A review of developments in Intellectual Property Law
Avoiding Common IP Pitfalls:
What Every Startup Needs to Know
By Emily Miao, Ph.D. and
Bryan G. Helwig, Ph.D.
Startup companies often
face significant risk and
liability with respect to
Intellectual Property (IP)
on their path to success.
The failure to adequately
address IP issues can lead
to the permanent loss
of IP rights and create a
litigation risk. Furthermore,
insufficient or nonexistent
IP protection can hamper
business transactions,
including seed funding,
partnerships, and status
as a desirable acquisition
target. This article
discusses common IP pitfalls and outlines steps
that startups can implement to protect IP assets
while reducing the risk of litigation.
A. What are IP Assets?
Conceptually, the term “intellectual property”
can be thought of as creations of the mind that
are given legal rights commonly associated
with real or personal property and can have
economic value. These property rights are
generally a function of federal and/or state laws
and include patents, trademarks, copyrights
and trade secrets. All businesses have
some form of IP that provides a competitive
advantage and helps generate profits. Many
companies mistakenly believe that patent
protection is the only form of IP protection and
ignore the value of non-patent IP. However, it
is imperative that startups identify patent and
non-patent related IP assets when evaluating
their IP portfolio. Information describing the
various forms of IP (e.g., patents, trademarks,
service marks, copyrights, and trade secrets)
can be found on the U.S. Patent and Trademark
Office website.1
B. Common IP Mistakes
Investors typically conduct due diligence to
evaluate the strength of a startup’s IP portfolio
for valuation and negotiation purposes.2
Generally, investors seek to ensure a return
on their investment by identifying factors
that can impede development of the startup’s
commercial product or service.3 The strength
of a startup’s assets, including IP assets,
informs valuation, influences negotiations,
and significantly impacts a startup’s ability to
secure funding, establish partnerships and
enhance acquisition. Common pitfalls that
negatively affect the valuation of a startup
include underestimating IP importance, a
lack of confidentiality protections, failure to
establish clear IP ownership and third party
rights, and poorly drafted IP agreements.
1. Underestimating IP
Importance and Failure
to Create an IP Plan
Startups, from conception, need to
determine the role of IP in their business,
the IP tools that support their business
(continued on page 2)
Summer 2018 Vol. 16, Issue 3
Page 4
Guidelines for Drafting
and Prosecuting U.S.
Design Patents
Page 8
Claiming Artificial Intelligence:
AI-related Patent Filing Trends
and Practice Tips
Page 6
Patenting Repurposed Drugs
