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Singapore – Thinking About Intellectual Property As A Startup.

2 October, 2014

 

Legal News & Analysis – Asia Pacific – Singapore – Intellectual Property

 

Over the past few years, Singapore has begun to attract technology startups and investors alike. According to a recent article from Channel News Asia, venture funding for Singapore’s technology sector “soared to more than AUD 2.1bn last year from approximately AUD35m in 2011”.

 

Notwithstanding this explosive growth, startups and investors often lack the
time and resources to worry about intellectual property (“IP“) strategy at the validation stage – they just want to launch a great product and build its initial customer base. However, much of the value of startups lie in their IP, and the prudent founder or investor will want to bear in mind that taking steps to enhance their IP assets at the outset can positively impact the startup through its subsequent development from raising capital to eventual IPO or acquisition. While asset enhancement, being relatively easy and affordable, should be the focus at the validations stage, it often also has the positive side-effect of creating defensive barriers to entry, such as a registered trade mark allowing the proprietor to oppose registration of similar trade marks or bring actions for infringement later on.

 

To begin with, almost all work done by founders of a startup involves the creation of IP, or the use of another’s IP as a means to develop the startup’s goods or services. Some examples are:

 

  • Creating a business plan or product mockups (trade secret)
  • Creating and using a logo (copyright, registered or unregistered trade mark)
  • Coding a program (copyright)
  • Using user-contributed content (copyright, personal data)
  • Adapting open-source software (copyright)
  • Financial or technical forecasts (trade secret)
  • Creating marketing materials (copyright)

 

IP assets of demonstrable value may increase the likelihood of the startup raising capital and/or being acquired. For example, registering a valuable  trade mark and corresponding domain name will increase the value of the startup’s IP asset (the trade mark and goodwill in the mark). Similarly, a well-protected trade secret, or copyrights over programming code may appeal to potential acquirers or investors, while also acting as barriers to entry for prospective competitors.

 

In contrast, poorly managed IP assets can be detrimental to startups. Products or services using a third party’s patented inventions, or trade marks that are similar to existing marks may attract infringement actions or passing-off claims. IP assets developed by a founder in the course of his previous employment or assets developed by third parties that are not validly assigned are also potential liabilities.

 

Startups should also be sensitive to timelines relating to registration of IP assets from the get-go. For example, startups should be prepared to use registered trade marks in the course of business, and have evidence of such use to avoid actions for revocation on the grounds of non-use being brought by competitors.

 

Finally, startups should weigh the cost of protecting their IP assets against the importance of the assets. For example, registering a patent can be expensive and once it is published, the proprietor has a fixed timeline within which he can claim priority to file for patents in other countries. A patent proprietor would therefore need to be prepared to bear the cost of filing patents in all the relevant countries within this timeline. If the invention is not substantially valuable, it may not be worth patenting. Even if the invention is valuable, a lean startup may instead prefer to protect it by keeping it a trade secret

 

ATMD Bird & Bird

 

For further information, please contact:

 

Koh Chia Ling, Partner, ATMD Bird & Bird
chialing.koh@twobirds.com

 

ATMD Bird & Bird Intellectual Property Practice Profile in Singapore

 

Homegrown Intellectual Property Law Firms in Singapore 

 
 

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