What is Intellectual Property and why it matters for Startups?

What is Intellectual Property and why it matters for Startups?

Intellectual property grants your business the ability to prevent other businesses from stealing intangible properties like trademark, copyrights, and patents that your business possess. Your ability to secure and enforce these rights determines the success or failure of your business in the longer run. It also involves investors who want to see you have a plan to control your IP assets as they take this seriously. Most businesses looking to create a brand should opt for trademark registration in initial stages.

If a company uses intellectual property rights to protect its patents, copyrights, and trademarks, competitors will clone them and steal market share. An unpatented invention will be copyrighted when replicated by a competing company, making it impossible for the originator of the concept to profit from it. Patenting inventions and innovations are essential to a startup’s growth. The same applies for the copyrights if you are in into producing content or trademark for the securing the brands.

Intellectual property is a significant corporate, financial, and legal asset that are valued at more than 80% of the value of the product. Organizations with a strong IP portfolio are attractive investment opportunities for investors.

Startups typically have no substantial asset base. They may be a person with an interesting idea that hasn’t started selling or a small company that just started running. If you are a startup, it’s often this lack of assets that make it so important to recognize and protect the assets you have =- the “intellectual assets”. It is because often your intellectual assets that differentiate you, provide your competitive advantage, and drive revenue. By comparison, failure to identify and protect your intellectual assets will cause your business to fail, usually because someone more experienced sees the business thriving and takes the essence of what’s unique about it — your creativity.

Now, how to defend your intellectual assets?

It may be classified as “Intellectual Property” (IP) depending on the type of intellectual asset. The name for legally enforceable intellectual rights. There are several different types of IPs: copyright, trademarks, patents, design rights, and trade secrets are perhaps the most often mentioned.

For instance, Apple had to pay $60 million for the Chinese iPad trademark because another organization had licensed it first. Intellectual property functions “first-to-file” (whoever owns it first gets the rights). By securing the brand name in important countries, you will guarantee that nobody else gets better naming rights in those countries. Changing a brand name only in one country is a costly process, not to mention losing investment in promoting the brand. Such risk hanging over a company’s head makes it less appealing as an investment target. While there are trademark trolls, particularly in China, conflicts are mostly the result of an unfortunate coincidence. Every day there are over 20,000 trademarks registered, so the likelihood anyone may think of a similar name is very high. Protecting intellectual property in the most important countries as early as possible is critical.

There is a vast difference between all IPR in India and exercising those rights is critical to business success. Protecting brand, creativity, and product design with intellectual property rights in major markets provides a foundation for quick and comprehensive company scaling – a strong reason why investors love intellectual property rights.

Investors are keen to invest in companies with specific patents, as it allows them access to the technologies behind the patents, if not the patents themselves. That’s why acquiring patents is one of the best ways to draw investors. When a company is awarded a patent, it can use the technology behind it for 20 years without fear of being replicated by others. The patented technology is also likely to contribute to the production of new patent-based technologies.

Therefore, a proprietary invention increases a startup’s probability of obtaining more patents and the possibility of increasing its value. A company with one valuable patent will acquire much quicker, making it more appealing to investors.

Software investments that give a company an edge over incumbents and others are often important. Unless proprietary, such technology yields similar advantages to all organizations. If a rival copies the technology of the company, the hundreds of man-hours spent creating technology and the financial costs are lost.

Trademarks contain logos. Every startup logo is crucial to the success of its brands. If a company signs its logo, it can find unscrupulous competitors copying its logo and stealing customers. Through identifying the logo, a startup maintains the brand’s reputation and that anyone who wants to purchase the product or service can recognise the product’s originator.

Copyrights is also a tool for those creating content – music, written words, images, etc. Most artists providing the free music online can generate a revenue at later stage by copyrighting their music. Copyright owners can enjoy the rights over their produced work for over 60 years. This means, if the created work is intended for business then creator can leverage its benefits for long.

It is safe to conclude that although intellectual property issues are often swept aside during a business’s early stages, the early creation of a diligent and smart IP strategy is important. Startups will determine the forms of intellectual property that can affect their company and consider seeking patent, trademark, and copyright rights as appropriate.

Seema Gupta is a well-known financial and tech advisor with the abilities to keep a track and predict the market trends with the utmost accuracy. Her extensive knowledge in finance and tech is remarkable as she has worked on different financial and sectors dealing with the entire range of loans. She is also an expert in writing many finances and tech related articles and blogs, so she is a renowned finance blogger too.

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