Ignoring this crucial step could cost your startup everything

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July 17, 2024
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7 min read
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Imagine waking up one day to find that all your hard work has been stolen, your ideas replicated, and your startup on the brink of collapse. Yes, you just read my last article on securing partnerships, pitched to a much bigger company, and now they’ve launched a product that looks like yours

In my journey as a startup attorney, I've had the privilege of working with multiple startups, guiding them through this incredible journey from inception to funding and scaling. I’ve had to settle disputes and fights because founders failed to protect themselves, and that’s what I’ll discuss in this article.

You know, you have founders who create a scale of preference. This is what's important. This is what's not important. Sometimes, when I sit down with founders, I ask if they've got a law firm on a retainer.

"Ah, no o, we can't afford lawyers," is the usual response. But then we start talking, and they casually mention how they spent over ₦20 million building their app. And I laugh.

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 An app with a name and brand that is not trademarked. Where your backend infrastructure is not adequately protected with the right intellectual property protection. Where you don't even have the right service level agreement with the app developers who have developed the app you have spent so much on. You're literally at their mercy. You don't put the cart before the horse.

We've had to negotiate very difficult service-level agreements. And thankfully, those difficult conversations helped the startup retain ownership of their applications when things got bad. 

Protecting your intellectual property

While partnerships are crucial, it’s equally important to protect your intellectual property (IP). Intellectual property is a very important component for every startup, especially in the fintech space and many founders don't understand how to protect this thing called intellectual property.

Before you pitch your idea or enter into any partnership discussions, ensure that your brand, app, and any proprietary technology are adequately protected through trademarks, copyrights, patents, and trade secrets. Here’s a detailed breakdown of the key areas of intellectual property and how you can protect yourself for the future:

Trademarks

Paystack

Trademarks protect your brand name, logos, and slogans. For example, the name "Flutterwave" or the logo of "Paystack" must be trademarked to prevent others from using a similar name or logo that could confuse your customers. One advice I give to businesses at the early stage is to make your registered business name amenable. 

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The biggest flex you have as a startup is your ability to pivot. Samsung was founded as a grocery trading store. Most of these entities started with different businesses. And as they saw the need of the market, they continued to twist and turn to where they were.

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Leave your registered name amenable to allow you the opportunity to move into different areas. For instance, If you are a prop-tech company and what you want to do is shortlets, and then you call your company Emmanuel Shortlets Limited, not bad. But where you want to go into full-blown construction, would that name be fitting for a construction company?

Let's take for instance that the prop-tech is no longer profitable and you would like to venture into commerce or logistics and the logistics business begins to blossom. You suddenly receive a huge contract from Techpoint to move some items from Ikeja to Banana Island. They request for your invoice for payment and you present them with an invoice reading "Emmanuel Shortlets Limited". This may raise avoidable questions, especially during audits and most companies may think you are not the same company or you are a scam. You will definitely have a hard time explaining that it's your company. 

So, to avoid such difficulties, it is usually advisable to make use of non-generic names like EMG Services Limited, EMG Integrated Services Limited or EMG Global Limited. Even when you start out with prop-tech, you are still able to use that name without any issues when you venture into other businesses because the law allows you to amend your objects.

You are simply able to say, "Oh, I'm doing real estate now. I don't want to do real estate again because it is not as profitable. I want to do something else." You can go back to CAC and say, "Modify my objects to suit these changes." And the law allows that.

Protecting your brand name doesn't come from company registration. It comes from intellectual property registration. So Emmanuel Shortlets should be a brand name that is trademarked, not a company name that is registered, as long as there is Emmanuel Shortlets Limited, no other person can trademark it. Brand it everywhere in the country where it is registered 

 Oftentimes founders fall into the trap of trying to protect the brand through company registration and this is very wrong. Brand protection does not come from company registration, It comes from intellectual property registration. Company registration provides you with a corporate legal personality. Both of them are distinct, and the roles they play are different. You can't go to a bank to set up a corporate account with your trademark certificates, but you also cannot fight market exploitation with your company incorporation certificates. You fight brand theft with your trademark certificates. 

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Service level agreements and ownership rights

It’s crucial to have strong service level agreements (SLAs) when dealing with developers. Founders (typically Non-technical founders) often spend millions on an app, but without the right SLA, they can end up in a difficult position if things go south.

For instance, who owns the server? If I don't need you anymore, can I still access the servers? These are questions that need clear answers in your agreements. Always prepare for the worst-case scenario. Imagine both parties with their hands on their necks, trying to headbutt each other. This mindset ensures that your contracts cover all eventualities​. 

