Intellectual property
eye-PEE
Legal rights that protect creations of the mind, including patents, copyrights, trademarks, and trade secrets.
Intellectual property is the legal category that covers creations of the mind. In tech, the four main types are patents (inventions and processes), copyrights (code, content, and design), trademarks (brand names and logos), and trade secrets (proprietary algorithms and business methods).
For software companies, IP is the foundation of the business. The code you write is automatically copyrighted. Your company name and logo can be trademarked. Novel technical approaches can be patented. Customer lists and pricing models can be trade secrets.
IP matters most during fundraising, acquisitions, and legal disputes. Investors want to know you own your IP. Acquirers pay premiums for strong patent portfolios during due diligence. And competitors will push boundaries unless you protect your trademarks and copyrights. NDAs protect confidential information during business discussions.
Examples
A startup's employment agreement includes an IP assignment clause.
The clause states that any code written during employment belongs to the company. This ensures the startup owns the IP its engineers create, which is critical for fundraising and potential acquisition.
A company discovers a competitor copying their UI.
The legal team evaluates their options. The UI layout is not patented. But specific design elements and copy are copyrighted. They send a cease-and-desist letter citing copyright infringement.
An acquirer conducts IP due diligence.
The acquiring company reviews the target's IP portfolio: 3 patents, registered trademarks, copyright ownership of all code, and trade secret protections for their core algorithm. Clean IP ownership increases the acquisition price.
Frequently asked questions
Is source code automatically copyrighted?
Yes. In the US, copyright protection attaches automatically when code is written. You do not need to register it, though registration provides additional legal benefits if you need to sue for infringement.
Can you patent software?
Yes, but it is complicated. Pure algorithms are not patentable. Software that produces a novel, useful, and non-obvious technical result can be patented. The bar is high and the process is expensive.
Related terms
A legal contract that prevents one or both parties from sharing confidential information disclosed during a business relationship.
A legal doctrine that allows limited use of copyrighted material without permission for purposes like commentary, education, and research.
A permissive open source license that allows anyone to use, modify, and distribute the software with minimal restrictions.
The practice of tracking and fulfilling the legal obligations of all open source software used in a product.
Want the complete playbook?
Picks and Shovels is the definitive guide to developer marketing. Amazon #1 bestseller with practical strategies from 30 years of marketing to developers.