Explores what IP you should be concerned with, when to consider it, and IP related to founder equity, outside investment, board membership and agreements.

1. Series 1
Intellectual Property and Your Start-Up
Company
By:
Attorney Advertising
Wayne Kennard
Josh Fox

2. 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
Wilmer Cutler Pickering Hale and Dorr LLP is a Delaware limited liability partnership. WilmerHale principal law offices: 60 State Street, Boston, Massachusetts 02109, +1 617 526 6000;
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Representative Office. This material is for general informational purposes only and does not represent our advice as to any particular set of facts; nor does it represent any undertaking to
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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