We’re living in an age of breakneck technological progress. From our computers and advanced machine learning algorithms to AI tools, reusable rockets, satellite-beamed internet, EVs, and robots that can pet your dog. It’s all moving too fast. And the key factor driving this growth is competition.
One could say that competition has been as important as curiosity in the history of humanity, leading us to innovation, exploration, and not giving up despite failure. And this competition has taken quite a modernized aesthetic today. Tech startups are doing business in quite a fearless way. That’s great for them. After all, it drives true innovation and propels us forward, one step at a time.
But key business decision-makers can’t leave it to their VCs and legal counsels, who might not have consistent experience in handling the legalities of various businesses, when it comes to protecting intellectual property.
IPs are your business’ core idea. And despite how protected you believe you are, there are chinks in any armor until there are none. IP protection is the last coat of paint, the last weld, that finally fixed it all. Counterfeiters, lost revenue, forced rebranding, deterred investors in subsequent rounds, loss of brand rights, reputational damage, and even something as simple as losing credibility on social media or among influencers can be terribly destructive for a startup.
Big businesses can take care of this. They are more likely to have done it a dozen times already that a 13th time is a breeze for them. But as a key decision-maker, board member, executive, or leader of a startup, you might not have the legal expertise to see 100% of the damage coming your way from different angles.
Tech Startup Risks
Tech startups are specifically at considerable risk. Not all startups are equally aggressive. More aggressive competitors only want one thing: to mimic your success or replicate your product/offering. With simple, in-house IP protection measures, you’re compounding your risks.
- Can the employees use special channels to release trade secrets?
- Are you using tools that can accidentally leak information?
- Is your filing balanced between exact methodologies and sufficient wiggle room to thwart any attempt by a bad actor trying to replicate your product or core service?
We live in an age of pretty much everything being bundled as a service. Digital footprint is easier to crack than, say, factory workflows. As such, any tech startup needs to be overly cautious about risks to their IPs, trademarks, and copyrights.
3 Strategies Competitors Can Use to Bypass Your IP Protections
Competitors in the tech space often bypass IP protections by using three key strategies.
- Cleanroom Reverse Engineering: You have a copyright or patent. But a competitor badly wants to replicate that software. Their engineering team will use your software and study it. Based on their findings, they will write a purely functional spec without any code or schematics. A second, isolated team will take that and build a product using only that spec. This is how Compaq and Phoenix Technologies bypassed IBM’s protections in the PC space. They made IBM-compatible clones, and IBM couldn’t successfully sue for copyright infringement. This is how Connectix created a PlayStation emulator. When Sony sued, the courts ruled in favor of Connectix.
- Fair Use & Interoperability: The fair use argument is another powerful tool. You must protect your IPs against this. Copyright law prevents copying exact code, but this can be circumvented by stating the goal as making a system interoperable or for indexing information. Google needs Java to build its Android operating system. Java is owned by Oracle. Instead of licensing the APIs from Oracle, Google wrote its own code for 37 APIs. It took a year for litigation to see the case through, and ultimately, the Supreme Court ruled in Google’s favor. They said that Google’s use of APIs was legal and fell under transformative fair use. If you don’t see where this could hit your product, you’re already at risk.
- Efficient Infringement: If you’re building something that a tech giant might want, you need to be especially careful about this one. The large company can just take it from you, well aware of the copyright infringement. Use it, implement it, and market it heavily in their products. You’ll sue, of course. But by the time the ligitation is through (courts can be clumsily slow at times), assuming you’re not already in huge losses because you couldn’t capitalize on your tech properly, the tech giant’s product will already have market dominance. The fines they’ll need to pay will be peanuts compared to what they have already gained using your code, your software. Apple has done this multiple times, such as against VirnetX and Optis Wireless. They have won hundreds of millions in jury verdicts. Dealing with IP disputes later is a strategy many tech giants use without concern.
IP Theft
The theft of intellectual property is perhaps the #1 cause of damage to businesses. The financial damages alone can be catastrophic enough that you cannot recover easily. Both, counterfeiters and aggressive competitors can make use of any gaps in your IP protection to cause severe reputational and financial damage.
Even if you have filed for patents, trademarks, and copyrights, there are ways to tiptoe around weakly drafted arguments or vague systems. In many cases, competitors just get lucky and arrive upon a way to mimic your product or service using a wholly novel system. You need to be protected against all potential angles.
And that begins with a specialized group of lawyers who handle copyright, IP theft, business asset protection, and related cases every day, including cases where companies are falsely accused of IP theft or similar misconduct.
Dhillon Law Group Inc. is one of the most reputable firms in this space, specializing in IP law for startups and smaller businesses, not just larger corporations. They have dedicated professionals who can cater to all sorts of IP and trademark cases. Especially if you’re situated in California, New York, Virginia, or Florida, their service can be extremely valuable.