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Safeguarding Your Startup’s Future by Securing Your Intellectual Property

How do we protect the intellectual property of our MVP? This is a question many businesses and startups grapple with in the early stages of developing a new software product. Some businesses delay pursuing IP protections because of time and money, thinking they can secure it post-product launch, when revenue is more steady and they have a better grip on product-market fit. However, delaying the pursuit of IP protections can actually pose several business risks. There are strategic, Agile-friendly ways to implement intellectual property protections that protect your MVP’s chances of success. In this blog, we’ll show you how lean development and IP protections can go hand-in-hand.

The Different Types of Intellectual Property Protections

Before we get into the why of intellectual property protections, it’s important to understand the what. There are several different ways to protect your intellectual property as you prepare to launch a Minimum Viable Product: 

  • Patents - There are two types of patents that pertain to software: design patents protect visual components, while utility patents protect the functionality. (The utility patent protects the novel process your software performs, not the code itself.) 

  • Copyrights protect software's code and implementation. According to the U.S. Copyright Office, source code is considered a literary work (like a book) and is automatically copyrighted regardless of who might attempt to register it.

  • Trademarks protect a business’ brand name, logo, and sometimes their tagline.

  • Trade secrets do not require registration, but are still legally protected through the federal Defend Trade Secrets Act and are enforced internally through Contractual Rights such as NDAs, non-compete agreements, and confidentiality agreements, as well as data access policies. Trade secrets are also protected by fostering a company culture of confidential development, but more on that below. 

To Patent or Not to Patent Your Software

Although patents are the first thing most people think of when they hear “intellectual property protections,” patents for software products are rarely appropriate due to the strict standards for eligibility. Under the 2014 Federal Supreme Court Decision, Alice Corp v. CLS Bank International, a two-step test heavily restricts the use of patents as a means to protect software: 

  • Step 1: Is it an abstract idea, such as an algorithm, method of computation, or other general principle? 

  • Step 2: If it is not an abstract idea, is the patent submission in question an inventive concept?

In the example of the Supreme Court decision, Alice Corp’s patents were invalidated because implementation of escrow is an abstract idea, and managing escrow processes via a computer is not novel or inventive, and therefore does not rise to the level needed for patent.

If, however, your software innovation would potentially meet the standards for a patent, there are still some things to consider: 

  • Cost: There’s the cost of pursuing the patent (anywhere from $15,000 to $35,000) and then there’s the cost of protecting the patent once you have it. We have heard from clients, "We can't afford the legal cost to defend our patent, so why bother getting it?”  This is a short-sighted argument; if your product is truly novel and innovative, securing a patent can be helpful for fundraising with investors and ultimately, your Venture Capital can afford to defend it if they truly value it.

  • Timing: the patent review process is slow, averaging around 2 - 3 years per review. It doesn’t have to be a deterrent, you just have to be strategic about factoring this into your timing, and this is why it’s crucial to take intellectual property protections into consideration from the beginning. 

A patent may not be the right option for protecting your intellectual property, but there are still other ways of protecting it as outlined above and strategic reasons you should pursue those protections. 

When Are Trade Secret Agreements Appropriate to Implement? 

Most of the work that a company does is going to fall under the category of trade secret protections. However, we often see founders and business leaders prematurely seeking trade secret protections such as NDAs and non-competes before it is really appropriate or enforceable. We get it; you’re excited about this amazing idea you have and you’re eager to be the one to bring it to market before anyone else, and that requires discretion. 

However, an idea is essentially useless without an ability to execute on it. 

We often hear from founders, “well what if I share this idea with you or another developer and then they build it without us!” Technically, yes, a developer could build your product without you, but they would have no way to sell it! They don’t know your market, they don’t know your customers. They’re simply not equipped to build any business traction without you. Expecting a potential developer partner to sign an NDA so that you can simply discuss your idea isn’t appropriate and can start the conversation off on the wrong foot. Ideas and ideation with potential partners about the ideas can’t meaningfully be protected by something like an NDA. 

The ideation stage is when we encourage business leaders to spend time thinking about what they’re trying to protect versus not trying to protect. You wouldn’t send a developer any code without an NDA, but you can and should have discussions about your business (what your product idea is, who your customer is, what your market is)  without an NDA. Once you’ve selected a developer partner and are ready to outline technical requirements, then trade secret protections become appropriate. 

Why You Should Seek Intellectual Property Protections for Your MVP

Reason 1: IP Protections Reduce Your Risk Footprint & Increase Competitive Advantage

When you’re developing an innovative new product, it’s important to reduce your business risk as much as possible. Some business leaders might say “IP protections are expensive!” and yes, they can be, but we would argue that the risk of delaying IP protections is much more costly:

  1. Risk that you’ll reinvent the wheel, i.e., infringe on existing IP because you haven’t done the research to ensure that your idea is novel.

