In this series' last installment, I tackled the IP lessons learned in traditional startups. Here, I explore IP paint points experienced by some non-traditional companies, such as non-profit, non-tech, and online education startups. Completely not by design, but the founders I feature here are all female!
Lesson #1: It’s all in a name, so make sure you can use that name. Joyce Petrowski reached out via email to ask if non-profits had IP. For those of you that follow my Traklight blog, you know the answer is “yes.” All companies have some type of IP regardless of corporate structure or mission. After all, every business has a name, right?
Joyce learned that the first step to naming a business is to make sure that you are not taking or infringing on another entity's name. Joyce’s non-profit is Furnishing Dignity, an organization that helps low-income individuals and families furnish their homes and “dwell in dignity.” That was not Joyce’s first choice for a name:
“[I] saved a lot of money by...[searching] for trademarks on my nonprofit name before I put everything on paper. We found that the other nonprofit did have a federal trademark, and while my name wasn’t exactly the same as theirs, it was close enough that I didn’t want to take the chance. We had to change the name again because our second name (while no conflict in AZ or with trademark) was already taken with GoDaddy.”
For years, I have seen too many fall in love with a name before doing a search to make sure they can use it. It is important to protect your IP, and in this case, you should absolutely apply for a trademark, but before you do, make sure that you do not waste time and money on the following:
- Registering a domain name (just because you lay claim to a URL doesn't mean you have the trademark)
- Creating branding or developing a website
- Applying for a trademark without completing a name search
Lesson #2: Get your entity first, and never forget housekeeping issues.
Rachel Olsen is a San Diego-based entrepreneur who runs bschoolgraduates.com and getapplr.com. Her original company, Best Mom Products, has a business entity, but as she started numerous ventures, she realized that each venture needed to be its own business entity and that she should establish separate IP protection for each new company.
Entities are important to protect your personal assets, but if you have multiple businesses, it may be important to seek professional advice to separate the operations for financial or legal purposes.
Founders also often want to skip over the less fun tasks like book- and record-keeping, licensing, and obtaining insurance. However, these are business-critical steps. Furthermore, with all the cyber security issues these days, it is important for some businesses to consider "Cyber/Internet Insurance," which offers coverage for data breach and data security incidents.
Lesson #3: Litigation is draining.
Rachel Olsen experienced the pain of litigation as a startup. She started a site, used a self-proclaimed public figure's name in an editorial sense, and received a "cease and desist” letter from that person's team—a tactic meant to intimidate her into taking down her site. Although she immediately took down the person's name out of respect, she continued to receive emails. Rachel chose to hire a legal team to protect her business idea and domain name. However, as Rachel points out below, legal battles deplete you of money and time, both of which are equally valuable for a new venture: “As an entrepreneur, if you are in a legal situation, the party with the most money and resources is likely to win. This is a major hardship to entrepreneurs when they are legally in the right but don't have the finances or time to withstand the duration of a legal dispute.”
Lesson #4: IP is everywhere, even at brick-and-mortar businesses.
We often think of IP as being related to technology and bio-medical ventures. This is most likely due to the misconception that only online offerings and inventions have valuable IP. Such is not the case.
We interviewed Laurel McConville, owner and founder of Nectar & Green, a relatively new, locally-focused organic juice and nut milk company based in Boston. Laurel’s lessons learned are many and apply to all fledgling companies: her trade secrets (e.g. recipes) and new brand are valuable IP that need protection from day one. Check out my interview with Laurel below to learn more:
Mary: What problem are you solving?
Laurel: We are in the midst of launching our first product line of organic, pressed almond milk sold online using a subscription model. We are committed to creating a small batch product that is impossibly pure—without fillers, preservatives, pasteurization, or pressurization. Currently, the US market is dominated by heavily processed milks largely devoid of the nutrients found in their unadulterated ingredients.
Mary: What's the vision for your company?
Laurel: Our mission is to put a healthful, beautiful, nutrient-dense product into our neighbors’ hands and to support local growers and makers in every way we can. We aim to grow the business strategically over the next three to five years in ways that maintain the integrity of our product and remain true to our values.
Mary: Did you think you had IP?
Laurel: I knew in starting my business that I had signed up to be a learner. In starting a food business, IP never once crossed my mind. It wasn’t until we launched our brand and began building our web presence that I really started to think about the vulnerability of what I was creating. The thought of IP was daunting at first. There also was an element of not knowing what I didn’t know. From concept and strategy to branding and recipes, [it all]illuminated for me just how crucial it is to protect the different facets of the work we do.
Mary: What IP pain points did you experience when you started up?
Laurel: In our first year, I experienced a steep learning curve with agreements and contracts. When you find the right people to hire, it’s easy to think that they will always be the right people. But things change as you grow and as you better identify the needs of your business. I’ve learned that it is far better to protect IP on the front end, before any work begins or confidential information is discussed. It’s important to be explicit about what can and cannot be shared and who owns the work that gets created.
I have worked to protect our most important assets now and also have a clear understanding of the long-term and ongoing work we’ll need to do to keep our IP safe.
Mary: Your last response is so crucial and brings up the tip to always read your contracts thoroughly to make sure you own your IP, and when in doubt, seek professional help. Any specific tips for entrepreneurs now that you realize the extent of your IP?
Laurel: The way I talk with potential employees and independent contractors is different now. I know what to share, what questions to ask, what to look for in any contracts they present me with, and what to ask of them in the contracts I present to them.
Mary: Startups are an adventure. What is your favorite startup story?
Laurel: One of the most important lessons I’ve learned as an entrepreneur is to get very clear on why I’m doing the work I’m doing and not to confuse this with the how. When too much emphasis is placed on the how, you hit dead ends. When you focus on why, you’re open to possibility; you’re able to adapt and reroute.
Stay tuned for my next article, where I'll discuss IP lessons learned from incubator managers.
