5 Things Small Business Investors Need to Know about “IP”

The Wall Street Journal’s Small Business Blog featured recently a guest column by Antone Johnson on the use, misuse, and misvaluation of intellectual property.  It’s probably of interest to valuators and financial consultants who are working with small business owners to value and growth their businesses.  

Venture capitalists, angel investors and start-up lawyers these days tend to be obsessed with “intellectual property,” or IP.

 

And for good reason: In the information economy, the core assets of a new venture are likely to be talented people, the IP they create, and little else.

To maximize future value, founders should try to lay a solid IP foundation even before a new start-up is incorporated. 

Be Sure You Protect and Value Your Unique Competitive Edge

Johnson, who is a lawyer for start-up technology and media entrepreneurs and investors, and previously was vice-president for legal affairs at eHarmony Inc., says there are five common mistakes to avoid about intellectual property.  He labels them:

1. “Contamination.”

 

2. Mixing up what came from where.

3. Planning to launch a business around a clever, catchy brand name that can’t be used.

4. Confusing types of IP and means of protection.

5. Overvaluing patents.

 . . . and provides good detail on how these mistakes happen how business owners can avoid them.    (For instance, in “Confusing types of IP and means of protection, he distinguishes the role and limits of trademark, copyright, patents, and trade secrets from intellectual property.   Check out the full article here. 

See our earlier piece  referencing NPR’s  This American Life podcast on “Patent Trolls,” which also takes note of a piece in The Advertiser claiming Apple’s “Bogus Patents” will “Strangle Android.”