  2. Risk that someone else will bring a product to market before you, or straight up steal your idea.

Risk reduction is cost savings; it’s a necessary part of a lean development approach. If you can take initial steps to protect your business and your team from the cost of having to scrap or rebuild a product, you should do it. At minimum, businesses need to consult with IP lawyers to understand their options and begin to outline a roadmap for choosing the right IP protections at the appropriate stages of development. 

Reason 2: IP Protections are a Strategic Financial Tool

"During the innovation process, the legal protection of the knowledge that will finally materialize in a product or a process is crucial. For this reason, IP protection is a strategic tool in the innovation process of companies,” writes Maria del Coro Gutierez Pla and Lynn Burtchaell in review of a 2021 study conducted by the European Union Intellectual Property Office (EUIPO.)

That same 2021 EUIPO study also found that companies that own intellectual property rights generate higher revenue than those that don’t, by significant margins: 

“When controlling for relevant factors, such as country or industry sector, SMEs that own IP rights have a 68 percent higher revenue per employee than those that do not own any IP rights. Moreover, SMEs that own a combination of patents, trademarks and registered designs generate almost double (98 percent) the revenue per employee compared with companies that do not own any of the three IP rights.” WIPO 2021

Intellectual property rights essentially turn your business ideas into financial assets, and the roadmap you outline for securing IP rights demonstrates to your investors that you’re on track for success, their investment is secure, and there is a greater likelihood of a return on their investment.

How to Implement an IP Strategy, the Agile Way

So, given how important IP protections clearly are, what’s the most cost-effective way to go about securing them, specifically within an Agile development process? As we mentioned earlier, it is crucial to consult with an IP lawyer early on so that they can best advise your business on the IP rights that will be relevant to your product, but the general rule of thumb is to outline an IP roadmap that implements milestones along your business and product journey. 

Here’s a typical example of an IP roadmap: 

  • Idea Stage: As explained above, there’s not much you should do in this phase except be mindful about what you can and should protect. Start outlining your IP roadmap! 

  • Technical Requirements Planning and R&D

  • Milestone 1: Establish contractual rights documentation such as NDAs with partners and employees to protect trade secrets.

  • Milestone 2: Create data access policies with employees once you have a better idea of how your product will facilitate the flow of data. 

  • Preparing for Market Launch

  • Milestone 3: Secure a provisional patent (again, only in rare cases where your product’s process is truly novel and innovative) 

  • Milestone 4: Copyright innovative code

  • Post Product Launch

  • Milestone 5: Register your trademark after validating product-market fit

  • Milestone 6: License your software after scaling your product (e.g., no one else can use it until you’ve reached a certain capacity)

How Company Culture Can Protect Intellectual Property 

Beyond the legal legwork your business does to strategize and secure intellectual property, the other crucial component to protecting your business IP is team culture. 

  • Clean documentation is key, with copyrights on innovative code clearly marked. 

  • Security measures also need to be clearly communicated and well-documented. It may take time to work out what kind of security measures will be needed for your platform, but conversations about it should begin in the stage when your developers are outlining all of the technical requirements. If you know, for instance, that your platform will need to comply with HIPAA standards, then some of the security measures will be clear. 

  • Confidential development is crucial to protect trade secrets. Contractual rights documentation (NDAs, non-competes, etc) are there to protect a business in the event of a disclosure, but employee training and communication are key to preventing disclosure and fostering a company culture of confidential development. 

At Mile Marker we live by a saying: “Slow is smooth, smooth is fast.” When it comes to intellectual property, doing the legwork at the beginning is worth the time and resources to future-proof your startup’s future.

Mile Marker is here to help you think about intellectual protections from an Agile perspective. We’ve worked with clients to implement IP milestones in a product roadmap to protect their ideas at every step along the journey to launch successfully and secure additional funding. Curious to learn more about our process? Schedule a chat with our team today.

About Mile Marker: 

Mile Marker is your strategic partner for Agile software development. Created for founders, by founders, we offer strategic software at startup speed. We specialize in aligning your technical work with your business goals through collaborative planning, offering a multidisciplinary development team, and ensuring ongoing support for your software. If you’re searching for a software development company or need a technical partner, start the conversation with an introductory call.

Disclaimer: We at Mile Marker are software engineers, not lawyers. This blog post shares the perspective and learnings of Mile Marker Founder CEO Daniel Litvak, who has brought more than 30 products to market to date. The information contained in this post is provided for informational purposes only, and should not be construed as legal advice on any subject matter. You should not act or refrain from acting on the basis of any content included in this post without seeking legal or other professional advice. The contents of this post contain general information and may not reflect current legal developments or address your situation. We disclaim all liability for actions you take or fail to take based on any content in this post.

Sources & Additional Reading:

- Developing an IP Roadmap, Carnegie Mellon University Swartz Center for Entrepreneurship 


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