The Startup’s Guide to Intellectual Property

Author: Jin Heo, Graphics: Anna Szymoniak

The BRB Bottomline: Intellectual property (IP) is a silent powerhouse that can make or break startups. But IP doesn’t just protect – it propels startups forward, differentiating them in the market, attracting investors, and securing their path to incorporation. Aspiring entrepreneurs should leverage this vital asset as both a shield and sword to ensure supported growth for startups. 

Defining intellectual property

Intellectual property (IP) refers to the creations of the mind, including inventions, literary and artistic works, symbols, images, names, and logos used in commerce. Intellectual property represents a fundamental pillar of modern business and legal frameworks, encompassing a wide array of assets that are the lifeblood of innovation and entrepreneurship. Oftentimes, businesses don’t protect this valuable asset because of its intangibility- this means compared to physical assets, they pose an additional challenge in monitoring and detecting unauthorized use or infringement. Measuring the value of intellectual property itself is also difficult as its intangibility leads to a subjectivity in its value that relies on factors such as market demand and innovation. This subjectivity can result in disputes over the true value of intellectual assets. Nevertheless, businesses should prioritize IP to enhance their competitive advantage in the marketplace.  

The IP Imperative

According to the Harvard Business Review, in 1995, “intellectual property wasn’t even in the vocabularies of many CEOs, let alone a part of their business strategies.” However, Richard Thoman of the $20 billion Xerox Corporation believes this landscape had vastly changed already by 2000. During his time at IBM, one of the largest companies that integrate cloud computing and information technology, Thoman witnessed the remarkable effectiveness of their intellectual property management strategy that elevated its yearly patent-licensing royalties from a mere $30 million in 1990 to a staggering $1 billion in 1999, marking a phenomenal 3,300% increase. This $1 billion per year of nearly all free cash flow is a testament to the significant financial gains that effective intellectual property management can bring to companies. 

Over the past three decades, there has been a notable and continuous rise in the prominence and utilization of intellectual property across various industries. The World Intellectual Property Indicators reported that 2022 marked a record high for patents with 3.5 million applications worldwide. The key contributors of this growth included countries like China, the United States, Japan, South Korea, the European Union, and India. China’s share in patents of the global total rose from 27.7% in 2012 to 46.8% in 2022. For India, 2022 was the sixth year of growth in a row, with patent filings increasing by 25%. Overall, there were 1.5 times more applications filed in 2022 than 2012. 

Evidently, what was once a concept unfamiliar to many businessmen has now become and remains an integral part of company strategy. In fact, IP Group Vice President Reanna Myers  predicted that 2024 would be a “pivotal point for the IP industry amid the AI discussions while many are balancing market pressure with regulatory complexity.”

Since they are typically smaller and more vulnerable to exploitation, startups must prioritize protecting their concepts and assets, enabling them to thrive amidst fierce competition. Though the business landscape, and therefore the intellectual property landscape, can be different for startups, the value of IP lies in the same two major reasons: the protection it provides against imitation and the value it can provide in securing funding. 

Startups often operate in high risk environments with limited resources, so safeguarding their original concepts and assets should be one of their main priorities. Not only does it act as a legal safeguard that prevents the unauthorized use and copying of their ideas by other startups, but, more often, it protects the startup from the hands of larger, more established corporations. Startups often lack these larger companies’ financial and operational resources, and IP protection helps level the playing field by giving startups a legal means to defend their innovations. This protection not only fosters further innovation but encourages economic growth by allowing creators to benefit from their efforts with an established ownership. Subsequently, its users can benefit from their ideas at large, and larger corporations have the opportunity to profitably invest in these startups’ proprietary products to build on top of them. This is the very purpose of IP, according to Bernie Meyerson, IBM’s Chief Innovation Officer, who said that corporations should not use their patents to “impede innovation…you want to encourage others to build on your ideas and increase the market size while at the same time protecting your freedom of action and to serve your customers well.” 

A look into the types of IP protection

IP protection encompasses several key categories, each serving distinct purposes that form a critical defense against imitation. Copyrights, for instance, protect artistic and literary creations, preserving the rights of creators to their original works. This protection lasts for a specific duration and carries associated limitations, balancing the interests of both creators and the public. For trademarks, the emphasis lies on safeguarding a brand or company’s identity. Particularly crucial for startups, this protection involves a registration process and specific steps to ensure exclusive rights to the creator. Conversely, patents are varied, catering to diverse inventions, be it designs, products, code, or processes. The application process can be complex and costly, especially for early startups, but it provides protection for a specific period, typically 20 years, during which companies can capitalize on their creation. Lastly, trade secrets secure critical business knowledge by protecting confidential information. Non-disclosure agreements (NDAs) play a vital role in enhancing this process, enabling businesses to share sensitive information while maintaining a level of internal security. These varied forms of IP protection collectively contribute to the innovative and competitive business landscape by offering a spectrum of legal safeguards for creators. 

Startups should leverage IP in order to fuel competitive advantage and investor appeal. The competitive edge that IP provides differentiates them in the market, positioning them as leaders with proprietary offerings that are challenging to replicate. Such a strategic use of IP not only solidifies their presence but also enables them to capitalize on market opportunities because of the market’s fluctuating value. This allows IP to enhance their brand and reputation, making startups more appealing to potential investors. IP provides a level of security and exclusivity, increasing investor confidence in the startup’s ability to protect its innovations and ultimately generate returns on investment. In fact, the European Patent Office and European Union Intellectual Property Office published a joint study in 2023 that reported that startups that utilized IP rights during their initial seed stages were up to 10.2 times more likely to secure funding successfully. 

