Intellectual Property--The Four Elements of Intellectual Property

Almost every entrepreneur has heard that it’s important to protect the idea and most have heard about patents. But in addition to patents there are other forms of protection that come under the name of Intellectual Property. They are

Trade Secrets--information about your product/service that is not publicly known
Trade Patents--protection based on legal means through the US patent office
Copyrights--set of exclusive rights granted to the author or creator of an original work
Trademarks-- a distinctive sign or indicator used by an individual, business organization, or other legal entity to identify that the products or services.

A robust intellectual property strategy for your business includes all of the above. Some recommend you start with trade secrets and only move to patents if necessary. Using copyrights and trademarks you can add additional layers of protection around your business.

For a software business many startups talk about their patents, but most angels know that patent protection is weak at best in the software world since there are many ways to work around a patent if someone wants to duplicate the idea. A better measure is to calculate the cost of duplicating the software including design, coding, build out, and most importantly data set build out.

Best regards,
Hall T.

Startup Weekend will be coming to Austin at CoSpace

Startup Weekend will be coming to Austin at CoSpace (http://cospaceatx.com/) the weekend of September 10th-12th, 2010.

Startup Weekend (http://www.startupweekend.org) recruits a highly motivated group of developers, business managers, startup enthusiasts, marketing gurus, graphic artists and more to a 54 hour event that builds communities, companies and projects. It is an amazing opportunity to connect with other passionate and skilled individuals, and perhaps even find a co-founder or two to transform your idea into reality.

Featured in Forbes, TechCrunch, NY Times and more, Startup Weekend continues to make the buzz with success in more than 100 cities world-wide. Thanks to Joey Pomerenke (http://www.twitter.com/joeypomerenke) of Startup Weekend for bringing the event to Austin for the first time.

“Startup Weekend is a perfect opportunity for entrepreneurs and the local tech scene to network, but also meet potential co-founders and hopefully leave the weekend with a new startup. It is a must attend event if you want to network, find co-founders or just spend the weekend with some passionate and smart people. –Joey Pomerenke”

If you want to be a part of Startup Weekend Austin you should act fast and buy a ticket because participation is limited to the first 75 and tickets are selling fast! Tickets are $75 and include meals and beverages for the entire weekend.

To register now, click here: http://austin.startupweekend.org/tickets/

When: September 10th-12th, 2010
Where: CoSpace (http://cospaceatx.com/)

For more information visit http://austin.startupweekend.org/

Legal Structure—What does an Angel Investor Look for in a Startup’s Legal Structure?

Most startups use an LLC structure when they form the business. This is okay for starting a company but when it comes time to raise funding, it needs to be converted to a C-Corp. In general, angel investors don’t like LLCs. Tax laws dictate that owners in an LLC must submit a K-1 tax form each year which is a hassle. The other drawback is that there’s typically not a proper board formed in an LLC so the oversight by investors is not as solid it needs to be from the investor’s point of view. S-Corps limit the number of investors and so doesn’t work well in an angel funded company.

The next question is should it be a Texas-based C-Corp or a Delaware C-Corp? If you raise funding only in Texas then a Texas C-Corp is sufficient for most investors. If you plan to raise funding on the West Coast or East Coast, then a Delaware C-Corp is better. For those who are not familiar with company legal structures, Delaware provides the most advantageous legal environment for companies.

I’m not an attorney and so advise you to seek professional counsel on these matters.

Best regards,
Hall T.