Legal Advice For Tech Startups: A Quick Guide

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Getting ready to launch a startup? Before you click the mouse, make sure all your legal ducks are in a row.

You’re starting a startup and need to know the applicable laws. Well, you’re in luck, because this is a quick legal guide to launching a tech startup. While it’s always a good idea to speak with a startup law attorney before launching, this advice for tech startups should set you down the right legal path.

First Things First: Pick A Home-base For Your Business

Not all state startup laws are created equal. Some states have affiliate-friendly statutes; others favor e-commerce outfits. Finding the best jurisdiction for your company is the first step in establishing a legal base for your operation. In addition to industry considerations, remember to review the partnership laws in your state of choice. Some states have laws that prevent a co-founder from being let go without being bought out, others don’t. Some have tax structures that favor small tech startups, some don’t. So when you’re debating the decision, take some time to really think about your business; think worst case scenarios and then figure out which state is best for you. If you’re not sure where to begin with something like that, a good startup lawyer can help.

Legal Advice for Tech Startups Point #1: Register That Intellectual Property Properly

These days, intellectual property is as valuable to a startup as a bottomless venture fund would be. OK, that’s an exaggeration, but it can’t be stressed enough that IP is the equivalent to digital gold. Think about how much it would sting if you lost your branding edge due to an ill-filed copyright or trademark registration.

Another bit of startup advice: in the interest of clean records, make sure the intellectual property is registered to the company, not an individual. In the event of a partner split, the last thing you need is to be haggling over who owns the IP. It could get nasty.

Legal Advice for Tech Startups Point #2: Work Out a Partnership Agreement and a Pre-Nup

If you are embarking down startup path with others, make sure a partnership “pre-nup” is signed. Starting a company can be stressful, just as stressful as an unsuccessful marriage. Putting an exit agreement on paper while things are good is a great idea. Moreover, it allows you to see how you and your partners deal with unpleasant necessities – and it may just save you from getting into the wrong relationship with the right people.

Legal Advice for Tech Startups Point #3: Domestic and International Online Privacy Laws

While the Internet industry currently has fewer regulations than many others, there are still a number to which all companies must adhere. If you’re planning on doing business overseas – or targeting clients in the EU as well as North America – then there are even more laws you must heed. Here’s a quick list of a few:

Children’s Online Privacy Protection Act

The Children’s Online Privacy Protection Act is the only Internet privacy bill that has not been shot down in some way by the Supreme Court of the United States. And it looks like it’s about to be updated again – in a not so great way. If you are running a site or app that could potentially be attractive to kids – even if it’s not your intent to target kids – you’d better familiarize yourself with COPPA regulations. If not, crippling fines could play a major role in your not so distant future.

Gramm-Leach Bliley Financial Modernization Act

The mighty GLB – otherwise known as the Gramm-Leach Bliley Financial Modernization Act – is a wide sweeping bill that affected many industries. Tech startups need to be aware of the bill’s very specific financial online privacy standards. It’s a nuanced piece of legislation that must be understood, or, again, you could find yourself beat before you warm up.

United Kingdom Cookie Law

The Internet knows very few borders. That’s why any startup in North America must consider Internet law happenings across the pond. Currently, the new UK cookie law is the main regulation any new online venture should understand and incorporate into their platform. If not, you could face some very time-consuming European litigation, and possibly a hefty fine.

Legal Advice for Tech Startups Point #4: The Dot Com Disclosures

If you market on the Web, you must follow guidelines in the Dot Com Disclosure — the online marketing bible put out by the Federal Trade Commission. It covers everything from the proper use of testimonials to disclosure statements to allowable online marketing language. Get a copy, read it, know it — doing so will save you a lot of grief in the long run.

Legal Advice for Tech Startups Point #5: CYB and Invest In Proper Website Policies

Every type of startup business – whether it be a groupon-type platform, a crowdsourcing project, an app or a social network – has its own set of provisions that need to be touched upon in a site’s terms of service, privacy policy and disclaimer. While some template website policies are perfectly fine for your average run of the mill website, a legitimate startup could find themselves in some very deep legal hot water by using one. Besides, there are inexpensive legal services out there that custom draft terms, so you won’t have to pay a huge amount for the protection.

The Kelly / Warner Law Firm was established to cater to the needs of online businesses and Internet entrepreneurs. We know the industry and the regulations that govern it; we understand the difference between blackhat and whitehat; we spend our days lawyering and our evening devouring anything tech-related. If you’re a startup looking for legal counsel, contact us today. We’re confident you’ll be impressed with our efficiency…and Internet law geek quotient.

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