BY: Patrick Perrin
BERG HILL GREENLEAG & RUSCITTI
Most people know that starting a new company is a big endeavor, but few appreciate the legal pitfalls that can sink a startup before its products or services ever reach the marketplace. Entrepreneurs are typically moving very quickly to develop and launch products and services, raise capital and meet real and imagined deadlines. It will be legal counsel’s job to identify and help entrepreneurs avoid these five common startup mistakes.
1. FAILURE TO SECURE CLEAR INTELLECTUAL PROPERTY OWNERSHIP
Intellectual property is often a new company’s single most valuable asset. Unfortunately, proper screening and protection of IP rights is often overlooked during the startup phase. Existing IP ownership might be claimed by a founder’s or employee’s former employer under a prior employment or other agreement. A seemingly novel company or product name or invention might already be a federally registered trademark or patent of another company. Failure to conduct trademark clearance searches, to properly review the ownership of existing IP or to register new IP can be costly mistakes that can result in loss of the assets that a company needs to thrive or even survive.