You have now thought through the issues which I set out in Stage 1, HOW TO: Start your business journey, and you have a plan of action – super! Your next steps might include conducting market research, developing a prototype app, platform, or product, and exploring logos and branding ideas. You may be looking to reach out to people in the Start-up world or the industry you are looking to disrupt to get some ideas for your next steps.
As you are likely to be engaging or approaching third parties at this stage, you should take measures to protect your brand and any rights you have in it.
Intellectual Property and Confidentiality…
Third parties may perform services and create IP for you at this stage. If a consultant has not specifically assigned such IP to you, the default position is that they own it, not you. You need to take the relevant steps to ensure that you own your IP.
On top of this, other parties will be exposed to your idea and how you intend to implement it. Therefore, you should have protection in place to stop others from taking your idea and claiming it as their own.
All Startups need to remain aware of these potential issues and deal with them properly from the outset. I’ve set out some tips below on how to do that.
3 Key Tips to Avoid Legal Battles at this stage:
- Use a Non-Disclosure Agreement
If you are in the negotiating stage with a third party, discussing your idea in detail or disclosing sensitive information with people in your industry, you should ask them to sign an NDA (if appropriate in the circumstances) and sign it as a deed if nothing is changing hands. If so, they would agree not to disclose or use for their (or another party’s) gain, details about your idea or other relevant confidential information. I can provide a template NDA free of charge.
- Use an IP Assignment Deed
Where a third party has created IP for you, they should sign a form of IP assignment to transfer the rights in that IP to you or your company (I deal with incorporating a company in Stage 3). Ideally, the third party would have signed a consultancy agreement containing various protections for you, including IP. However, where you have not put a consultancy agreement in place, you should ask the third party to sign an IP Assignment Deed in your favour. Again, I have a template that I can provide free of charge. An appropriate NDA should also be used where you have not put in place a consultancy agreement.
- Use a consultancy agreement
In all cases where someone is performing services for you as a contractor/consultant/freelancer and is exposed to confidential and sensitive information, they should sign an appropriate consultancy agreement. That consultancy agreement should contain, among other things, robust IP and confidentiality clauses, as well as non-competition clauses for added protection against the poaching of your idea.
If the consultant has his own service company, then the individual should sign the agreement personally as well as on behalf of his/her company. Otherwise, you could be chasing a shell company with no money if something goes wrong. I will deal with consultancy agreements in more detail in future segments.
The above is intended as guidance only and does not substitute legal advice. Please get in touch with me via LegalDrop if you need assistance on such issues or to discuss my Start-up services.
I am happy to have an initial no-obligation chat.
contributed by Declan Bradley, Doyle Clayton