More Related Content Similar to Intellectual Property and Your Start-Up Company (20) More from WilmerHale (18) Intellectual Property and Your Start-Up Company2. Three-Part IP Series
(1) Intellectual Property and Your Start-Up Company
(2) Practical on Patents and Trade Secrets
How to’s, Dos, and Don’ts
(3) Practical on Copyrights and Trademarks
How to’s, Dos, and Don’ts
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3. What IP is of Concern?
Every start-up company has IP that must be properly
handled:
Patentable invention (commonly thought of)
Trademarks (commonly thought of)
Copyrights
Trade secrets
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4. When Should We Think About the IP?
Pre- or Post-Company Formation?
The founders should determine, as much as possible, the
following before the enterprise is formed:
– The IP by type being contributed by each of the founders: the
most important are patentable inventions, copyright material, and
trade secrets
– The IP to be developed by the enterprise and when: first product
or some future product
– When to make founder contributed IP company IP
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5. Founder Equity Contributions and IP
Founder Contributions for Equity
Money
Ideas
Potentially Registrable IP
– Patentable subject matter
– Copyright material
Trade secrets for the enterprise
What about trademarks?
Value based on “use”
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6. Outside Investment and IP
Premise: Company vision and ideas (management), and IP
(technology) drive outside investment.
Outside investment types for early-stage companies:
Friends and Family
Angels
Venture Capitalists
Control of IP:
Each of the above, if sophisticated, will not expect to have direct
control of, or any claim to, company IP.
However, none of the above will invest unless the
company owns its IP.
Some overly-aggressive investors may attempt to include a
“claw-back” on IP, a means to obtain ownership of IP, under
certain specified circumstances, such as liquidation or
dissolution of the company.
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7. Equity, Board Membership, and IP
The Certificate of Incorporation, By-laws, and amount
of stock that is distributed, along with any other
contracts agreed to by stockholders, will determine
board membership
The board controls the assets of the company, including use
and disposition of IP
Unintentional loss of board control by founders to other
stockholders would result in loss of control of company IP
Board member equity: Options to purchase common
stock for independent directors as compensation for
their services (not investor-directors or founders)
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8. Advisory Board Compensation and IP
Advisory Board compensation
Money
– Hardest for a start-up
– Impact on IP?
Equity
– Easiest for a start-up
– Type of Equity
Options to purchase common stock
– Impact on IP?
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9. Agreements
Employee agreements and IP (See Sample)
IP created and developed on company time using company
resources
– “Work for Hire” and “Assigned” to the Company
Confidentiality provisions
Third Party/Vendor agreements and IP
The company “owns” IP it paid to have developed
– “Work for Hire” and “Assigned” to the Company
Company can consider licensing back certain aspects of what
was developed with limitations
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10. Agreements
Joint Venture/Collaborative agreements and IP
Protect contributed IP
Know technology state in the area of interest of the parties
If joint ownership of developed IP, start-up must consider
relative size of its partner
– Need protections in agreement
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11. Agreements
Nondisclosure/Confidentiality agreements and IP (See
Samples)
Start-ups will use and see this type of agreement the most
Start-ups may find a potential investor reluctant to sign
2-4 pages
Key limitation is that whatever the start-up discloses under the
NDA/CA cannot be used by the recipient for its benefit without
the prior written consent of the start-up
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12. The Next Phase of the Company and IP
IP Enforcement
Expensive and avoid at all costs (if possible)
Out-Licensing IP
Revenue generation
No warranties regarding IP
Merger/Acquisition
Know the IP the company owns
Do not have equity distributed or agree to contractual
restrictions, if possible, that would allow an outside investor to
stop transaction
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13. The Next Phase of the Company and IP
Company dissolution
IP has value
Distribution according to determination at company formation
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14. Questions?
Wayne Kennard
617-526-6183
wayne.kennard@wilmerhale.com
Josh Fox
781-966-2007
joshua.fox@wilmerhale.com
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keep recipients advised of all legal developments. Prior results do not guarantee a similar outcome. © 2014 Wilmer Cutler Pickering Hale and Dorr LLP
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