Why Is Intellectual Property Important for my Startup?
George Raptis
At the early stages of operating your startup, it can be easy to become overwhelmed by all the requirements involved in the process. However, business owners should not overlook the importance of their business’ intellectual property (IP). As a business owner, your IP can become one of your most valuable assets. For this reason, this article outlines:
- the most common IP within startups;
- three reasons why IP is valuable for startups; and
- ways that you can further protect your business’ IP.
Common IP Within Startups
Of all the different types of IP available to a business, the most common types within startups are:
- trade marks;
- copyright; and
- patents.
Trade Marks
A trade mark protects a recognisable mark or brand element of a business by granting the business owner the exclusive right to use, license and sell that mark. Your startup might register a trade mark to protect your business name or logo from competitors copying or misusing it.
Copyright
Copyright prevents your original material from another person copying to communicating it without your permission to do so. Your startup might produce original works, such as graphic designs or photographs. Consequently, copyright protection gives you the option of taking legal action in the instance where another person infringes on your copyright.
Patents
Patents typically protect inventions from another person or business making, using or selling your invention. Startups who invent computer software or develop business methods can seek patent protection over these innovations.
Why Is IP Valuable for Startups?
Nowadays, it is important that startups consider forming an IP strategy in order to ensure the business steadily grows in the long-term. The value of protecting IP can be narrowed down to three main reasons, as set out below.
Build Your Brand
For a startup, building a sturdy business reputation is vital to long-term success in the market. A startup’s identifiable features, like its name or logo, are closely associated with the goodwill and the quality of its goods and services that the business offers. You can seek to protect these identifiable features of your startup by a registered trade mark. This ensures competitors cannot misuse your startup’s brand and potentially ruin your business reputation without facing legal action. In this sense, IP can play an essential role in helping your startup’s brand stand out from competitors.
Added Value to Your Startup
As previously mentioned, IP can become one of your startup’s most valuable assets in the long-term. When determining the actual value of your business’ IP, the key benefits associated with the IP are taken into consideration.
For example, the goodwill of a business, which includes customer loyalty and business reputation, is often indicated by the value of a trade mark. The value of IP is generally considered to be equal to the amount that a purchaser would pay for that asset at market value. If you decide to later sell your startup, the value of your IP can be included in the selling cost.
Although selling your IP can generate instant income for your business and assist with its cash flow in the long-term, you can also licence your IP to provide short-term benefits. You can issue licences for trade marks, copyright and patents. This gives another person permission to use the IP.
For example, your startup could issue a copyright licence to another business, specifying that they can use a graphic design on their business website. Through licencing IP, a startup has the potential to generate income from the multiple payouts over the licencing period.
IP Protection
IP also ensures that you have the right to pursue legal action in the instance where someone infringes your IP rights. There are many instances where competitors could take advantage of your startup’s operation.
For example, a competitor could:
- copy a new product that your startup is selling; or
- reproduce a design your business has copyrighted.
Having IP protection means that your startup can prevent other businesses from replicating what makes your startup unique.
How Do I Protect My Startup’s IP?
It is important to first identify the IP within your startup business. You can do this through an IP audit, which is a useful way of keeping track of the IP within your startup. Whether a trade mark is registered or not will determine the level of protection it is afforded. Therefore, it is important to note how your IP is currently protected to determine whether additional steps need to be taken to strengthen your IP protection. Once you have determined the legal status of the IP, you should then pursue different protections to strengthen your exclusive rights to the property. This could include registering your trade mark or applying for a standard patent.
Key Takeaways
IP can become one of the most valuable assets of a startup. Not only can IP help build your business’ brand, but it can also protect your brand from being misused by competitors and generate income for your business. If you require more trade mark legal assistance for your startup, contact our experienced trade mark lawyers on 1300 657 423 or fill out the form on this page.
Frequently Asked Questions
It is best to protect your startup’s IP earlier in its operation rather than later, to ensure adequate protections are in place from the outset. This will provide sturdy foundations for your startup’s growth.
The value of your IP depends on how strong your brand is. Ultimately, the value of IP is largely dependent on the amount that a purchaser would pay for that asset at market value.
The costs associated with IP protection will depend on the type of protection being sought. Trademark and patent registration can cost between $130-$600, not including fees for renewal.