Proper protection of intellectual property rights in any innovative technology startup is key to gaining the trust of business partners and consumers, building a strong business reputation, and generating stable profits. Conversely, the lack of legal protection for a startup’s intellectual property can lead to the following negative consequences: loss of rights to the developed intellectual property; plagiarism, unfair competition, and lawsuits seeking compensation for the unauthorized use of others’ intellectual property; damage to business reputation; a lack of investor interest; and unstable profits.

Potential investors typically focus their attention on projects in which intellectual property rights are properly regulated and protected.

Therefore, intellectual property, in addition to validating intangible assets of the company, such as trademarks, industrial designs, know-how, inventions, elements of design and so on, provides their creators and owners competitive advantages in the market.

How are intellectual property rights protected in IT projects and startups? First, an intellectual property right is created; then it is registered in accordance with the procedures established by law; next, the issue of granting permission to use or transfer property rights to such an object is resolved; and finally, the process culminates in receiving compensation for it.

It should be noted that, when it comes to IT projects, it is possible to register not only a complete program or website, but also individual components: product documentation, interface design, software module logic, APIs, and database structure.

When developing an IT product, startup founders have the right to engage third-party specialists—such as developers, designers, and engineers. To protect the rights to the development of such a product and prevent the leakage of important information, trade secrets, personal data, etc., non-disclosure agreements (NDAs—Non-disclosure Agreement) are entered into.

They are especially necessary:

• when communicating with potential investors—to showcase the company’s proprietary product;
• when hiring new employees and contractors—to protect its intellectual property and trade secrets;
• during negotiations with partners or contractors—to protect copyrights in future legal relationships;
• when testing the product with external specialists—to prevent information leaks.

The conclusion is this: when creating intellectual property, it is necessary to enter into agreements with employees and contractors that must include the following provisions:

• a clear definition of intellectual property;
• the terms for transferring property rights to the employer;
• Privacy Policy and Non-Disclosure Agreement.

The contract must clearly specify who owns the intellectual property created while working for the company. It is important that the contract spell out the terms for the transfer of rights to software, technologies, and other intellectual property.

A software development contract with a full-time employee must include the following:

• the inclusion of writing program code in an employee’s job duties;
• the automatic transfer of all exclusive property rights to the employer company from the moment the asset is created;
• Including compensation for the creation and transfer of rights in the salary.

A similar agreement with a contractor is drawn up as a separate contract (for construction, services, or work) and must include a section on the full transfer of exclusive property rights to the resulting product to the company, as well as confidentiality provisions (NDA).

Under Ukrainian civil law, the client and the developer each hold a 50% share of the rights to the intellectual property created, unless otherwise specified in the contract. Therefore, in the event of a legal dispute, it becomes necessary to prove authorship. Proper registration of rights and documentation of the author’s information significantly simplify the defense in court.

If a company operates in the international market, it is necessary to register its rights in various jurisdictions. In the event of unauthorized use of copyright abroad, having an official certificate makes it possible to file a claim in foreign courts or to utilize mechanisms such as DMCA, WIPO, and others.

One practical tool for protecting rights is deposit—the transfer of a sample of the work (code, text, design) to a specialized institution for safekeeping, which then issues a certificate confirming authorship and the date of creation.