How to Safeguard Your Ideas: Intellectual Property

🔖 Contents on this page:

• Intro
• What are the different types of Intellectual Property?
• How is Intellectual Property generated?
• Patentable Inventions
• Trademarks
• Copyrights
• Intellectual Property and Freelancers
• 🔎 It all starts with research
• 🛡️How do I protect my Intellectual Property in Germany?
• Patent Protection
• Trademark Registration
• Scope of Review by DPMA
• Non-Disclosure Agreement (NDA)
• Intellectual Property in a Cross-Border Structure
• Where is my IP located?
• Allocation of Intellectual Property
• Summary
• 📚 Resources
• ⚠️ Disclaimer

Intro

Intellectual Property (IP) is a crucial aspect of modern business, especially for startup founders. In most cases, IP is an integral part of a startup's assets and is one of the most important value drivers of the company.

In this page, we'll summarize the concept of IP from a legal perspective, focusing on German intellectual property and copyright law. We'll explore what IP is, how it's generated, and essential strategies to protect your intellectual assets with a focus on patents and trademarks.

What are the different types of Intellectual Property?

Intellectual Property refers to a category of legal rights that protect creations of the human mind, encompassing inventions, literary and artistic works, and symbols, names, and images used in commerce.

In Germany, IP is regulated by a strong legal framework designed to safeguard innovations and creations. In general, Intellectual Property can be divided into the following different types:

Source: German Patent and Trade Mark Office

In addition to the above, German law also protects copyrights (Urheberrechte). Copyrights safeguard literary, artistic, and musical works. In Germany, copyright protection is automatic upon creation, and registration is not required. However, registration can provide additional legal benefits.

How is Intellectual Property generated?

Patentable Inventions

To generate IP through inventions, startups need to create something new and inventive. This can be a technical product, process, or even software. Once patented, it grants the founder exclusive rights to their invention.

Trademarks

In Germany Intellectual Property rights for trademarks are generated through a combination of registration and actual use of the trademark. Startups who created a specific logo, symbol or word that may qualify as a trademark need to file a registration for said element with the German Patent and Trademark Office (DPMA; see below for more details). However, to maintain and protect a trademark, startups also need to continuously use the registered trademark.

Copyrights

Authors, artists, and musicians generate IP through creative works like books, songs, or artwork. Copyright is automatically granted upon creation, allowing creators to control how their work is used.

Intellectual Property and Freelancers

When startups depend on the work of freelancers to generate IP, it's important to note that the freelancer may also have partial ownership of the IP if they played a crucial role in its creation. To guarantee that the startup ultimately receives the benefits of the IP, the service agreements with the freelancers should clearly and thoroughly state that the IP rights are assigned to the startup.

🔎 It all starts with research

No matter which type of IP might be of interest to you - it is important that you gain information on already existing IP rights in your field before you file an application to protect your Intellectual Property.

Important questions to evaluate are:

1. What is the state of the art in the field of my invention? Is it really new?
2. Does a trademark already exist for the name I wish to apply for and in the geographical area relevant to me?
3. Will my draft design possibly infringe the IP rights of another person who already registered a design in my geographical area?

🛡️How do I protect my Intellectual Property in Germany?

Patent Protection

If your startup has come up with a groundbreaking invention, we highly recommend that you consult with a patent attorney to assess its patentability. You should then file a patent application with the DPMA to secure exclusive rights. Please be prepared to disclose detailed information about your invention. It is important to note, however, that patents only protect technical inventions like mechanical devices or pharmaceutical compositions. They do not protect categories such as discoveries, scientific theories, or mathematical methods.

Patents can be registered with the DPMA in Germany and with the European Patent Office (EPO) for European patent applications.

Trademark Registration

Consider consulting with a trademark attorney to conduct a thorough search for existing trademarks that may pose a conflict with your brand. Once the search is cleared, you can proceed to file a trademark application with the German Patent and Trademark Office (DPMA) to secure and protect your brand identity.

Trademarks can be registered with the DPMA for Germany, respectively with the European Union Intellectual Property Office (EUIPO) for EU trademarks registrations. The Registration application requires submitting the required information, that is, details about the applicant, the trademark, and the list of goods and services claimed, the industries and sectors your startup is active in, and payment of fees.

Scope of Review by DPMA

Only patent applications undergo substantive examination by the DPMA. Applications for other IP rights such as trademarks are only examined with respect to formal requirements. A lawyer can carry out a more comprehensive examination to assess whether your trademark, your design or your utility model is capable of being protected and can work to amend it to avoid any possible conflicts with other trademark. Yet there always a risk that a trademark protection might be challenged by a third party sometime down the line.

Non-Disclosure Agreement (NDA)

Once your Intellectual Property is properly registered and an important step in keeping your IP protected during daily business operations is to consider NDAs whenever IP, trade secrets or other confidential information is shared with business partners.

For a more detailed overview on NDAs we recommend our sub-page on Essential Business Contracts for startups.

Intellectual Property in a Cross-Border Structure

Where is my IP located?

When a company grows and expands internationally, it's important to consider how to protect its Intellectual Property rights across different countries and entities. For instance, if a software company does most of its development work in Germany but also some significant parts abroad, its IP rights could end up being held by different companies in different countries.

This can become a major issue, especially when it comes to discussions around a potential exit. Even more, in case of an intended asset or licensing deal.

Allocation of Intellectual Property

In order to prevent this issue, in cross-border structures it is advisable to first analyze carefully in which entity relevant IP rights can arise and where they vest.

The next step is to clarify in which entity (and in which country) IP rights should be best held. This should be done, on the one hand, to optimize the use of government grants and tax incentives, and, on the other hand, to prepare for all potential exit scenarios, such as licensing or asset deals - which often require the entire IP to be vested in a single entity.

After determining which entity, and in which country, should strategically hold the startup's IP rights, the allocation of IP is typically regulated in a final step through an intercompany agreement.

For a more detailed overview on the most important legal and tax cross-border topics we recommend our sub-page Taking your Startup Cross-Border.

Summary

Intellectual Property often is a key asset for startups and understanding its legal framework is vital for founders. Therefore, recognizing the types of IP relevant for your business, how it is generated, and - potentially most important - the necessary steps to protect your IP, should be on top of every founders list.

Protecting your intellectual assets is not only a legal requirement but also a strategic move to ensure the long-term success of your venture.

📚 Resources

1. German Patent and Trademark Office - Deutsches Patent- und Markenamt (DPMA)

Website: https://www.dpma.de

The DPMA is the official government agency responsible for intellectual property rights in Germany. It is the central point of contact in Germany for all questions regarding industrial property protection. Their website offers a wealth of information on patents, trademarks, and designs, including application procedures, legal texts, and helpful guides.

2. European Patent Office (EPO)

Website: https://www.epo.org/en

The European Patent Office registers European patent applications.

3. European Union Intellectual Property Office (EUIPO)

Website: https://euipo.europa.eu/eSearch/

The European Union Intellectual Property Office provides a data base that lets you search through trademarks, designs, owners registered within the EU.

4. United States Patent and Trademark Office (USPTO)

Website: https://www.uspto.gov/trademarks/search

The United States Patent and Trademark Office provides a data base that lets you search through trademarks and patents registered within the US.

⚠️ Disclaimer

Please be aware that the information provided on this page with regard to legal and tax topics is intended for general informational purposes only. It should not be interpreted as legal or tax advice. We do not provide legal or tax advice, and we strongly suggest that you do your own research or seek advice from qualified professionals.