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Massachusetts companies should examine intellectual property

Perhaps you are a Massachusetts startup company, looking for investors. One of the key things they will want to know is whether you own any intellectual property (IP). Hopefully, you will be able to confidently answer that you do and explain what that entails. However, if your company is like many others, the answer may not be so clear cut, causing investors to become leery due to the potential for future business litigation.

To make sure you have the correct answers concerning IP, check to see if the company founders owned any IP and if it was assigned to the company. Company ownership is usually established at the beginning of a company by issuing stock to the founders in return for the assignment of any assets to the company, including IP and rights in business plans. If this was not done, it should be corrected as soon as possible.

Next, look for any IP that may have been developed by someone other than a founder, such as a contractor or a university. If so, are there documents in place that clearly assign the IP to the company or provide a license for its use? Agreements are needed that clearly spell out the details of the assignment or license. Also, make sure you have agreements that assign any IP developed by employees to the company. Every present, past, and future employee should sign such an agreement, saying that any IP they develop while in the company's employ is owned by the company.

All agreements should comply with federal and state laws and be readily available. There is no excuse for poorly drafted agreements. Make sure you have all the agreements you need and potential investors will be glad you did.

Source: Techli Chicago, "Reality Check: Does Your Company Own The Intellectual Property You Think It Does?", December 24, 2013

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