The reading level for this article is Novice


Start-up issues for High-Technology Start-ups

January 27, 2003


(see .ppt in Entre > Legal > IP.ppt)


Copyright n. – Right to govern the use of the work and obtain the economic benefits

¨ One can copyright computer code, images, books, works of art, or any original works of authorship. One copyrights the tangible expression of the work, not the idea. The act of creation gives copyright.

¨ One can receive additional rights if file Copyrights can be registered with the U.S. Patent and Trademark Office. One does receive additional rights if files.

¨ Copyrights last seven five years after death for an individual and ninety five years for a corporation.

Trademarks ä & Service Marks SM

 Trademarks are for goods. Service marks are for services.

¨ One can trademark slogans (i.e. Where do you want to go today?), letters (i.e. HP), symbols (i.e. logos), sounds (Apple and Macintosh start up sound.

¨ One can register trademark by state or with federal government. To obtain protection throughout U.S. one should register with the U.S. Patent and Trademark Office.

¨ USPTO bases decision to grant trademark based on distinctiveness, industry

¨ One can use PTO site, do a NAMEPROTECT, or Thompson and Thomson to do a search to see if a trademark or similar mark is currently being used

¨ In U.S., first use in commerce matters in U.S. First to register in Europe.

¨ One cannot file trademarks that are deceptive, symbols of the United States, misappropriates names or likeness of a well-known person.


Patent (n.) – Right to be the only person/entity that does something in a certain way.

The idea/invention has to be novel (first time anybody has ever addressed problem in the proposed way. It has to be non-obvious.

¨ Once idea is published one has one year to obtain a patent

¨ One can patent machines, processes, types of designs, compositions of matter.

¨ Patent legal cases up until recently were mainly against patents

¨ Investors generally like to see patents and other competitive advantages

¨ Possible to file for provisionary patent that lasts for one year

¨ Can take between 3 weeks and 3 months usually for patent application to be completed by attorney. Time is reduced if drawings are done, prototype exists, flowcharts exist, or there are copious notes and logs.

¨ To obtain patent one must disclose idea

¨ Receive right to be only one to use idea for 17 years in return for telling the world about it

Obtaining a Patent: Costs between $5,000 and $10,000 with a lawyer. It can take a while to be approved. It can take 18 to 24 months.

Trade Secrets

¨ Can be better than patent because trade secrets will never expire

¨ Classis example is Coca Cola formula

¨ There must be high security level for trade secrets

¨ Companies must force employees to sign agreements, information is provided on need-to-know basis

¨ Make revealing a trade secret grounds for immediate termination

¨ One should inform their employees of their duty to protect the secret

¨ Secrecy has to start at beginning or courts are merciless

¨ Make sure all contractors have signed confidentiality contract

¨ Once trade secret is out it is no longer a trade secret

Protecting IP

Do on first day with new employees:

  1. Non-disclosure Agreement
  2. Non-compete Agreement
  3. Confidentiality Agreement
  4. Assignment of Invention
  5. Hiring Process
  6. Exit Process

California does not recognize non-compete agreements.

This MBA Series Notes article was written by Dave Neal and Merrill Mason, taken by Ryan Allis on 2/28/2005

Ryan P. Allis, 20, is the author of Zero to One Million, a guide to building a company to $1 million in sales, and the founder of Ryan is also the CEO of Broadwick Corp., a provider of the permission-based email marketing software and CEO of Virante, Inc., a web marketing and search engine optimization firm. Ryan is an economics major at the University of North Carolina at Chapel Hill, where he is a Blanchard Scholar. [learn more.