What to Ask: Intellectual Property and Incorporation | Anne Kearns, Esq.
UpCounsel attorney Anne Kearns explains what every startup should be asking their legal team about intellectual property and incorporation2 min read
How and when should I protect my brand?
Brand protection is essential to every new business. You want to make sure early on that your company isn't infringing someone else's trademark. If it turns out it is, you may end up being forced to change your brand identity, and even defending a lawsuit. Trademark searches can be done quickly and inexpensively.
Do I have all the permits and licenses required to run my business?
Every county and state have their own requirements for what licenses and permits are necessary, which may differ per industry. It's important to dig deep to make sure you are meeting all requirements. Otherwise you may end up paying fines or other consequences down the road.
What agreements do I need in place for my independent contractors?
It's important that all agreements are in writing and clearly state the parties' intentions. This is especially true regarding ownership of intellectual property. Generally, independent contractors own the intellectual property they create for their principal. If the principal wants to own that IP, then it must be put in writing (e.g., work for hire or assignment).
What kind of entity should I form?
New businesses can take different forms ranging from a simple sole proprietorship, to a corporation. It can make big differences in risk, costs, and tax treatment.
What is the best way a small business owner can protect personal wealth and assets from business risks?
By choosing the correct business entity (e.g., sole proprietorship verses corporation), by obtaining insurance, by signing agreements in the name of the business, by making sound business decisions with full knowledge of consequences, by not commingling personal funds with business funds – keeping everything separate, among other things.
What specifically are small business owners most confused about when you first meet with them?
Intellectual Property – trademark protection
How can quality legal services help a small business grow?
By getting on top of and resolving issues that could cause distractions later on.
How can quality legal services help small businesses save money?
By getting issues resolved quickly and correctly.
How can small businesses maximize the value of their legal team’s services?
Ask for a budget.
Should business partners have the same amount of equity in a company? Why or why not?
It really depends on the company, voting rights, the partners and long term strategy. If there are two partners, and one has less equity and less voting power, they have less incentive to stay highly motivated.
What are the top three things a small business owner should be aware of when purchasing an existing business?
Accurately determine the value, Require the current owner to sign a “Not to Compete” contract, Must fully complete due diligence on everything: intellectual property ownership, pending lawsuits, outstanding liabilities, potential liabilities, contract obligations, etc.
Do you have any other essential legal guidance for startups that you haven't already included in this survey?
Get your IP protection and license agreements in place; make sure you have the correct permits and licenses; get on top of HR requirements; make sure you have formed the type of legal entity that is right for your business.