, biological and other compositions of matter; and improvements to other patentable subjects.

Pros

• Strong exclusive rights for 20 years, creating a legal monopoly over competitors.
• Attractive to investors.
• Can be licensed or sold.

Cons

• Expensive to file and maintain.
• Filing process is slow, often taking years.
• Enforcement can be costly as it takes the form of litigation.
• Requires full public disclosure of the invention.

When is a Patent the Correct Choice?

• Patents are best for startups that have a novel, difficult-to-replicate invention or inventions, in markets that care about patents.

Copyright

Copyrights attach to original works of intellectual and artistic expression in various categories, including but not limited to: books/magazines; photographs; film; music; software; drawings; graphic designs; business plans and charts websites; architecture; etc.

Pros

• Copyright arises automatically when the subject matter is fixed in a tangible form.
• Inexpensive, registration is relatively cheap and strengthens enforcement (allowing for litigation to result in damages and proper enforcement).
• Protects a wide range of potential assets.

Cons

• Copyright only protects expression not ideas or functionality.
• Limited ability to protect “functional” IP.
• Enforcement still requires litigation.
• Does not protect branding materials.

When is Copyright the Correct Choice?

• Copyright is best for startups that generate and centralize significant amounts of code, content, media, or design assets.

Trademarks

Trademarks are used to protect, distinguish, and identify brands, goods, and services in their marketplace.

Pros

• Protects brand names, logos, taglines, and in some cases trade dress of products, services, and businesses.
• Registration grants nationwide rights not limited by time.
• Registration costs are modest.

Cons

• Requires consistent use and policing of the mark.
• Only protects branding.
• Rebranding may be required in crowded marketplaces.

When is a Trademark the Correct Choice?

Trademarks are best for startups that rely on brand differentiation and customer trust.

Trade Secrets

Trade secrets broadly protect business, financial, and technical information (including but not limited to: client lists, marketing plans, production processes, chemical formulae, and software source code) so long as it meets the following requirements: One, that the information is confidential; two, the information grants economic value or advantage; and three, the owner of the information makes efforts to preserve confidentiality.

Pros

• Trade secrets cover a broad range of subject matter.
• Trade secrets are inexpensive as they have no registration costs; protection instead is derived from NDAs, access controls, etc.
• Avoids public disclosure.
• Trade secrets can last indefinitely, so long as the information remains secret.

Cons

• No protection remains if another entity independently develops or reverse-engineers the IP.
• Requires you as the founder to maintain confidentiality.
• More difficult to use as visible collateral with investors compared to registered IP.
• Enforcement often requires litigation.

When is a Trade Secret the Correct Choice?

Trade secrets are best for startups that hold their value in know-how, data, or processes that can reliably be kept confidential.

Mask Works

Mask works protect collections of templates used to create electronic circuits on semiconductor chips. The protection is limited to this specific area of invention.

Pros

• Industry specific and bespoke to the needs of semiconductor producers.
• Grants similar protections as patents or copyright, allowing for public use with stronger protections.

Cons

• Narrow scope. Limited only to this particular area, and the layout of the chips, not higher-level concepts or manufacturing processes.
• Requires litigation and other legal mechanisms to enforce.
• Still allows for some reverse engineering.

When is a Mask Work the Correct Choice?

Mask works are best for startups that design custom semiconductor chips and layouts.

Founder Takeaway

A startup often begins as a solitary idea. Your IP is your most valuable asset early in your startup’s life cycle. How you protect your IP ownership is a crucial decision, and IP protection is not a one-size-fits-all strategy. As a founder, picking and choosing what IP protections fit you, your IP, and your business can help ground and protect you in competitive marketplaces.