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Securing Intellectual Property

Once all existing intellectual property has been identified and appropriately protected, a system for capturing new intellectual property rights developed by the startup can be put in place. Such a system will have many facets. The types of intellectual property created by the startup will dictate exactly what types of intellectual property protection procedures should be used. However, there are several systems and procedures that nearly every startup should take to protect its intellectual property. If the startup does not already have employee agreements obligating employees to assign their rights in intellectual property to the startup, such an agreement should be implemented immediately. The agreement should require employees to assign their rights in patents, trademarks, copyrights or other confidential information created by the employee in the course of their employment by the startup. Implementing an employee invention assignment agreement is relatively easy for new employees. However, implementing a new invention assignment agreement for existing employees may require some additional consideration on the part of the employer in exchange for the employee's acceptance of the agreement.

A document related to the employee invention assignment agreement is a confidential nondisclosure agreement. The confidential nondisclosure agreement inhibits the loss of intellectual property such as trade secrets and know-how, which derive their value from not being readily available and are not otherwise protected. Employees who have access to trade secrets and confidential information should be required to sign a nondisclosure agreement, as should third parties such as suppliers or large customers who may have access to trade secrets and confidential information through the course of doing business. Security should be put in place to protect the client's intellectual property from access by individuals who do not have the authority or a need to know the information. The startup must treat the information as secret or confidential if a court is to regard it as such. The type of security will obviously depend upon the form the information is in, and may include both physical and electronic restricted access. Filing cabinets containing confidential information should be locked. Access to computer files with such information should have limited access. Access to a manufacturing facility should be limited if a trade secret could be discerned by an observer. In short, secret or confidential information should be provided on a need to know basis and documents containing sensitive information should be marked as confidential.

An organized invention documentation program should be implemented to encourage all employees to regularly document their inventive activities. The program should clearly set forth the type of information to be preserved (dates, inventors, drawings, etc.), and the manner in which the information should be recorded. For example, an invention disclosure form can be developed so that all of the disclosures contain the necessary information. The documentation program should make the creation of written invention disclosures a part of the regular routine of every employee who is involved in research and development of new products or services. For those employees who may not be regularly involved in research and development efforts, the client may wish to provide bonus compensation for useful ideas submitted to the startup. The written disclosures should be periodically collected for review and evaluation. A regular review should be conducted of all documents that may contain secret or confidential information, or which may lead to inadvertent public disclosure of intellectual property that is not otherwise protected. For example, all startup publications, distribution agreements, supplier agreements and license agreements should be reviewed. Startup publications should be reviewed to ensure that new and valuable developments are not inadvertently disclosed to the public prior to obtaining protection. Distribution and license agreements should be reviewed to ensure that intellectual property rights are adequately protected through nondisclosure agreements and that the agreement does not create an unregistered franchise.

In addition, an employee education plan should be created to educate the client's employees about intellectual property. The information disseminated to employees should include an explanation of the importance of intellectual property to the startup's business (and the employee's livelihood) and a description of the measures the client is taking to protect its intellectual property. Of course, not all of the employees will have a need to be educated about the same intellectual property issues, so it may be useful to identify various employee types, and then determine what particular aspects of intellectual property each of those employee groups needs to be educated about. For example, the startup's employees may include an engineering staff, a marketing group, a sales and distribution force and other administrative employees. Each of these employee groups have different concerns with respect to the client's intellectual property rights. For example, engineers or designers should be counselled about patents, trade secrets, copyrights and employee agreements that require assignment of inventions to their employer. The marketing staff should be apprised of various trademark, copyright, advertising and trade secret issues that affect the ability to market and advertise a new product. The sales and distribution force must be made aware of trade secret issues and perhaps franchising and advertising issues. The administrative force employed by the startup should also be made aware of trade secret issues so that sensitive business information is not inadvertently released to the public.