Intellectual Property Considerations – Product Development

Cite this article as:"Intellectual Property Considerations – Product Development," in The Business Professor, updated July 18, 2014, last accessed July 16, 2020,
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Intellectual Property Considerations - Developing a Product
This video explains the primary Intellectual Property Considerations when developing a product.



Intellectual Property Considerations for Product or Service Development

Part of a competitive strategy includes establishing rights in a product or service method that is not subject to copy or complete imitation by competitors. This may require capturing intellectual property rights in the form of a Patent, Copyright, Trademark, Trade Secret. Each of these forms of intellectual property protection has different requirements for securing those rights. Refer to our Legal Resources for more information about securing intellectual property rights in a product or service process.

Investors are particularly interested in a business that possess secure, intellectual property rights in their product or service. Securing intellectual property rights provides the ability to deter others from copying or imitating your intellectual property for commercial gain. As such, intellectual property rights are a form of security similar to physical assets.


Considerations for Hiring Individuals for Product or Service Development

The product or service development stage is an extremely risky time for loss of intellectual property. At this point the product or service is under development, rapidly changing, and is likely not subject to intellectual property protection. Individuals working on developing the product or service may be tempted to copy or reproduce the product or service for her personal gain. This could be transferring or selling the design, process, or information to third parties or exploiting their knowledge as part of their own business venture.

Several contractual agreements or provisions are common used to deter the theft or infringement upon intellectual property.

  • Work for Hire – This is an agreement with workers or independent contractors. The agreement essentially states that the worker understands that she is working on a project that has potential value as intellectual property. The worker thereby agrees not to copy, disclose, or transfer any information learned during the work project.
  • Non-Compete – This is an agreement where an employee (possibly an independent contractor) agrees not to compete with the employer in the same area of business as that employer. This assures that the employee will not acquire knowledge or sensitive information and immediately begin to compete with the employer. Non-compete agreements must be reasonable in time and manner restrictions to be enforceable in most jurisdictions.
  • Non-Disclosure – Non-disclosure agreements (NDAs) are agreements whereby information is disclosed to a third party and she agrees not to copy or otherwise communicate that information to other third parties. These documents are used to dissuade third parties from disclosing business secrets learned during a confidential meeting or presentation.

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