Nobody likes getting sued. If you’re a
start-up, a lawsuit can bring your business to a screeching halt.
On some level, you can’t ever provide 100%
protection against a lawsuit. Anyone can sue anyone at any time. The issue
becomes whether that lawsuit has merit or not. Hopefully you can institute the
following steps to make sure you would be protected against lawyers bringing
frivolous lawsuits against your company.
Step
1: Be patent and copyright compliant
If you are selling a product that you invented,
you should have patent and copyright protection in place before you make any
sale. There are plenty of internet resources you can tap into that will let you
determine whether or not you might be infringing on someone else’s copyrighted
material. If you’re making a new product is “like” another product then having
your own copyright or patent should insulate you from a lawsuit going forward. This
type of research should also apply to any type of logo or other marketing
device you intend on using. For instance, if you’re selling a new patented
blend of cotton T-shirt but have Mickey Mouse imprinted as the design you could
be sued by the Disney Company unless you have licensed that image.
Step
2: Incorporate
As the sole owner
of a start-up business, you might think it’s not necessary for you to
incorporate yourself. After all, you’re making all the decisions, right? In
truth, incorporation provides a layer of protection against liability. If your
business is sued it would only be the assets of that incorporated business that
would be at risk. All of your personal assets would be safe. In the worst case
scenario, an incorporated business can declare bankruptcy and you can turn
around a start a new business the next day with a new corporation.
Step 3: Always get it in writing
There isn’t an
aspect of your business that couldn’t benefit from a well written contract.
Whether that document is between you and an employee, vendor or client having
all the terms clearly spelled out will help reduce the instance when someone
could find fault with your practices. That’s why contracts should always
include clauses to consider all the possibilities of a particular outcome.
Step 4: Don’t steal staff
Too often the best
potential workers are already working somewhere else. There is nothing wrong
with hiring a worker away from another company. It happens all the time.
However, when you get into situations where intellectual property is involved
it might cause some problems down the road. For instance, if you’re starting a
mobile game development company and you poach a great designer from another
company, that company might take exception with the kind of knowledge their
former employee is bringing to your company. This is why there are non-compete
clauses in a person’s severance contract. If you are hiring someone in a
situation like that make sure they are coming to your business free and clear.
