- The document discusses common intellectual property (IP) mistakes made by founders, including forgetting about IP agreements signed with prior employers, assuming that buying a domain name is enough to protect a company's brand, and overthinking third party patents. - It provides tips to avoid these mistakes, such as carefully reviewing prior employee and contractor agreements, conducting basic trademark and patent searches, and having written IP assignment agreements with employees and contractors. - The document is intended to help entrepreneurs navigate legal challenges and avoid costly IP issues through resources on the Founders Workbench site.

2. ©2014 Goodwin Procter LLP
Common IP Mistakes
Made by Founders
Steve Charkoudian
Partner, Goodwin Procter LLP
June 3, 2014

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1. Forgetting that you and your employees and contractors
signed IP agreements with prior employers.
 Look at employee and contractor agreements that you and your
employees/contractors have signed!
 Typically these agreements assign all of your rights in any IP
created, made, conceived or reduced to practice by you that
› result from tasks assigned to you by the prior employer, or
› result from the use of the prior employer’s premises or property, or
› relate to the business of the prior employer.
 Watch for traps.
 May also include a non-compete.
 Investors will care; the development timeline will be scrutinized
during any investment round.
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2. Assuming that all you need to do to use the company’s
brand is buy the domain name.
 Protecting your brand does not mean only buying the domain name.
 Can you use the name of the company and its products/services?
› You don’t want to invest time and money in creating brand awareness,
just to find out later that someone else has exclusive rights to the brand.
 Basic “do it yourself” trademark searching:
› United States Patent and Trademark Office: uspto.gov
› Web searching: Google
 More formal “lawyer” searching involves engaging a third party
search firm to do a search of many different databases: around
$1500.
 Rule of thumb: the more arbitrary or fanciful the trademark, the
more likely it will be protected.
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3. Overthinking third party patents.
 It is a good idea to put some thought into whether there are any
third party patent holders who can block you from doing business in
the manner in which you are planning – BUT don’t overthink it.
› Basic “do it yourself” patent searching:
▪ If there are known competitors, check the uspto.gov website to see
if they have a relevant patent portfolio.
▪ Other key word searching at uspto.gov
› If a plain reading of the patent leads you to conclude that it is a direct
hit – that is, that it reads on what you are planning on doing, then you
should have a patent lawyer look into it.
 Do not let this distract you from the primary goal - developing your
product or service!
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4. Assuming that you don’t have an open source software
problem if you don’t modify the open source software.
 The challenge is to understand open source licensing terms so the
software can be used without jeopardizing the confidentiality of your
own source code, or the integrity of future revenue streams.
 Understand the common types of open source licenses:
› Non-viral open source licenses (e.g., BSD, Apache and MIT licenses).
› Copyleft licenses (e.g., GPL, LGPL and AGPL and MPL).
 Establish and open source policy and enforce it.
 Know when to go to your lawyer and what questions to ask.
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5. Founding the company without transferring existing IP
to the company.
 In exchange for founders shares, contribute all IP of the founder that
relates to the business of the company under a Contribution and
Assignment Agreement.
 This agreement is entered into in addition to a Confidentiality and IP
Assignment Agreement, which would cover the assignment of IP on
a go-forward basis.
 Great resource for documents such as this,
http://www.foundersworkbench.com/document-driver/
(yes, this is a shameless plug).
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6. Assuming that IP developed by an employee is owned by
the company.
 Very important to have written agreements with employees that
assign all of the employee’s rights in any IP created, made,
conceived or reduced to practice by the employee that relates to
your business, result from tasks assigned by you or result from the
use of your premises or property.
 The only category of IP that may be assigned automatically in this
context without a written agreement is copyrights (under the work
for hire doctrine). However, do not rely on this narrow exception.
 Maintain a policy of having each employee sign such an agreement
as part of the new hire package. Investors will ask.
 Consider whether to include a non-compete (and enforceability
issues).
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7. Assuming that a simple fee for work agreement with an
independent contractor is adequate to assign IP rights.
 It is even more important to have written agreements with
independent contractors than employees, as the work-for-hire
doctrine in this context is extremely narrow.
 Understand what IP is being assigned to you and what is being
licensed.
 Ask whether the independent contractor may reuse any the
delivered work product.
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8. Missing the traps in “mutual” NDAs.
 Basic rule here: Don’t disclose nonpublic information about your
company to anyone without a nondisclosure agreement.
 Watch for unusual or aggressive provisions in “standard mutual
NDAs”
› “Residuals” provisions
› NDAs without “non-use” provisions
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Questions?