by Justin Tollefsen | Oct 10, 2013 | Blog, Nondisclosure Agreements, Tax Issues US
In a previous post I wrote about some of the ways in which a good attorney advisor can help a startup avoid some of the common mistakes made by early stage companies when contemplating formation. In this article, I address some of the additional IP and tax pitfalls that founders should keep cognizant of amidst the excitement of getting their new venture off the ground. Assignment and Ownership of IP Assignment and ownership of a company’s core IP from the pre-formation stages through funding and eventual exit are part and parcel of the nuanced advice provided by an experienced attorney. IP assignments must be clear and correct between the parties. Although the founders are focused on the success of their idea at the outset, if things go sideways it needs to be clear what the company owns and what the individual founders own. Does the founder’s agreement assign to the company all related IP from before incorporation as well as after incorporation? Is there a technical founder who wishes to retain rights to his personally developed IP until some specified event (e.g., funding) occurs? Founders agreements must contain clear and unambiguous terms in order to establish a chain of ownership for all of the company’s IP early on. This will be important later on to potential funders, partners and acquirors. In situations where founders remain employed in other companies or have recently left a company, any IP ownership provisions in their current or previous employment agreements should be scrutinized. Don’t just assume that the individual owns all of the IP that they’ve create outside of work hours—make sure that...
by Justin Tollefsen | Sep 27, 2013 | Business Law, Contracts, Nondisclosure Agreements
I participated in a session yesterday on IP protection for technology companies that presented a wealth of good advice on certain provisions of Nondisclosure Agreements (NDAs) to which founders and IP owners should pay close attention. These agreements are sometimes confusing to the uninitiated, and often drafted in a manner that heavily favors the side producing the document. Knowing what to look for when an NDA is pushed across the table (or the electrons arrive at your inbox) is of utmost importance when discussing technology with a potential partner. Of course, some partners (such as VCs) will generally refuse to enter into NDAs at all. Often times these people talk to so many companies about their ideas in the course of a business day that there is simply no practical way for them to avoid running afoul of the provisions of an NDA. At the opposite end of the spectrum are mutual NDAs, where the terms apply (generally equally) to both sides. Mutual NDAs are far less likely to contain one-sided provisions. A unilateral NDA, however, presents the opportunity for one side to fine tune the language to benefit themselves (as either the recipient or discloser of confidential information), and may contain some tricky clauses for which every startup founder should watch out. I outline a few of these in this post. Residual Information Clauses One clause to be keenly aware of is what is known as a “residuals” or “residual information” clause. These are often structured to permit the recipient to freely use any information that is retained in his or her unaided memory (i.e., anything that they...
