What are the best strategies for managing IP risks in contracts with startups?

If you are a contract manager who works with startups, you know that intellectual property (IP) is one of the most valuable and sensitive assets that you need to protect and leverage. However, managing IP risks in contracts with startups can be challenging, as they often operate in fast-paced, innovative, and uncertain environments. How can you ensure that your contracts reflect the best practices and trends for IP protection and exploitation, while also fostering a collaborative and flexible relationship with your startup partners? Here are some strategies that you can apply to your contract management process.

Find expert answers in this collaborative article

Selected by the community from 3 contributions. Learn more

1 Identify and classify IP

Before you enter into any contract with a startup, you need to identify and classify the IP that is involved in the project or transaction. This includes the IP that you and the startup already own, as well as the IP that will be created, modified, or transferred during the contract term. You should also determine the nature, scope, and value of the IP, and whether it is protected by patents, trademarks, copyrights, trade secrets, or other legal mechanisms. By doing this, you can avoid ambiguity, confusion, and disputes over IP ownership, rights, and obligations.

Add your perspective

Christian B.

International Development at Cognition IP
Report contribution
With IP being a big topic, especially for innovative startups, it's important to consider what IP the startup owns, how best to protect it, and who deserves what level of access. Contracting with a startup can mean many things, from many angles, depending on the parties and objectives. It's best to evaluate your IP position with an intellectual property attorney before contracts are signed, so as not to overlook potential risks or inadvertently forfeit potential value in a proposed agreement.

Like

2 Negotiate IP terms

Once you have identified and classified the IP, you need to negotiate the IP terms that will govern the contract. These terms should cover issues such as IP ownership, licensing, assignment, disclosure, confidentiality, indemnification, warranties, infringement, enforcement, and termination. You should also consider the specific needs and goals of both parties, and balance the risks and rewards of IP sharing and exploitation. For example, you may want to grant the startup a limited, non-exclusive, and revocable license to use your IP for a specific purpose and duration, while retaining the right to terminate the license if the startup breaches the contract or violates your IP rights.

Add your perspective

Christian B.

International Development at Cognition IP
Report contribution
Referencing above, you'll need to understand your potential risks and opportunities to know what you'd like to negotiate towards, or away from. For founders or business owners lacking deep experience in IP, this is best supported by an IP attorney with experience in your particular field. As in any industry, the law and written rule can be quite nuanced and different from the culture of application.

Like

3 Monitor and enforce IP compliance

After you have signed the contract with the startup, you need to monitor and enforce the IP compliance of both parties. This means that you should keep track of the IP activities and deliverables that are required or permitted by the contract, and verify that they are consistent with the IP terms and conditions. You should also communicate regularly with the startup, and address any issues or concerns that may arise regarding IP protection or exploitation. If you encounter any IP violations or disputes, you should act promptly and decisively, and use the appropriate legal remedies or dispute resolution mechanisms that are available under the contract or the law.

Add your perspective

Christian B.

International Development at Cognition IP
Report contribution
Depending on which type of agreement is signed, it can be smart preventative maintenance to periodically check in on the terms of the contract and the actual performance. It can happen that agreed upon terms are modified in practice and performance due to unforeseen circumstances. If major discrepancies occur or can predictably occur, best to address them sooner rather than later. As well, if a dispute were to surface, best to have demonstrated an interest in resolving it quickly, rather than establishing a culture of accepting it.

Like

4 Adapt to IP changes

Finally, you need to adapt to the IP changes that may occur during the contract term. These changes may include new IP developments, modifications, or discoveries that are relevant to the project or transaction, as well as changes in the IP laws, regulations, or market conditions that affect the IP rights or obligations of both parties. You should be prepared to review and revise the IP terms and conditions of the contract, if necessary, to reflect the IP changes and maintain a fair and mutually beneficial relationship with the startup. You should also be flexible and open to new IP opportunities or challenges that may arise from working with a dynamic and innovative partner.

Add your perspective

5 Here’s what else to consider

This is a space to share examples, stories, or insights that don’t fit into any of the previous sections. What else would you like to add?

Add your perspective

What are the best strategies for managing IP risks in contracts with startups?

1

2

3

4

5

1 Identify and classify IP

2 Negotiate IP terms

3 Monitor and enforce IP compliance

4 Adapt to IP changes

5 Here’s what else to consider

Contract Management

Rate this article

Thanks for your feedback

More articles on Contract Management

More relevant reading