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How much will your business lose if your intellectual property is taken away?


At the start of the business, partners sign corporate agreements and local analogs of NDAs, register the company, and draw up the articles of association. It is not the first year we have learned this with our legal colleagues.


But the issue of intellectual property is often put in a long box as "not important in the first stages of business". Or, even worse, they carelessly make the academic paper like "another piece of paper".


Fact.


In business, especially in IT, intellectual property can be 2-3, sometimes even 100 times higher than the price of the company's tangible assets. For example, Meta Platforms Inc., the owner of the social network Facebook, made a deal to buy the trademark of the regional bank Meta Financial Group. The amount of the contract is 60 million dollars.


Ask yourself a simple question.


How much will your business lose if your intellectual property is taken away?


The concept of intellectual property rests on three pillars:

  • patent

  • copyright

  • and trademark

The first two are used to protect the rights of creators of artistic works and inventions. The third is used mainly to prevent unfair business competition.


It is excellent when there is a legal entity to which you issue all intellectual property, and all partners are part of the founders.


But "business in Ukrainian" looks different.


We like to make a bunch of private entrepreneurs because it is more profitable from the point of view of taxes. There is no single LLC that owns all intellectual property.


Did you recognize yourself?


Are there representatives of big business?


Ask yourself the question again. Does the goal of reducing taxes always come first among other legal tasks?


Attention, case!

Quite real.


As of December 2021, the appeals court is considering the issue regarding the Citrus company. The owner of a 50 percent stake in ZT-Invest LLC (which includes the Citrus group of companies) filed several lawsuits totaling more than UAH 1 billion against the company's co-owner partner. His demands were justified because He did not coordinate the company's activities with his.


The partners share the rights to the trademark of the "Citrus" group of companies. They have equal rights to it, and all decisions regarding using the Citrus brand must be made by mutual consent.


That's how "another piece of paper" suddenly became the subject of a lawsuit for a billion.


By the way, the trademark is an excellent deterrent to the actions of the second partner. Joint ownership protects well against "throw", which often happens in business.


Using a trademark with a partner can insure you with an additional contract that will help in court.


In such a document, they write the following:

  • procedure for disposal of trademark rights

  • means of using the trademark

  • terms of distribution of income from the brand

  • and the order of distribution of expenses related to the functioning of the trademark. For example, they obtain security documents, legal protection of violated rights, etc

  • the procedure for representing the interests of co-owners of a trademark

The Citrus court case deals with many violations. One contract cannot fix this.


There is no single piece of paper that will cover all legal tasks. Unfortunately for business, fortunately for lawyers.


For our latitudes, jurisprudence is an expense, and for the West, it is an investment in a bright and safe future of business.


Change, don't repeat mistakes.


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