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5 Ways to Protect your IP in Crowdfunding

By February 24, 2021No Comments

Author: Prayank Khandelwal and Tanmay Kulkarni

Once you have put in the hard work and developed an invention, created some new technology, the technical aspect of your work is done. But what remains is getting that work into the public domain, and then using it for the purpose it was developed for. Lot of financial aid is required throughout the process along with some business assistance, which is where an investor comes in the picture. The most common ways of investment are through – angel investors, venture capitalists, public listing, crowdfunding, etc. If the invention in question falls under your IP, then protecting it becomes the top priority, and in such a scenario, crowdfunding might just be the best option to pursue your investment goals.

What is Crowdfunding?

One might question, what exactly is crowdfunding? It is simply the method of raising money by accepting small amounts from multiple people. It is generally done via the internet where it is easy to garner a massive response and get as much attention as possible. Although similar to benefit events, crowdfunding differs in the media used which is the internet. There are three pillars involved in the process – the person with the idea that needs funding, the people interested in funding that idea, and the mediator platform that brings the other two together. The campaigns may be reward-based, equity-based, donation-based, or debt-based. Crowdfunding is considered as one of the low liability forms of fundraising option as the amount being invested by an individual is small, and hence the payback they expect is not very big. However, whatever be the amount, the person putting in money will ask about the invention and you have no option but to make it public!

Protecting Intellectual Property

Your invention is your Intellectual Property (here on, IP). Hence, it is not advisable to reveal it to anybody without having necessary confidentiality protection. Filing Patents, trademarks, design applications are the most potent forms of securing IP and ensuring that your IP is not copied by someone else. At Photon Legal, we work towards providing utmost protection for our client’s inventions and ensure that they can reap maximum benefits out of it. Securing your IP is the first and foremost thing that should be pursued for any new invention you have, the business part always comes next. When it comes to investors considering your idea, there is some benefit expected by them as well. If the invention is ground-breaking, any person willing to fund it will be eager to get to the secrets of its working as well. Protecting IP or keeping it under wraps is very difficult in such situations. However, there exists a way to get around this.

IP in Crowdfunding

In crowdfunding, since there are huge number of investors involved, the dynamics of the benefits being offered shift a little. Based on the amount being invested, they get some gifts, hampers, or in very few cases a percentage of stake. Through the years, sharing your IP rights with the people participating in crowdfunding is something that almost never happens. However, the difference here and the trick as well lies in the concept of sharing IP rights and disclosing your invention itself. You may not have to share the rights, but it may be obligatory to share information about your invention in full public disclosure. There are a few ways to stay protected in such cases as well and maintain the protection of your invention. Let’s explore, what are they?

1) Patent Protection – Filing a provisional or complete patent application before you go for funding provides you a safety net. Provisional applications help you protect your idea with a priority date and also buy you some time to later file your complete application in due course. The very motive of crowdfunding is to get little amounts from multiple people, so getting a provisional application before that justifies that you are securing the invention and also not spending much on it. Furthermore, the money raised through the campaign can be used in financing the patent process later on. After filing the patent, any public disclosure to the prospective investors will not hamper your invention’s security. What is important to remember here is that a disclosure should not be made before filing the application. Any prior disclosure may debar you from getting any patent protection in the future. Inventors may get excited to share their work and get investors as soon as possible, but such a lapse will cost one the chance to protect their patent ever again.

2) Selecting appropriate jurisdiction – While choosing a platform for crowdfunding, be sure to check out the region where it operates. Only if you already have a patent application filed in that region, you should select it as your funding platform. Even if the platform runs in your region of choice, does not mean it is run by that country, and hence you might fall victim to public disclosure in other country where no patent protection is obtained. Therefore, it is highly recommendable to analyze your target markets beforehand and then do a profound background search on the platforms you have in mind, before selecting any.

3) IP Protection for the Platform – Some crowdfunding platforms do give the inventors some IP protection, apart from the Non-Disclosure Agreement they have for any campaign. In such cases, there is a restriction on the comments, and the messages put on the forum, along with any accidental or intentional infringement of your invention on the platform. In case of an infringement being noticed, the platform must have strict measures in place to correct the issue or abandon the campaign altogether in order to protect the rights. What does and does not qualify as a public platform should be studied carefully before finalizing the platform.

4) Trademark – Registering trademarks in the name of your product or service helps to secure and promote your brand. If there is some catchy name that you have thought of, it is advisable to get it trademarked and then use in your crowdfunding campaign to attract more investors. Creating a brand name from the get-go will make your invention more memorable to the people involved in it, and help in marketing as well.

5) Suggestions/Modifications by Investors – the rules for the inclusion of any changes or modifications suggested by the potential investors for the invention may differ from region to region. Such intricate rules must be looked at and any amendments in rules that need to be made should be communicated to avoid any issues from cropping up later. As your entire invention is disclosed to the forum, almost everyone will have some opinion or suggestion to make it even better, but as the inventor, you have to be prudent in choosing what changes may be made. Although not considered as one of the traditional methods of investment, crowdfunding has helped fund some unique ideas which have gone on to become hugely successful, such as Oculus and Fidget Cube. However, the part that worries most inventors in protecting their IP throughout the process as pursuing and tracking every small infringement can be a tedious job! Keeping the above-mentioned tips in mind, one may ensure absolute IP protection and also gain decent funding through crowdfunding. At Photon Legal, we provide the fastest service in securing your IP and supporting you throughout the way to ensure it is protected. Be it an investment opportunity or a funding campaign, we prioritize your invention above all and keep it secure.

Do reach us out at to know more about crowdfunding and protecting IP throughout the process.