How to Invent and Protect Your Invention: A Guide to Patents for Scientists and Engineers

11.4 START-UPS, SPIN-OUTS, AND JOINT VENTURES

Start-ups are new companies created by entrepreneurs. While the term start-up includes any new business, like bakeries or lawn care providers, we will use the term start-up to refer to a recently created company established expressly to commercialize a new invention. Inventors that do not wish to sell or license their patents may instead choose to establish a start-up. While an inventor could do the same work as a sole proprietor without creating a new company, organization of the project into a corporation or limited liability company can protect the inventor from some forms of liability, make it easier to obtain investment money, and look more official to potential partners, employees, and investors. The inventor creates a legal entity, like a corporation, by filing documents with a chosen state's office of corporations or business associations. He then licenses patents, trademarks, copyrights, or trade secrets related to the invention to the start-up. In addition, the inventor may invest his time, money, and know-how into making the company successful.

Start-ups are a good option for inventors who wish to control the commercialization of their invention and who have the requisite passion, expertise, and capital. However, they also require significant time and resources including a lot of non-research work, like bookkeeping, marketing the invention to investors and business partners, and developing a business plan. While inventors ...