How to Create a Legal Startup Strategy?

Awareness that strategy is needed

Why Intellectual Property is Important for Startups.

We are often asked from the startup community how to conceptualize their startup project in relation to competitors, partners, associates, subcontractors and intellectual property, etc.

That’s good.

We notice that today’s generation of entrepreneurs in tech startups in Serbia has more awareness of the importance of well-regulated relationships than some of the earlier generations of entrepreneurs.

How to create a startup strategy

The answer to that question lies in the intersection of corporate law, information technology law and intellectual property.

It should be made clear from the outset that for every business, and especially for a tech business such as startups, it is necessary to have a clear and precise legal strategy.

Why is it important?

• To protect the basic idea on which the project is based
• To have an edge over your competition
• To protect the time and money spent in R&D
• To defend revenue and company
• To protect your brand and product or service
• To attract investors

As a last resort, you could eventually use that property as a pledge to secure financing.

Intellectual property is a complex legal discipline and consists of patent rights, trademark rights, design rights, copyrights and related trade secrets.

Need to make every effort to determine for sure which rights your product or service is competing with and how to get the most out of the legal options offered?

This in particular, the more effective protection is gained by combinations of rights.

But in order to create your strategy, you need to be aware that you must first have a strategy.

If you do not have that awareness, it does not mean that there is no competition for you, so your hard work will remain without tangible results.

Every investor wants to invest in a business that is previously adequately protected by legal mechanisms.

There is no investor who will invest capital in an idea or a business that is not protected.

Did you know

Many of these rights are governed by certain principles or there are certain pitfalls that are not easily observed.

For example: did you know that a patent lasts for 20 years but according to some research you have the greatest chance of selling your patent to an investor within 36-48 months from the date of patent application?

Or did you know that a trademark can be extended indefinitely for periods of 10 years each with the payment of a trademark renewal fee?

To cite one example: When we were hired by Procter & Gamble to protect certain rights of that company in the Serbian market in connection with the Gillette product, we used the 1921. Gillette Trademark Office for the territory of the then Kingdom of Yugoslavia as evidence.

Therefore, the said mark was registered for this territory in 1921. and the company has been extending and maintaining it for all these years (!).

Also, did you know that the validity of a trademark is territorially limited, so if you protected your trademark for the territory of Serbia, this does not mean that the trademark is valid abroad, but you have to protect it globally, internationally.

Again, copyrights work erga omnes (to everyone) and in most parts of the world (except USA) do not have to register such as trademarks, patents or designs.

Startup cycle

Finally, each startup company has its own cycle from startup to so-called. There are also some key points in this cycle that need to be particularly cautious and develop legal strategies, since they are most often the ones that make mistakes.

The following points in the startup cycle are key:

• Starting a company
• Employing or hiring associates
• Research and development of a product or service
• Placing a product or service on the market
• Negotiations with an investor or strategic partner
• Exit

All of these stages involve numerous legal risks, and for illustrative purposes, we will list only some of them.

How will you arrange the relationships between the founders, will you have any patent or copyright or trademark protection, will you protect the know-how, research results, who owns the data, how will you edit the confidentiality, what if the basic idea is improved, what if an employee or subcontractor goes and brings with them certain know-how, what about the source code, where it is stored, licenses, sub-licenses, taxes, features of the service and many others.

At the end

To avoid potential damage and business losses that are often the result of startup mistakes when starting a startup, you first need to be aware that you need a strategy and then the will to create and implement that strategy.

Of course, in order to minimize the risk of business failure, we advise that you consult legal experts when designing your strategy.

The first rule of business has always been: always protect your business.

The second rule of business is: always follow the first rule.

There is no third rule.