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Crowdsourcing offers dangers to intellectual property rights

Startups across many industries have taken advantage of crowdfunding to raise impressive sums of startup capital without going through a round of fundraising from traditional investors. The primary advantage of crowdfunding is its ability to allow a business to make its sales pitch directly to its potential consumers, without having to first get the approval of boardroom full of suits.

With the introduction of the Jumpstart Our Business Startups Act, this trend of crowdfunding startup capital is likely to continue, although it is not without its risks. Often, in the course of a crowdfunding campaign, entrepreneurs are compelled to share essential information about their idea or prototype that can compromise the protection of their intellectual property.

If entrepreneurs launch campaigns that reveal information that may traditionally be protected as a trade secrets before they have sought out intellectual property protection, they may be leaving themselves dangerously vulnerable to intellectual property theft. United States patent laws provide a business one year from the date of disclosure of new technology to file a patent on that technology. In many cases, the presentation accompanying a crowdsourcing campaign may be considered sufficient to begin that one-year countdown, even if those running the campaign are unaware that their time to file a patent for their innovation has begun to run out.

If a startup fails to protect its intellectual property through filing a patent within the one-year grace period allowed by law, they are leaving themselves dangerously vulnerable to intellectual property theft without much recourse. Any member of the public may file a patent and claim the rights to the innovation after the grace period expires.

The prospect of having your idea stolen and exploited can be devastating to a promising entrepreneur. The guidance of an experienced legal professional can ensure that your rights and your innovations are protected to the full extent of the law.

Source: Insidecounsel.com, "The 5 intellectual property mistakes startups must avoid to protect ROI," ANDREA L. GOTHING, SETH A. NORTHROP, LI ZHU, accessed July 08, 2016

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