Over the past few months, we have been talking to many entrepreneurs about their knowledge-gap around intellectual property (IP) and other important startup matters that actually impact IP or intangibles (and therefore valuation and ultimately their success). This is the first in a three part series detailing the lessons learned by these early stage companies.
First, what do I mean by traditional IP? I often joke that if I had a dollar for every person who told me they didn’t have any IP in their business, and a second dollar for those who think IP is only patents, I would be rich. Traditional IP to me is the patent or trademark protection. That is not to say that copyrights, trade secrets, and so on are not IP—far from it—but the most common IP is patents and trademarks. Unfortunately there remain some big misconceptions around protecting traditional IP.
A few brave entrepreneurs have shared their stories to help others learn about the importance of IP identification early and often.
Timing is everything
Phillip Felice, Founder of Bridge Optix, described his recent brush with IP horror in a single sentence: “I realized I have underestimated intellectual property timing importance.” Phillip was weeks away from a public release of his product when he was grilled on his company’s IP protection and strategy. He realized that his patents needed to be filed before his public product release.
We have heard other horror stories where companies have spent thousands on branding for websites, signage, or product packaging without first securing rights to a name, including trademarks. Register and secure rights before spending too much of your limited startup capital.
Location, location, location
Patents filed with the United States Patent & Trademark Office (USPTO) only cover the US. The same goes for trademarks and copyrights filed with the US Copyright office.
No handshake deals
If you have software code and you are having overseas work done, you need to make sure you have agreements to protect your confidentiality and trade secrets. Contracts and code copyright can be very helpful in protecting software that may not qualify for patent protection. This also applies for prototypes and other items that will be considered for patent protection.
Last fall, I interviewed Justin Effron, CEO of ALICE, a NYC based startup. ALICE stands for “A Life Improving Customer Experience,” but is also in honor of Alice the housekeeper and much more from the Brady Bunch series! Justin’s experience creating an IP strategy provides some great lessons for other startups and early stage companies.
Justin Effron: Startup – Our company started in the summer of 2012 but as founders, we were not full-time until January 2013.
Juetten: What is ALICE?
Effron: ALICE is the first mobile guest engagement and request management platform for the hospitality industry. We empower our hotels and their staff to drive deeper, sustainable connections with guests using mobile technology, while increasing operational efficiency through a robust back-end task management and analytics platform.
Juetten: What problem are you solving?
Effron: Hotels must adapt to constantly evolving guest expectations. We enable our hotels to deliver the very latest in guest technology without substantially adding to their technology expense as we are the first provider that solves both the front and back end operations within one system.
Juetten: As an aside, I wanted to add that, as a frequent traveler who often needs to find either gluten-free food or some missing or forgotten item (like a Mac mouse before my presentation at SBDC last fall), having ALICE would have helped me! That being said, what’s the vision for your company?
Effron: We intend to make the hospitality industry smarter and more streamlined. We allow a hotel to run their entire operation through a single platform, regardless of department, for both staff and guest requests. The power here is that irrespective of how a guest chooses to make a request, ALICE ensures excellent delivery and tracking. On the analytics side, hotel operators can now gain a new level of insight into their operations.
Juetten: Can you comment on any pain points or lessons learned?
Effron: I have learned four points:
- Knowledge is power – The entire process of identifying IP was very opaque to us. It was hard to understand the different places of IP, the people that needed to get involved to secure it, and the value that protection could bring.
- Patents – We now understand that a provisional patent can be a good starting point for us. We have a number of novel components in our system that gives us a competitive advantage, and we needed to protect that as a business. Before we created an IP strategy, it was hard to understand how to go about this process.
- Assistance – We needed to identify the right type of people or resources to help us, and also the best approach to conducting the conversations with those service providers.
- Location – As a global startup with operations on three continents, we have a need to get smart on IP protection within each region quickly and we need to track all of our IP and trademark licenses across each country we operate in.
Juetten: Back to your bit about patents, I wanted to add that a provisional is much less expensive than a utility patent, but to of course seek legal advice on patent protection! Moving on, what is the advantage to understanding your IP early on?
Effron: We were able to have an intelligent conversation with our lawyer to better understand the costs and steps needed to actually pursue a patent. We began registering our trademarks in other countries.
Juetten: Startups are an adventure. What is your favorite startup story?
Effron: When we started out and were in the process of launching one of our first hotels, a senior board member whom we had never met was wary of our idea as he felt the technology might lower the level of face-to-face service the hotel prides itself on. We were pushed through anyway because the rest of the senior team shared our vision. After we launched, he used the app to see what it was like and loved the experience so much that he actually tracked us down on LinkedIn, asking if we would take an investment from him! Safe to say we did. It was a really big vote of confidence to see someone inside hospitality do such a 180.
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This is a great example of persistence, which is a common theme in successful startups. Thank you also to two other entrepreneurs who shared their lessons learned, Ghedalia Gold-Pastor and Adir Miller to assist other founders.
Remember, you may not know what you do not know about your valuable assets like patents and trademarks until you can identify your valuable IP. That discovery needs to happen early on and then you can strategize on protection, remembering to consider all the locations of your operation.
