Crowdfunding and the Importance of Protecting Your Intellectual Property

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In an era of ubiquitous technology and information, protecting Intellectual Property becomes a key task, especially when a firm or individual innovator opts for fundraising through the publicly driven strategy of ‘Crowdfunding’.

The concept of Crowdfunding can be understood as a strategy of collecting funds from existing customers, investors, or the public at large though an internet driven platform. The platform itself may be just a webpage with a description of the project or product and the target amount needed to fund it. Investors can be rewarded with anything from a simple “thank you” to equity share in the organization, share of profits, and/or participation in the product development.

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Necessary Countermeasures

A person or company raising a Crowdfunding scheme must keep the following in mind:

  • Without complete research, Crowdfunding can lead to the infringement of someone else’s intellectual property rights
    It can so happen that the product for which Crowdfunding is organized has already been patented or registered as a copyrighted material or trademark by another firm. In such a situation, the fundraiser could end up infringing the intellectual property rights of another, leading to penalty. A sure way to avoid such a situation is to conduct a deep and extensive research on the product before arranging for Crowdfunding for the same.
  • It can give away the essentials of the person’s or company’s intellectual property, which leaves it at a risk of being copied or stolen before the person or company has gotten its product registered
    This scenario is the other side of the coin. Crowdfunding is often based on word-of-mouth and requires the fundraiser to explain and elucidate on the product in question. It is the easiest way to expose the vital details and essentials of the product that make it unique. The fundraiser should  secure product registration to avoid any form of copyright infringement before making public presentations for the purpose of fundraising. 
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When organizing a Crowdfunding campaign for a product, it is advisable to consider the following in order to mitigate unexpected risks:

  • The first and foremost step to avoid hassles is to conduct a thorough research on the product in question and similar products already in the market;
  • A Non-Disclosure Agreement in place always proves beneficial in preventing any leak of information regarding the new technology or product;
  • One must make sure to gather all information about the requirements to get a product registered as well as the intellectual property rights of the person or company involved, beforehand;
  • The fundraiser must be very careful in choosing the right platform and right set of investors for Crowdfunding according to the product or technology, which is to be funded;
  • Disclosure of vital information, such as a trade secret, can be withheld to protect the intellectual property;
  • A provisional filing of the patent can help protect the invention from being copied or stolen.

Observation: Crowdfunding can be a double-edged sword, which is why though it may be very useful in raising funds, all the risks must be calculated well before beginning the scheme to avoid the loss of one’s intellectual property.

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A&A LAW is a full service law firm, offering comprehensive legal services in all major areas of law. The firm offers contentious and non-contentious legal services to clients. The non-contentious services include strategic planning, providing legal opinions, preparing documents, and conducting negotiations. The contentious services include arbitration, representation of clients in court hearings at all levels, and enforcement of court judgments and arbitral awards. In addition, they provide services for commercial & non-commercial litigation and corporate governance. The combined experience of the firm’s professionals is over sixty two (62) years, spanning across the world. A&A LAW have worked with industry leaders in the field and have delivered as per their requirements.

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