Walking the tightrope of disclosure to create a robust IP strategy

When to share, what to protect, and how to negotiate: These are questions that confront every company navigating the complex landscape of intellectual property (IP). 

 For startups, IP represents more than just innovation – it forms the bedrock of business value and competitive advantage. Managing these intangible assets can become particularly challenging when startups must balance protection with necessary disclosure, and these decisions can have far-reaching implications for their future. 

To provide clarity on the grey area of rights management with partners, we speak to experts Mr Fu Zhikang, Director and Senior IP Strategist at IPOS International, a subsidiary of the Intellectual Property Office of Singapore (IPOS), and Ms Suchitra Narayan, Director of Venture Building and Advanced Manufacturing Lead at SGInnovate. 

Mr Fu, IPOS International: You can’t completely protect yourself from larger distribution partners if your business interests are fundamentally misaligned, for example, they want to sign an exclusive distribution deal with you just so you don’t sell it on your own and overtake them in the market. It’s important to get to know your partner and their interests before even entering the distribution deal. When negotiating the deal, that’s where having control points over your IP comes in to protect your product and your advantages. 

Ms Suchitra, SGInnovate: For manufacturing partners, do your due diligence on the organisation and make sure it has a reputation to manage and maintain. Large companies with a reputation are unlikely to want to replicate your IP. Rather, they want the startup as a long-term customer that would generate recurring revenue.  

Mr Fu: The general guiding principle for confidential information is that you share it on a need-to-know basis. Unless you’re hiring a very key person, like a chief software engineer, a new hire wouldn’t need to know all your trade secrets. You want to reserve this access for your key personnel in the organisation.  

For commercial partners, you should only share points that you need to share. For example, in the manufacturing process, if there are secret ingredients, you should continue to keep them secret. This will prevent the partner from fully learning what you do. 

Ms Suchitra: Investors are happy to sign non-disclosure agreements with startups because they look at the potential of the technology to provide a return on their investments and are not looking to make money from their IP. It can be a problem if startups want investment capital but are unwilling to share the secret sauce. Investors need to do their due diligence and de-risk the science to make sure that it works, it has potential for scale and returns. At some point in time, you’ve got to trust investors to help you grow. 

Mr Fu: The most important thing is not about the IP first but aligning the goals and interests of each party and understanding what you’re entering the collaboration for. Subsequently, based on that understanding, you define IP ownership and rights positions by setting out the roles of each party. If that’s not clear going in, that’s where the subsequent unhappiness comes in. 

Ms Suchitra: We can break down IP sharing with organisations into three distinct categories of collaborators: 

• Institutes of higher learning: The first scenario is when working with IHL’s you must come to a decision up front on the impact of background and foreground IPs. Is it going to be a single IP that you own, or a joint IP, for example?  

• Paying Customer: The second situation is when an organisation pays you money to solve a problem. When you take that non-recurring revenue and solve a problem, you might stumble across something that is IP-worthy. That IP belongs to the organisation that paid you money. This is relatively clear cut. 

• Co-Development: The third scenario is when an organisation puts money on the table, you put your technology on the table, and you collaborate on developing a solution. As in the first situation, you need to negotiate up front as to who owns the resulting IP. 

Mr Fu: It is important to recognise that all stakeholders have an interest in the business’s success and that it’s not a zero-sum game. For example, when working with a university, both parties want to see the technology successfully commercialised so that it can make a real difference, and public funds are not wasted. 

Ms Suchitra: As a business owner, the IP strategy is yours. But if the investors are proposing an alternate IP strategy, my advice would be to take a step back. Don’t get defensive, and instead think about why the investors are offering you a contrarian view. Maybe it’s because they’ve seen 100 startups, they’ve seen some of these IP strategies fail, and they don’t want you to fail. Bear in mind that they have your vested interests at heart. Because when you succeed, they succeed. 

Mr Fu: With confidential information, it’s a lot about management. Contracts and legal threats are important, but how you manage access to information is probably the most critical bit. For trade secrets, if you have documented certain processes well, then that gives you more options to stop a rogue co-founder or rogue employee from using those trade secrets elsewhere. 

Ms Suchitra: From a pragmatic perspective if the former employees leave and relocate overseas, , the legal costs to chase them down are very high,you may need a local lawyer there, and that’s even harder. A safer way is to have anything developed constantly assigned to the company’s name, and not to the individuals associated with it. 

Find out more about SGInnovate’s resources and support for Deep Tech startups here.