How should founder keep control over startup? What should he/she do?


My answer to How should founder keep control over startup? What should he/she do?

Answer by Ken Larson:

At the onset an operating agreement is vital if there are more than one individual involved in forming the company.

Next, intellectual property property protection must occur.


Bringing IP into existence requires that the tangible property as a result come under control. For small business this is usually brought about by a series of encounters with IP. They are discussed below in the relative order in which a small business encounters them.

Company Founding Personnel

A small business usually encounters IP and PD concerns when it is formed. The operating agreement between the founders must address these matters from the perspective of who brings property to the venture and who owns it as well as the rights to the property developed thereafter. A typical operating agreement may be downloaded from the Box Net “References” cube in the right margin of this site:

Please examine it as a framework and add those elements that are unique to your enterprise.

Employees and Contractors

The next encounter usually entails employees or contractors who apply for work. It is wise to inquire as a standard practice, and as part of an employment agreement or contract, whether or not an individual has signed a non-compete or proprietary data agreement with prior employers. If they have, acquire a copy of the agreement and assess whether or not the employment of these personnel poses a risk of IP violations in terms of another company's property or their claim to ownership of what the candidate may develop on your behalf while in your employ.

Make it clear in your agreements of hire and contracts that IP and PD that employees may participate in developing are the exclusive property of the company, that they will not own it and that they are expected to protect it, even when they leave your firm.

Industry Partners

Declare in your non-disclosure, teaming, and contract agreements the precise definition of the IP and PD ownership brought to the table and the exact share of ownership in subsequent development items. Most firms use the efforts of their employees (labor records) as a basis to make these distinctions, but further specificity may be necessary on complex projects.

Government Agencies and Prime Contractors

Ensure your policies and practices utilize assertions to document the ownership of IP and sound job cost accounting records for any IP developed at company expense, either in the past or during the course of a contract. The link below discusses the following major rights assertions in detail:

Unlimited Rights

・ Government Purpose Rights (GPR)

・ Limited Rights

・ Restricted Rights

・ Small Business Innovation Research (SBIR) Data Rights

・ Specifically Negotiated License Rights

・ Prior Government Rights

・ Commercial License Rights…


Intellectual property and proprietary data protection should be tailored to your organization, its industry relationships, people and practices. It must grow as the company grows, adapt to changing conditions and be ever-sensitive to risk.

The best intellectual property protections are well understood, practical, teaming relationships among partners, employees, industry and government. All sides in such relationships lose if disclosure or violations occur.

Establish sound operations practices and train to insure these practices meet the objectives discussed herein to protect your organization IP.

How should founder keep control over startup? What should he/she do?


About rosecoveredglasses

2 Tours in US Army Vietnam. Retired from 36 Years in the Defense Industrial Complex after working on 25 major weapons systems, many of which are in use today in the Middle East. Volunteer MicroMentor. I specialize in Small, Veteran-owned, Minority-Owned and Woman-Owned Businesses beginning work for the Federal Government. MicroMentor is a non-profit organization offering free assistance to small business in business planning, operations, marketing and other aspects of starting and successfully operating a small enterprise. You can set up a case with me at MicroMentor by going to: key words: "Federal Government Contracting"

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