IPR- Game-changer for Fintech Companies and Start-ups

How IP is related to Business

Intellectual property is covered by law so that the ideas or inventions may gain credit or financial benefit from individuals working on the invention. Software, hardware, and branding related to fintech innovations that are important for competitive technology are protected by IP rights. For start-ups, an IP strategy is particularly important because they are pursuing investment from investors who want to ensure that the Fintech business in which they invest is covered by the law. In addition, in the event that a founder wishes to sell his company, there is nothing more appealing to potential buyers than a strong IP portfolio.

Conversion of finance by FinTech to supplement or replace conventional services, business models, and suppliers. It can generate brand new business opportunities or have a competitive edge that can have far-reaching effects over traditional offers. Different stakeholders, including major financial institutions, insurance companies, hedge funds, institutional investors, credit rating agencies, accounting and auditing firms, regulators, technology companies, consortium, non-profit organizations, and start-ups, may be impacted. Major investments can be made by large organizations to develop older technology systems or replace them with new FinTech products.

The Government of India has made honest efforts over the years to raise awareness of the value of intellectual property rights among start-ups by highlighting their modern-day need and offering different incentives for start-ups, such as tax incentives, to protect their intellectual property rights.

IP Strategy for FinTech Companies and Startups

1. Keep your job work separated from your new Idea

It is definitely frightening to give up an existing paycheck and take the risk of working long hours with no pay at a start-up. At the beginning of a company, however, one of the greatest pitfalls is when a creator begins working on his new concept at the same time as working for someone else.

Conflicting commitments will place at risk the ownership of the intellectual property of your new business. It is important to know what has been done, what tools have been used, and where the foundation work has been done. Know your work rights, including those relevant to intellectual property distribution and non-competition. Many employers require their workers to sign a Confidentiality and Invention Assignment Agreement in which the employee accepts and acknowledges that the employer is wholly owned by any new ideas and innovations created by the employee relevant to the employer's company.

2. Don't allow anyone to assert ownership of your IP or your company

Over discussions with friends, in dorm rooms, or with other entrepreneurs over drinks or coffee, some of the best new ideas are born. Let's face it it's fun to chat about things that are exciting and to get ideas from others along the way. The informality of these conversations also causes individuals to jointly send funding requests, to keep each other out as co-founders, and to speak loosely about equity shares.

You completely have to negotiate on the terms of your partnership with the co-founder when you actually have a co-founder. Later on, not doing so will cause immense problems. Think of the founder agreement as a kind of "pre-nuptial agreement" in a way.

In any kind of written Founders agreement, here are the main terms of the contract you need to address:

• Who is getting what percentage of the business?

• Is the percentage of ownership subject to vesting on the basis of continued business participation?

• What are the founders' functions and responsibilities?

• Will the firm or the other founder have the right to buy back the shares of the founder if one founder leaves? At what cost?

• How much time is required of each founder to be devoted to the business?

• What salaries are the founders (if any) entitled to? How is it possible to improve that?

• How does the company make crucial decisions and day-to-day decisions (majority vote, a unanimous vote, or those decisions exclusively in the hands of the CEO)?

• In what conditions would a founder be eliminated as a company employee? (This will usually be a decision by the board of directors of the company.)

• What assets or cash does any founder contribute or invest in the company?

• How will the sale of the company be decided?

3. The strategy of patent needs to be cost-effective and not be avoided

Patents can be important business properties. Patent portfolios are also interpreted as a way of boxing out rivals in similar technical spaces to have offensive advantages. Patents, however, also have extensive defensive advantages. For example, if a start-up is threatened by a competitor's patent infringement, a defensive patent portfolio may serve as a valuable bargaining chip. This can lead to a range of reasonably favorable results for a start-up, including improved terms of settlement or a cross-licensing opportunity. If any lawsuit is launched, it may also permit an opportunity to file counterclaims.

4. Open-source Software

Startups may elect to integrate open source software into their code while developing software. In general, the use of open-source software is free and can also speed up development. Open source licenses must be read carefully, however. Start-ups could face threats of breach of contract or copyright infringement if the open-source code is used in a way not allowed by the license.

5. Beware while hiring a new employee

In recruiting new employees, especially from competitors, you need to be extremely careful. You want to escape lawsuits from the former employer that your business is using the prior employer's confidential or proprietary information.

Consider the following in that regard:

• Make sure that the worker is not subject to a related non-compete binding arrangement.

• Require the new employee to represent that no sensitive or proprietary information or files of the former employer are taken over by them.

• Require the new employee to agree not to use any third party confidential or proprietary information.

• Until recruiting, do full reference checks on the new employer.

To know more about, How a Startup can acquire and build high performance, refer to the given video below-

Conclusion

It is a once-in-a-lifetime opportunity to set up a company or launch new start-ups with the implementation of Atmanibhar Bharat by the Government of India. The urgent need for an hour, however, needs entrepreneurs to be conscious of the extreme value of intellectual property rights and the need for a constructive approach to protecting their intellectual property rights. They need to realize the value of implementing an intellectual property security policy right from the outset, in order to shift the attitude of entrepreneurs. It cannot be denied that the protection of these rights might be correlated with a cost. However as IPR is an asset that offers various economic benefits for the entrepreneur when secured from the beginning, the price is more like an investment.

BY-

Ankita Rathi