Managing Intellectual Property of a Web3 Startup
Compliance with IP policies is the crucial component that helps to manage any business successfully. In most cases, technology companies that want to match the intellectual property requirement are about to work with a classical scheme. Most commonly, it would involve registration of rights to software code and design, registration of trademarks and patents, and transmission of all databases into a company’s ownership. Despite not being obligatory, all these steps are essential because they ensure a company receives a competitive advantage and guarantee its constant growth. Notwithstanding the importance of all the steps, the rules differ when it comes to managing a Web 3 business. In this article, we will help you clarify all the specificities one has to face as an owner of a Web 3 startup.
Managing Intellectual Property of a Web3 Startup
As a Web 3 project owner, you should perceive it as the combination of on-chain and off-chain components. The on-chain part includes everything that doesn't require centralized IT infrastructures, such as additional servers, domains, or administrators. Users don't interact with this part directly. However, they still manage to reach it when making transactions, for example. It's when the off-chain part comes into action. Off-chain is a face of a product that can be issued in the form of a website, mobile app, or browser extension. Unlike on-chain, off-chain relies on centralized solutions such as domains or services. Although IP policies have significant similarities for on-chain and off-chain constituents, both still include many peculiarities. The essential thing to remember in the early stages of product building is that any rights for the product should be registered with the company. Thus, the preliminary work to meet IP requirements includes signing two fundamental documents with each team member. Firstly, the Non-Disclosure Agreement (NDA) will secure the project owner from spreading the commercial secret. Secondly, IP Assessment Agreement transfers developers' rights to a company. Further policies for on-chain and off-chain parts differ considerably in the core. Thus, the company should preserve ownership over all off-chain elements so it has the right to publish related materials at any time. Overall, the protection specificities vary greatly depending on the type of interaction with the end user selected for the product or, more specifically, whether it's a website, mobile app, chatbot, or browser extension. For instance, a company has to preserve complete ownership over the code and design of the off-chain part. All personnel involved should sign the IP Assignment Agreements to meet this requirement. Similarly, additional protection under IP would be required, for instance, for logos implemented in the design or domain names. On-chain constituent, on the contrary, aims to ensure complete autonomy. The most common way to ensure it is by publishing an open-source code. This code is usually developed and issued by a group of developers who have rejected their intellectual rights and acknowledged it as a company's property. Open repositories serve as a storage for the open source code where everyone can access it.
The role of license for the off-chain part of the project
Before making a project code open source, developers ensure that no one owns it. As stated above, the off-chain part has to be decentralized, so by putting it online, a business shows that no internet users need specific access rights to watch and adjust the code, and intellectual property isn't centrally moderated. The important constituent that should always be added to the code is a specific license that defines rules and conditions under which it can be used. Published directly with the code files, the license describes how the information can be updated, maintained, or improved. But how to choose an appropriate license? The most valuable thing to note is the extent of the rights developers want to preserve for their work. Overall, the most popular license choices to consider for a Web 3 project are the General Public License (GNU) and MIT License. The GNU license contains stricter limitations than MIT License. For instance, once issued under a GNU license, a project cannot simply shift to another license but should be issued under GNU one more time. MIT license, on the contrary, doesn't include similar restrictions and allows changing a license type without republishing.
Why do you need the Dev Lab company for your Web 3 project?
The primary role of a Dev Lab company is to hire engineers for a Web 3 project. Since software specialists are the main resource needed for successful project deployment, a Dev Lab company may take an essential part in IP structuring. Overall, it's capable to: Hire software engineers, rent an office, or ensure completing any other organizational tasks; Take responsibility for the off-chain part of the project that involves ensuring that all rights for the off-chain constituent are preserved exclusively for a company. Manage the on-chain constituent. In particular, the matter concerns choosing a suitable license before publishing an open-source code. However straightforward it may seem, selecting a jurisdiction for a Dev Lab registration requires much attention. Indeed, being aware of the pitfalls of this part of the process and picking the most favorable jurisdiction allows going through early investment stages smoothly, even when you don't have a White Paper of a finalized strategy. When selecting a jurisdiction, choosing the state where most team members are located may seem the most obvious solution. Nevertheless, when making a final choice, Web 3 project owners should think about the following factors: Whether the chosen jurisdiction is IP- and IT-friendly; Whether it's fundable. Answering positively to both concerns might be the additional factor to guarantee a project's constant and smooth development. In addition, it will help your potential investors to feel more relaxed and confident about trusting in your Web 3 project. As for today, the best potential jurisdictions for opening a Dev Lab company include states like Estonia, the UAE, the UK, Singapore, etc.
To conclude
The core steps needed to manage Intellectual Property for a Web 3 project are overall simple. To start structuring a Web 3 project, one needs to: Select the appropriate jurisdiction for opening a Dev Lab company while keeping in mind that the surrounding should be IT and IP-friendly. It's needed to attract more investments to the developing project. Sign a Non-Disclosure Agreement and Intellectual Property Assignment with all the team members involved with the project As discussed above, both on-chain and off-chain components of a Web 3 project are crucial constituents that contain additional requirements and thus urge different approaches. To protect the on-chain part that should be decentralized and doesn't require additional permissions to access it, the Web 3 project owners should: Publish the project code as open-source in an open repository; Select the most-suiting license for the open-source code paying attention to the extent of restrictions they want to preserve. The off-chain part of the project requires preserving all the ownership rights to the company and has a different approach to matching the IP policy. The key step need is transferring any ownership rights of Intellectual Property assets to a Dev Lab company. Although IP elements of a Web 3 project are easy to tackle, some elements also require special attention. Most complications may arise when selecting a jurisdiction for registering a Dev Lab company. The concern is caused by the fact that lawyers are most commonly proficient in one or a few jurisdictions and can't consult clients on multiple options. However, once the jurisdiction is chosen, local lawyers can prepare all the necessary documentation for a specific Web 3 project. Please remember that if you need additional consultations or clarifications on how the IP policies can apply to your Web 3 project, the Legal-Crew team is ready to provide them for you.