Contracts

Do startups need legal protection?

Contracts

Recently, a New York Times article discussed the tendency for tech-startups to forgo the use of Non-Disclosure Agreements (NDAs) as legal protection. The article, Why more start-ups are sharing ideas without legal protection, written by Eileen Zimmerman, explains that the original intent of NDA agreements was to help avert fraud and the theft of ideas. However, Zimmerman sites examples of situations where both the developer and tech startups can benefit by avoiding the use of such legal protection.

Disadvantages – NDAs

According to entrepreneur, David Katz, Entrepreneur, there isn’t a proven way to protect intellectual property. Katz notes that if you are speaking to other people about an innovative idea, and request that they sign an NDA, they might be put-off.  Not only that, a non-disclosure agreement is difficult to enforce. Katz explains that openly sharing ideas can lead to new insights. Oftentimes, startups never really get off the ground because the developers are creating a product or service that isn’t of interest to the public. Therefore, brainstorming with others can open up creative insights that might lead to a successful business venture. This advantage, he feels, could far outweigh the advantage of requesting an NDA. Moreover, he recommends developing an idea that others would have difficulty implementing.

Advantages – Legal protection

On the other hand, as tech startups secure solid footing in the arena of respectable and successful businesses, it’s important that entrepreneurs keep up with the laws and ramifications. For a business to survive, it needs to have solid legal grounding in addition to desirable products and services. It is highly recommended that any company, whether a tech startup or brick-and-mortar, learn where they stand with respect to the legal aspects of their business venture. A qualified tech- lawyer can help explain the advantages and disadvantages of various types of legal protection. Online law companies such as Legal Vision provide assistance in tech law as well as supplying on-staff lawyers with tech-law expertise; lawyers without the technological knowledge would unlikely have the ability to assist at the same level. Furthermore, trained tech lawyers can answer questions and provide necessary documents to ensure that you get off on the right foot with your business.

Other types of startup documents

Some of the most common business forms available, besides the standard NDA, include App and Software Development Agreements, Service Level Agreements, E-Commerce Agreements, Software as a Service Agreements, and End-User License Agreements. Each form is specific to the service or product the tech-startup has developed. Additionally, it is important to consider a trademark registration once your idea begins to take form. Trademark registration offers exclusive rights to your concept as well as a legal means for protecting your mark.

Tech startup legal protection consensus

After carefully considering the advantages and disadvantages of using any of the various forms, tech startups are safely positioned as contenders in today’s comparative (and often wide-open) fields. The business prospects available within most areas of technology appear to be limitless. However, entrepreneurs benefit by remaining aware of the ever-changing legalities. In order to secure the appropriate legal protection, speak to the experts. Learn more about the pros and cons, as well as the types of forms available, and position your business for success.

Disclaimer: The author of this article is not a lawyer, and this does not constitute legal advice.

Photograph by Branko Collin

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