4 critical mistakes of startups in the field of intellectual property

Intellectual property is among the most valuable assets of any startup. Yet IP protection is routinely pushed to the bottom of the priority list by founders focused on product development or fundraising. The result is a set of avoidable mistakes that can block market entry, derail investor deals, or – in the worst cases – cost the founders their business entirely.

This article examines the four most common and most consequential IP mistakes made by startups operating in or expanding to Ukraine, explains why each one is dangerous, and offers practical steps to address each risk.

⏳ Mistake 1. Delaying Trademark Registration

Early-stage founders often postpone choosing a name and logo – and registering them as a trademark – until the product proves itself commercially. The logic seems reasonable: why spend money on IP protection before you know whether the project will succeed?

The problem is that trademark protection in Ukraine involves two features that make delay particularly costly.

The registration timeline

In Ukraine, the standard trademark registration procedure currently takes 18 to 20 months from the filing date. There is no expedited procedure available while martial law is in force. This means that a startup which files its trademark application only after achieving traction will spend the first one to two years of its commercial success without registered trademark protection.

Retroactive rights – but only after the certificate issues

Under Ukrainian trademark law, rights arising from a registration certificate are deemed to run from the date of the application, not the date of registration. This might suggest that filing is sufficient to establish protection from day one. In practice, however, this is not the case: until the certificate is actually issued, trademark rights have not formally arisen. Once the certificate issues, rights are retroactively backdated to the filing date – but any infringement that occurred in the interim can only be pursued after the certificate is in hand.

⚠️ Trademark squatting risk: The danger is not limited to competitors. So-called trademark trolls monitor promising startups and proactively register the startup’s name or logo in their own name – before the startup gets around to filing. Once a third party holds a registered mark that is identical or confusingly similar to your brand, enforcing your rights becomes expensive and uncertain.

✅ Recommendation: File a trademark application at the same time as – or shortly before – you begin working on the project publicly. If the project pivots or is abandoned, the application can always be withdrawn. But retroactive protection cannot be obtained after the fact.

📄 Mistake 2. Failing to Properly Document IP Ownership for Work by Employees and Contractors

This mistake is best illustrated with a software startup, where the core product is a computer program.

Under Ukrainian copyright law, a computer program is a copyright-protected work. Copyright comprises two categories of rights: moral (non-economic) rights, which always vest in and remain with the author personally; and economic rights, which govern commercialisation. The allocation of economic rights depends critically on how the work was created and whether the relationship was properly documented.

• Employee work product: If a work is created in the course of an employment relationship and constitutes a service assignment, economic rights vest in the employer – provided the service assignment was properly formalised in writing.
• Commissioned work: If a work is commissioned under a contract, economic rights vest in the commissioning party – again, only if the commission agreement was properly drafted and executed.
• Default rule: If the relationship was not properly documented, economic rights remain with the individual who wrote the code, designed the interface, or created the content – regardless of who paid for it.

⚠️ Investor due diligence risk: Investors and acquirers routinely conduct IP due diligence before closing a transaction. A startup that cannot demonstrate clear, documented ownership of its core software, designs, or other IP is a red flag that can kill deals – or dramatically reduce valuation. This is one of the most frequently discovered issues in startup M&A due diligence.

✅ Recommendation: Before work begins on any project, compile a list of all contributors – employees, freelancers, contractors – and the scope of their intended contributions. Engage IP counsel to structure the documentation correctly for each type of relationship. The documents themselves are straightforward; the risk of not having them can be existential.

🔬 Mistake 3. Underestimating the Value of Patent Protection

This mistake is most common among hardware or deep-tech startups whose core value lies in a technical solution.

Founders tend to polarise into two groups: those who believe every technical development is a breakthrough deserving immediate patent protection, and those who underestimate what they have built and never consider patents at all. In practice, far too many startups fall into the second group.

The practical consequence can be severe. Startups seeking investment routinely disclose the details of their technology to potential investors – sometimes in considerable depth – before any patent application has been filed. Unscrupulous actors can take this disclosed information and use it to file a patent application of their own, effectively locking the original developers out of their own market.

⚠️ Disclosure destroys novelty: In most jurisdictions, public disclosure of an invention before a patent application is filed destroys the novelty of that invention – making it unpatentable. Ukraine provides a 6-month grace period for the inventor’s own disclosures, but this is a narrow exception, not a safety net. Any disclosure to a third party – including a pitch to a potential investor – that is not covered by a robust NDA creates real risk.

✅ Recommendation: Before pitching to investors or disclosing technical details to any third party, consult a patent attorney to assess the patentability of your technology. A structured patentability assessment is a modest investment that can substantially increase the capital value of the project and protect against IP theft. Always sign NDAs before technical disclosures, and file the patent application before any public disclosure.

⚖️ Mistake 4. Using Third-Party IP Without Authorisation

This category of mistake is broad: incorporating a fragment of open-source or third-party code without checking the licence terms; using a design, image, or piece of content without obtaining an assignment or licence; building on a technical solution that is protected by a patent. All of these can constitute IP infringement – and all of them tend to be discovered at the worst possible moment.

A small, obscure startup may operate for some time without attracting the attention of rights holders. But the moment it achieves commercial success or becomes a target for acquisition, its product and codebase will be examined closely. Discovered infringement at that stage can result in injunctions, damages claims, forced product redesign, or – in the most serious cases – the effective destruction of the business.

⚠️ Licence terms change: Even where a startup is using third-party content or software under a valid licence, licence terms can change. A permissive open-source licence can be altered for future versions; a content platform can update its terms of service in ways that retroactively restrict commercial use. The burden of proving lawful use rests on the user – not the rights holder.

✅ Recommendation: Conduct an IP audit of all third-party elements used in the product at the development stage: code, libraries, designs, images, fonts, data, technical solutions. For each element, document the licence terms applicable at the time of use and retain that record. Where a licence does not cover the intended use, obtain a proper licence or commission an original work under an IP assignment agreement.

All four mistakes are easily preventable – if IP strategy is treated as a core component of the business plan from day one, not an afterthought. The cost of prevention is modest. The cost of remediation, after the damage is done, is often much higher – and sometimes unrecoverable.