Depending on the industry a startup company is operating in, the intellectual property rights can be one of its most valuable and important assets; if not properly secured in time, it may cost quite a lot to protect them if infringed.
Therefore, it is strongly recommended to transfer your intellectual property rights to your startup company as early as possible. This usually means transferring your IP to your company from the moment your startup is incorporated.
From that very moment, founders should make sure that they and their employees and/ or contractors execute the appropriate IP assignment agreements assigning all their IP rights to the company.
Under those agreements all IP rights developed by the founders, contractors and employees are assigned to the company from the moment of their creation. The agreements also secure the following:
1. Retaining Ownership. The IP assignment agreement stipulates that any creations or inventions made by employees or contractors during their engagement with the startup remain the property of the company. This ensures that your startup retains ownership of all valuable intellectual property developed within the business.
2. Preventing Intellectual Property Leakage: By signing the agreement, individuals involved in the startup are discouraged from taking IP assets or knowledge with them if and when they leave the company or using them for other purposes (note related to the startup) without permission. It acts as a deterrent against potential IP theft or unauthorized use.
3. Enhanced Control: The IP assignment agreement grants the startup more control over its proprietary information and intellectual property, reducing the risk of unauthorized use or disclosure, which in the long term increase the company value.
4. Safeguarding Sensitive Information: Since startups often deal with valuable and sensitive information, including trade secrets and proprietary data, inseparable part of an IP assignment agreement are the comprehensive confidentiality provisions. They ensure that employees and contractors keep such information confidential, preventing leaks to competitors thus preserving the company’s assets.
5. Attracting investors: A solid portfolio of IP assets can attract investors and partners and be a part of a startup’s competitive advantage. Intellectual property has a tangible monetary value, which is used in assessing the value of your company, which is very important if the startup is looking for investors or buyers.
If the startup is going through a fundraising round, having solid and protected IP rights is considered an advantage not only in determining the valuation of the company but also in assessing its viability. If the company has multiple competitors, having secure IP will help the startup stand out.
