Protecting Your Intellectual Property

If you have worked for small growing software companies for any length of time, you will eventually find your company under the microscope by a perspective purchaser.  For some rapidly growing companies, you may find yourself on the other side of the table -  examining a company you might want to buy.  Either way, technical due diligence is required when you examine a software company to assess its value. Real due diligence requires looking at more than the source code and the product. It requires examining all of the company’s intellectual property.

Intellectual property (IP) describes the data and information that you have spent time and money creating.  People who wouldn’t think about not having the proper insurance will take huge risks by not protecting their company’s IP.   Many small growing companies are so busy getting products together and dealing with the demands of growth they don’t have time to examine how well they are protecting themselves.    Even when IP is valued,  managers don’t understand the extent of the IP that they need to protect.

We all get the obvious - protect the source code.  However, there are other important items that are engineering focused:

• All engineering documentation
• All product documentation for all versions of every product
• Information of the why’s of design choices – design notes
• How to do less frequently done tasks – such as specialty builds
• Engineering architectural diagrams
• Database schema and database design
• API details
• Release process – down to the step by step level
• Test information, and coverage analysis
• Restrictions on 3rd party IP & software
• Failure mode analysis
• Processes
• Copies of the binaries of previous releases

Business focused list:

• Vendor lists
• Customer & sales lists
• Customer history
• Customer complaints
• Customer promises (especially longer term ones)
• Financial information
• Any regulatory required information
• Business Processes

Much of this information is fragile. You may find some of the information by asking current employees.  But as people change jobs and leave your company, information leaves with them as there wasn’t a requirement to write it down in a central location.  Even when people stay, memories fade after a year to two.   So, stop and build up your list – why wait until you are trying to sell your software company.

Comments

[tika sumarti]

Excellent Resources on Real Estate Information