Intellectual Property (IP) refers to intangible creations of the human mind. Keep in mind that it is not the ideas that are protected as such, but their expression.

No matter what your company does, it will create intellectual property along the way: Be it the innovative technology behind your solution, the source code of your software, the trust in your brand name, or simply the know-how of how to serve your customers better than anyone else.

For certain types of intellectual property, the government offers legal safeguards to incentivize the creators: If you have a patent on an invention, you are exclusively allowed to commercialize that patent for 20 years, and you can ask the government to stop anyone else from using the same invention without your permission. Similar concepts apply to other types of IP, such as designs, text, software, logos, and trademarks. Other types of IP are more challenging to protect, for example, know-how and data, which must essentially be protected by confidentialitly.

Whether or not your IP can be protected by the law, keeping it confidential to the maximum possible extent is often the best solution to safeguard it. For example, Google protects its algorithm by keeping it confidential; same for Coca Cola’s formula.

There are two main reasons behind that:

To ensure this, share your IP only on a need-to-know basis and always have a confidentiality agreement (e.g., an NDA) with the IP recipient. See our page on Types of contracts to learn more about Non-Disclosure Agreement (NDA).

It is often said that startup investors invest in teams. In our opinion, it should be specified: Investors invest in a team's ability to produce IP.

Why is that? IP rights are often the main sustainable competitive advantage of businesses. The IP remains in the company even when the people leave. It is the key asset for most companies: What would Coca-Cola be without its brand name, Novartis without its patents on pharmaceutical products, Facebook without its data?

For you as a decision-maker in a business, it is your duty not only to create but also to properly protect the IP of your business. Investors hate uncertainty, and if there is uncertainty around your IP, it will lower the valuation of your company and raise many questions.

In that regard, a clear IP strategy must be discussed and implemented with the key objective of understanding what your core IP is and how to reduce the chances for competitors to steal or undermine your IP.

Another key point is to verify whether you can market your product without infringing someone else's IP, who could prohibit you from commercializing your product. This is known as Freedom To Operate (FTO).