Crowdfunding through websites like Kickstarter and Indiegogo is becoming an increasingly popular way to launch new products and businesses. These sites have been particularly valuable in helping startups launch innovative new products. While crowdfunding can be an excellent opportunity for entrepreneurs to get market feedback and raise capital, it can have serious impacts on intellectual property rights.
Crowdfunding can damage your intellectual property rights because it constitutes a public disclosure, which starts the clock ticking for filing patent applications. If you do not file a patent application within one year of the date of first public disclosure, you have dedicated the invention to the public and lost the right to a patent. Additionally, because the United States has a first-to-file patent system, inventors who crowdfund without first filing a patent application expose themselves to copying and knockoffs. Crowdfunding also exposes you to counterfeiting of trademarks and copyrighted materials.
Exposure to infringement suits is another pitfall of crowdfunding. Even highly successful crowdfunding projects have been sued for patent infringement. Additionally, use of trademarks and logos without proper vetting can result in cease-and-desist letters, lawsuits, and bad publicity.
We recommend seeking IP protection prior to starting a crowdfunding campaign. Filing a provisional patent application can be a low cost way to protect your patent rights, and federally registering your trademark or logo can be critical to protecting your branding strategy. Further, proactive use of patent and trademark searching services can minimize your legal risk. While crowdfunding can be a great asset to startups and inventors, we encourage you to take appropriate measures to protect your own IP rights and avoid infringing the rights of others.