Having an intellectual property license and agreement is also a bargaining chip. Look at Steve Jobs; without his ownership of certain products, he wouldn't have found his way back to Apple. It was because he owned and could drive the implementation of what Apple needed that he regained his position​.

Copyrights

This is pretty straightforward. Copyrights protect written works, software codes, videography, and audio. If you have unique content or code in your app, ensure it's copyrighted. I've never seen a pitch deck that's copyrighted. Maybe one or two, but most of them are not. I always tell founders, "Go back and put a copyright clause in your pitch deck."

Adding a copyright clause in your documents is like putting a "Caveat Emptor" sign—buyers beware. It puts the world on notice that you own this thing and have no intention of allowing anyone to steal it. 

You are a creator, and copyright gives you the flexibility and protection you need. It’s a dog-eat-dog world out there, so you really cannot overprotect yourself. Just realise that you are in an environment where anything can be stolen.

Patents

Patents protect inventions and novel solutions. If you've developed a new way to process payments, a patent can protect this innovation. If Bill Gates had said because he co-owned Microsoft Incorporation , he did not need to patent the Microsoft software, would he be as rich as he is today? Every time you use Microsoft, he makes money because it was patented. 

Trade secrets

Trade secrets protect proprietary business processes and know-how. For example, the algorithms or business strategies that give your fintech a competitive edge. Internal frameworks are essential to protect your business. And that's what they call trade secrets. How do you protect it? What measures are you putting in place to ensure that you protect these things?

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Jurisdiction of IP and international considerations

Intellectual Property

IP protection isn't limited to one jurisdiction. While an IP certificate in one jurisdiction gives you the right of first refusal globally, it’s essential to trademark in every market your product will reach. For instance, if you're in manufacturing, one of the first places to take up trademarking is in China.

Many Chinese companies have trademarks in Nigeria, and this underscores the importance of protecting your brand in all relevant jurisdictions. There are 45 classes of trademark, and every business must identify and trademark in the appropriate class to ensure comprehensive protection​. 

The importance of NDAs and the art of pitching

As I often advise founders, before you start any conversation with potential partners or investors, make them sign a Non-Disclosure Agreement (NDA).

Anyone who refuses to sign an NDA is a major red flag. This is crucial because it helps protect your ideas and ensures that if they are stolen, you have a legal basis to challenge the theft. You cannot go into a boxing ring and then complain that they hit your cheek. What were you expecting?

You see, business is dog-eat-dog. It's not a fancy place. It's not where you come to enjoy the attraction and the admiration. It's where you come to fight for your survival​. 

When it comes to pitching, the art of pitching is something that is learned in itself. You say enough to warrant a second meeting but not enough to make any sense of the idea. Often times, because many are very excited about the money they think is coming, they over-explain. You must be strategic in your disclosures. Master the art of giving enough information to elicit interest but very little information that can be pieced together to make complete sense. This not only protects your idea but also sets the stage for further detailed discussions under the protection of an NDA. 

Tying it all together

Navigating fintech licenses for early-stage startups involves a strategic approach that leverages partnerships while ensuring your intellectual property is protected. By focusing on these areas, you can build a robust foundation for your fintech startup and position it for long-term success. Collaborate smartly and protect your innovations—these are the keys to thriving in the upwardly mobile and competitive fintech landscape.

Omoruyi “Uyilaw” Edoigiawerie is the founder of Edoigiawerie and Company LP, a leading Startup Law firm in Nigeria.

He is a Notary Public of Nigeria with extensive experience in startup, technology, and innovation law, expertise in artificial intelligence, and corporate commercial legal practice. Uyilaw’s vast knowledge in tech and innovation law is borne out of a strong startup background combined with a rare understanding of contemporary technology and the startup landscape in Nigeria and the African region, coupled with international best practices.
Omoruyi “Uyilaw” Edoigiawerie is the founder of Edoigiawerie and Company LP, a leading Startup Law firm in Nigeria.

He is a Notary Public of Nigeria with extensive experience in startup, technology, and innovation law, expertise in artificial intelligence, and corporate commercial legal practice. Uyilaw’s vast knowledge in tech and innovation law is borne out of a strong startup background combined with a rare understanding of contemporary technology and the startup landscape in Nigeria and the African region, coupled with international best practices.
Omoruyi “Uyilaw” Edoigiawerie is the founder of Edoigiawerie and Company LP, a leading Startup Law firm in Nigeria.

He is a Notary Public of Nigeria with extensive experience in startup, technology, and innovation law, expertise in artificial intelligence, and corporate commercial legal practice. Uyilaw’s vast knowledge in tech and innovation law is borne out of a strong startup background combined with a rare understanding of contemporary technology and the startup landscape in Nigeria and the African region, coupled with international best practices.
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