India is seeing a huge surge in startups and new ventures since the last few years. Most, if not all, start-ups are driven by one or more innovative ideas, their ability to scale operations, and the lucrative idea of fast growth rates. The success of these small and micro-sized companies is very closely linked to their innovative ideas and it has become extremely important for these companies to protect their Intellectual Property (IP)to avoid competition. Owing the large amount of exposure their ideas see, it is imperative that startups devise foolproof IP management strategies. However, given the nascent nature of startups and their lack of exposure to IP laws, a lot of questions and suggestions have been sought by these companies.

In this short article, I will try to share a few best practices on IP management for technology Startups.

The changing face of globalization and economic fluctuation, aggressive competition, lack of fool-proof data security mechanisms, and emerging technologies are forcing companies to emphasize on faster creativity and the need for incremental innovation. Intellectual Property is a hot topic in most start-up circles, which indicates that firms have realized the importance of intangible assets (such as patents, trademarks etc.), which is forcing them to actively manage their intellectual property (IP) portfolio. With larger organizations, IP was always regarded as a key driver for building and sustaining competitive advantage in a globally competitive market.

However, there are multiple questions/queries that startups usually have on IP management. What are the IP activities that need to be done, when do they start investing on IP management and why, what are the returns, how will investors view the additional costs involved, how can IP activities be executed and with whom should they partner, IP management is expensive – can this be done after commercialization? These are just a few questions around IP management.

Let us try to answer these questions. Technology startups should invest on strategic IP management, although, they are not expected to follow industry prevalent practices on IP management. Every company or startup has its own business strategyto grow, create differentiators in market etc. Therefore, IP management strategy needs to be uniquely defined for every company and the IP strategy should align to the business strategy of the company. One can follow best practices, but the implementation should be customized for a Company. Startups need to know what is important for them on IP management. Increasing the valuation of the company, building a business case for generating funds from investors, protecting the technology and approach, thereby creating long term differentiators, creating a defensive strategy to fight future litigations/oppositions, minimize IP risk and ensure IP compliance, or enforcing IP rights against infringers etc. are some of the high level benefits. Therefore, the IP strategy and approach should be largely dependent on what the company wants to achieve. Further, the IP plan and execution steps should also be tuned to achieve the identified objectives.

The key drivers for niche start-ups, hence, should be IP protection and IP risk and compliance management and they should invest on creating a strategy around these drivers. However, one of the most important factors that needs to be taken into consideration is the timelines involved – when does one start investing on IP management? This depends on the type of product/service, the market maturity of the offering, the competition and the general IP landscape of competitors, the IP litigation space, among others. Newly established setups should understand the overall IP landscape of the technology and market area; identify IP risks and opportunities before making the IP plan and approach.

IP protection should be a key aspect that all technology start-ups must keep in mind. However, it may, sometimes,be difficult to identify all the innovations in your product/process in the early stages of development. Technology may change, the approach may also change. Hence, it may be difficult to contemplate the actual scope for protection of the underlying technologies. Therefore, it may be wise to wait until after the technology scope is finalized and then protect the technology components.However, time is very critical for IP protection and hence, this needs to be planned accurately and appropriate advice from IP experts needs to be taken to determine all possible strategies to protect different technologies and innovations. Also, one should understand the types of protection required for their product/service. For example, certain design aspects of the product/service may require you to file design patents as opposed to utility patents that are filed for systems/processes. Further, it is important to determine the owners of the IPs. Ideally, the Company should own the IP rather than individual inventors or owners. This helps to reduce future ownership issues.

It is also important to invest in experts and spend time on structuring the IP commercialization deals. The aggressive urge to commercialize and monetize the product/service may lead to inappropriate structuring of IP transactions and deals. This may hurt the company later, especially when they are acquired by large companies. Further, there may be lot of dependencies on third parties, especially on the technology front. Hence, it is important to identify risks and dependencies at the early stage of the venture and structure the deal in a manner which mitigates/minimizes IP and legal risks during commercialization.

Finally, it is important for all the people/employees to understand the nuances of IP management, protection of IP/confidential and business sensitive data, prevention of IP leakage, adherence to IP compliance guidelines, minimizing risks of IP infringements etc. All these practices (that are applicable for a startup) help in the long run during the scale up stage and when one wants to monetize IP. Therefore, periodic trainings help startups create a culture of respecting IP among employees. One should remember that IP management is for future – it is like investing for future exploitation. Hence, it is important to create that mindset and ecosystem around the venture.

In summary, there is no ideal time for startup to invest on IP management for their ventures. It all depends on the nature of the startup, objectives and strategy of the Company and what one wants to achieve from IP management. However, the IP strategy and IP plan needs to be included in the overall business plan of the startup and the IP plan should be aligned to the overall business strategy of the company. The execution of the plan can be phased out in the overall lifecycle of the product/service. This also helps to normalize the IP expenditures