Moderna, a biotechnology company founded in 2010, has rapidly ascended to a prominent position in the medical innovation landscape. Going public eight years after its founding, Moderna has strategically harnessed its robust IP portfolio to revolutionize the field of mRNA-based vaccines and therapeutics. The company’s success is intricately linked to its innovative use of intellectual assets, serving as a testament to the transformative power of intellectual property in shaping the trajectory of a startup.

Often being at the forefront of innovation, startups bring several benefits to communities. Startups, with their entrepreneurial drive and advancements in sectors like healthcare, technology, and finance, contribute to building more dynamic communities. Nevertheless, it’s important to recognize that these contributions are not without their systemic challenges. The problem of monopolization arises when some corporations exploit the system by accumulating vast portfolios of patents, using them not to foster creativity but as legal weapons to deter competitors, resulting in an environment that limits consumer choice and drives up prices. The abuse of IP power can hinder smaller startups from entering the market and deter them from developing new technologies, ultimately impeding progress and technological advancement. Striking the right balance between protecting IP and preventing its misuse is essential in ensuring it serves its intended purpose without hindering innovation and competition because companies will often engage in “IP squatting,” acquiring patents not to innovate but to block competitors. This practice limits technological progress and harms communities by restricting access to new products and services. The threat of legal battles over these patents can deter startups from innovating, leading to a concentration of power among a few dominant corporations. 

What happened with Blackberry

The case of Blackberry’s patent infringement lawsuit by NTP in NTP, Inc. v. Research in Motion of the early 2000s exemplifies the critical importance of taking early legal action to defend a startup’s IP rights. The patent-holding company NTP sued Research In Motion (RIM), the maker of Blackberry devices, citing that RIM’s Blackberry wireless communication devices infringed on NTP’s patents related to wireless email delivery and synchronization technology. Using the precedent set by the landmark case Decca Ltd. v. United States, the courts ruled in favor of NTP and awarded damages of over $23 million to NTP. As the legal battle continued, the two parties reached a settlement for $612.5 million in 2006 and allowed RIM to continue its Blackberry services without disruptions. This significant settlement resolved the patent dispute, highlighting the potential financial risks and business operation disruptions that can arise from IP litigation issues. It serves as a cautionary tale for startups and large corporations alike about the potential consequences of neglecting IP matters and the importance of engaging with IP attorneys early on to gain invaluable guidance and defense against legal battles that could jeopardize the startups’ growth and success. 

IP success with Genentech

Genentech’s impressive business success is clearly reflected in their strategic approach to intellectual property. By 1985, a pivotal year when the FDA approved Genentech’s first product, the company had already amassed a substantial IP portfolio. They held 117 issued patents with an additional nearly 2,000 patents pending worldwide. This extensive IP coverage established a firm foundation for Genentech’s pioneering role in biotechnology and gene science which was established by a small group of scientists and entrepreneurs in 1976. Over Genentech’s four-decade history, they have secured nearly 20,000 patents worldwide, spanning their researchers’ discoveries, engineering, and manufacturing operations. This comprehensive IP strategy is a testament to their ability to protect and capitalize on their innovative breakthroughs, solidifying their status as a leading biotechnology company that effectively drives innovation, attracts investments, and influences the progress of medical science. 

The Berkeley Startup Law Initiative

The Berkeley Startup Law Initiative also recognizes the importance of IP. Here, Berkeley Law students provide pro-bono legal services to low-income and diverse startup founders to help them overcome the costly legal barriers that prevent many from establishing their innovations. In the fall semester, the students are matched with startup clients and assist them in the incorporation process. Their responsibilities include conducting research, managing client intake, interviewing subjects, and drafting and submitting legal documents with the help of supervising attorneys. In the spring semester, the students shift their focus to crafting a range of vital IP-related documents tailored to the needs of their matched startup, including equity incentive plans, non-disclosure agreements, and employment contracts. 

This program at Berkeley addresses a highly prevalent justice gap in the realm of business. By specifically targeting diverse and low-income startup founders who lack the resources to secure legal representation, the program contributes to a more inclusive entrepreneurial space. Furthermore, the program also offers Berkeley Law students a valuable hands-on learning opportunity to gain practical experience as part of their legal education that is highly applicable to careers in IP. 

One of the only university campuses that provide similar services, the Berkeley Startup Law Initiative reflects Berkeley’s dedication to community engagement and social responsibility. As the top university in the world for the number of venture-funded startups by its undergraduate alumni, it demonstrates the university’s dedication to using its resources and expertise to address inequities in business and a commitment to continued innovation. 


Intellectual property is intangible in the realm of startups, but its value is undeniable. As seen by the success of Genentech and the hindsight of Blackberry, taking preventative measures with IP law protection is often far more cost effective than dealing with potential legal consequences later on. 

IP serves as more than just a shield for startups– it’s a catalyst for growth and a testament to the transformative power of innovation in today’s business world.

Take-Home Points:

  • IP’s value lies in its ability to protect against imitation and attract potential investors, which is especially important for startups because they often operate in highly competitive environments. 
  • IP can be categorized into copyrights, trademarks, patents, and trade secrets. 
  • A court case involving NTP suing Blackberry illustrates the significant financial risks of neglecting IP matters. 
  • Genentech has attributed IP to its success, from its journey as a startup to a leading biotechnology corporation. 
  • The Berkeley Startup Law Initiative offers pro-bono IP-related legal services to low-income startup founders, fostering a space of inclusivity in entrepreneurship at Berkeley.

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