Everyone has seen the next “cool idea” somewhere: in commercials; in stores; or while watching Shark Tank. These ideas will inspire you to come up with ideas for products, services, or entire businesses. What happens when you decide to pursue these dreams? Aspiring entrepreneurs and early-stage startups need to be aware of certain types of documents and filing practices that can protect them down the road.
Once your initial planning and market research is complete, you’ll want to officially form your company. To do so, you’ll file some type of document, establishing your company as its own entity. Two of the most common types of documents are corporate charters (for corporations) or articles of organization (for limited liability companies).
You may also receive other forms from your government at this time. For example, in the U.S., you’ll be assigned an EIN (employer identification number). Documents like these and your formation paperwork are important when setting up a bank account for your company or applying for a business loan, so you’ll want to make sure they are well-documented and stored in a secure digital location.
Working with Outsiders
You’ll also want to keep track of contracts you set up with co-workers, interns, or sub-contractors you work with. During the early stages of your company’s development, it’s tempting–and sometimes financially necessary–to offer equity in exchange for work. Although equity-for-work agreements may be required to get your company out of the gate, one of the biggest mistakes a company can make is not keeping diligent track of contracts, receipts, and descriptions of the work that will be completed. Even if equity isn’t promised, there are instances of sub-contractors coming back and claiming that the work they completed exceeded the payment they received, entitling them to equity in your company. The same type of situation may occur with interns or other people involved with the business early on–just look at Facebook’s history.
One of the biggest favors you can do for your future self is manage your contracts and other important documents so you can reference them should some type of equity dispute come up. Some start-ups would rather look for opportunities employing a registered agent to handle their documentation, and the other would turn to automatic solutions, like the contract management software.
Finally, non-disclosure agreements, or NDAs, are very common practices for any company that is developing intellectual property (IP). NDAs can be simple (templates are available online) but set up an agreement between you and whoever you are working with to keep the ideas discussed among parties a secret. It’s a best practice to have anyone you meet to discuss your business idea with you or who does any work for you to sign an NDA.
You’ll also want to file these away in case of any future legal disputes. It’s a good idea to set up some type of dated document or file for each meeting you have that includes a signed NDA, a record of whatever you discussed, and any materials that may have been involved in the meeting. You can save these as separate documents in a folder, or organize them into a single PDF and store them in a “Meetings” file.
Protecting Your Intellectual Property
If your idea is innovative enough, everyone will want a piece of your success. Oftentimes, that means trying to replicate some aspect–if not the entire premise–of your product, service, or business. There are several ways to arm yourself against would-be competitors and maintain a competitive advantage.
Leaving a Paper Trail
Write everything down, date it, and keep an electronic copy of it. There’s nothing fancy about this step but being able to go back and produce a well-documented progression of your company’s development can help protect you against a number of unforeseen IP-related disputes. When we say document everything, we mean everything. Brainstorming documents, to-do lists, ideas for products drawn on napkins–anything that shows how your company’s ideas came to be. This may be crucial if you have to prove that your ideas are in fact, your ideas. We recommend designating a file for any type of product-development-related documents/drawings/whatever.
Setting up Legal Protection
Depending on the nature of your company, there are different legal routes to protect your intellectual property. Three of the most common are patents, copyrights, and trade secrets.
Patents are legal documents that secure your right as the sole producer of an invention/product that your company may have developed. (To legalize these documents, try to find out where to find a notary near me and notarize them for legal advice.) Patents are filed on physical products and prevent other organizations or individuals from replicating your designs. A design patent protects your invention’s physical appearance and dimensions, while a utility patent is filed to protect brand-new inventions.
- Trade Secrets
Copyrights and patents are two of the most widely-known ways of protecting intellectual property, however, they share the same drawback: they go into public record once filed. This prevents competitors from replicating the exact design but does very little to stop them from tweaking some tiny aspect and producing a similar product or making minute changes in code. Technically–these imitations constitute completely different designs and are not protected by your patent or copyright. In some cases, making designs public is what allows competitors to catch up in the first place.
The alternative option is getting trade secret protection. Trade secrets can protect “any formula, pattern, device or compilation of information which is used in a business, unknown to others, and gives the business a competitive advantage,” (FindLaw). Think Coca-Cola’s “Secret Recipe.”
The best way to keep trade secrets protected is by digitally storing files in a secure location, and marking them as “CONFIDENTIAL” with watermarks or other, hard-to-miss identifiers to keep them from accidentally being exposed to the public.
For any type of legal protection you set up for your company, you’ll want to set aside storage space to retain all of your documents so you have proof of the protection in place. The law firm(s) you work with should have something saved as well, but it’s best to be over-prepared.
Kdan Provides Document Management Solutions
Kdan prides itself on providing effective document management solutions for enterprises. Our Document 365 Business software includes a mobile PDF Reader that can easily scan and convert documents or handwritten notes into PDF files. You can also annotate PDFs, include e-signatures, or add watermarks to identify your important or confidential documents. Our Kdan Cloud provides users with 1TB (roughly 67 times the space available on Google Drive) of secure storage for all their important documents. If you are interested in exploring our business document solutions, you can start a trial of our software here.
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