Highlights from
Technology Ventures: From Idea to Enterprise
Introduction
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N ew ventures need to have a plan to build and protect their intellectual property.
Introduction
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The proper array of trade secrets, patents, trademarks, and copyrights can add up to a set of
very valuable proprietary assets. For many new firms built on innovation and technology,
intellectual property can provide a competitive advantage in the marketplace. Licensing,
including the licensing of university-developed innovations, can be an important source of new
technology or a potential source of revenue.
11.1 Protecting Intellectual Property
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Intellectual property is a subset of assets that can be legally protected.
11.1 Protecting Intellectual Property
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The purpose of intellectual property law is to balance two competing interests: the public and
the private.
11.1 Protecting Intellectual Property
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The public interest is served by the creation and distribution of inventions, music, literature, and
other forms of intellectual expression.
11.1 Protecting Intellectual Property
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The private interest is served by rewarding people for creating and publicly disclosing these
works by giving them a time-limited monopoly that grants exclusive control.
11.1 Protecting Intellectual Property
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Although it is important for entrepreneurs to educate themselves about intellectual property,
they are strongly advised to seek professional legal assistance.
11.2 Trade Secrets
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A trade secret is a confidential intellectual asset that is maintained as a secret by the owner and
provides the owner with a competitive business advantage because it is a secret.
11.2 Trade Secrets
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Secrecy is valuable for formulas, algorithms, and know-how that can be implemented by a firm
without its being known by other than a few people.
11.2 Trade Secrets
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Several semiconductor firms keep their competitive advantage by maintaining the secrecy of
their methods and processes.
11.2 Trade Secrets
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The risk always exists that an employee will learn the secrets of the methods and the process
and decide to start a competitor firm.
11.2 Trade Secrets
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A firm will have to balance the need to protect secrets with the need to widely share information
among employees.
11.2 Trade Secrets
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A nondisclosure agreement (NDA), sometimes called a confidentiality agreement (CA) or
confidential disclosure agreement (CDA), is one method of protecting a trade secret.
11.2 Trade Secrets
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An NDA is a legal contract that prohibits the covered parties from sharing certain information
with any third party.
11.2 Trade Secrets
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A non-compete clause in an employment agreement, sometimes called an NCC or a noncompete, can prohibit an employee from starting or working for a firm that may compete with
his or her current employer.
11.3 Patents
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A patent grants inventors the right to exclude others from making, using, or selling their
invention for a limited period of time.
11.3 Patents
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A patent for an invention is the grant of a property right by the country in which the application is
filed.
11.3 Patents
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asexually reproduced
11.3 Patents
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Utility patents are issued for the protection of new, useful, nonobvious, and adequately specified
processes, machines, and articles of manufacture.
11.3 Patents
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Design patents are issued for new original, ornamental, and nonobvious designs for articles of
manufacture.
11.3 Patents
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Plant patents are issued for certain new varieties of plants that have been asexually
reproduced .
11.3 Patents
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A business method patent is a type of a utility patent and involves the creation and ownership of
a process or method, such as Amazon’s “one-click” ordering process.
11.4 Trademarks and Naming the Venture
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A trademark is any distinctive word, name, symbol, slogan, shape, sound, or logo that identifies
the source of a product or service.
11.4 Trademarks and Naming the Venture
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The trademark owner has the right to bring legal action to halt any infringing use for damages
and recovery of profits.
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11.4 Trademarks and Naming the Venture
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The goodwill and consumer recognition that trademarks represent have great economic value
11.4 Trademarks and Naming the Venture
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A company’s name is often its most important identifier. The name of a new company should be
memorable, related to the product or service, and attractive.
11.4 Trademarks and Naming the Venture
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Ideally, the name tells the prospective customer about the product.
11.4 Trademarks and Naming the Venture
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The right name can deliver a subtle message about the firm’s unique features.
11.4 Trademarks and Naming the Venture
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If possible, a name will serve as a marketing tool and will be easy to remember, spell, and say.
11.4 Trademarks and Naming the Venture
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A new venture should make sure that the name does not translate into something embarrassing
or negative in a foreign language, and that the name carries no other undesirable connotations.
11.4 Trademarks and Naming the Venture
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Once the new venture chooses its name, it should reserve a domain name for its website and email address.
11.4 Trademarks and Naming the Venture
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The best situation is when you can use the same legal name and domain name.
11.5 Copyrights
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A copyright is the right of an author to prevent others from printing, copying, or publishing any of
his or her original works.
11.5 Copyrights
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copyright protection automatically attaches upon creation of a work
11.5 Copyrights
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A copyright extends protection to authors, composers, and artists, and it relates to the
expression rather than its subject matter. This is important, because a copyright only prevents
duplicating or using the original material; it does not prevent use of the subject matter.
Therefore, software programs, books, and music are protected from copying, but the ideas in
these forms may be used by others.
11.6 Licensing and University Technology Transfer
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Licensing is a contractual method of exploiting intellectual property by transferring rights to
other firms without a transfer of ownership.
11.6 Licensing and University Technology Transfer
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A license is a grant to another firm to make use of the rights of the intellectual property. This
license is Page 250 defined in a contract and usually requires the licensee to pay a royalty or fee
to the licensor.
11.6 Licensing and University Technology Transfer
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most new firms realize that intellectual property can be among their most valuable and flexible
assets, they remain unaware of the earning potential of their patent holdings.
11.6 Licensing and University Technology Transfer
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Licensing can form the core of a business model.
11.6 Licensing and University Technology Transfer
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A new venture can derive valuable income streams by licensing its intellectual property to other
firms for noncompetitive, complementary uses.
11.6 Licensing and University Technology Transfer
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The benefits to the licensor include spreading the risk, achieving expanded market penetration,
earning license income, and testing new products and markets.
11.6 Licensing and University Technology Transfer
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A new venture also can save time and resources by licensing another firm’s technology to use in
its products.
11.6 Licensing and University Technology Transfer
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Licensing terms often are structured in recognition of a startup’s high potential but lack of
capital. For example, a firm may waive or minimize the up-front license fee charged to a startup.
But in return it may demand a percentage of sales revenue once the startup releases a product.
11.6 Licensing and University Technology Transfer
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Most startups founded on the basis of university-developed technologies will need a license
from the university.
11.6 Licensing and University Technology Transfer
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Even if a student or professor is both the inventor and the entrepreneur who brings the
technology to market, most universities own the intellectual property since they provided the lab
space, salaries, and other resources to conduct the research.
11.6 Licensing and University Technology Transfer
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In exchange for the license, the university typically requires some combination of an up-front fee,
an annual fee, a percentage of related product revenue, and/or equity in the startup.
11.6 Licensing and University Technology Transfer
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an exclusive license
11.6 Licensing and University Technology Transfer
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a nonexclusive license
11.8 Summary
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Table 11.4
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