This is a column (first from a series) from an entrepreneur and lawyer Yrjö Ojasaar (pictured), who’s a fan of TigerPrises.com

Start-ups face the old dilemma – walking the path is much harder than knowing the path.

Everything a successful start-up needs to know is available on the internet and its almost always free. But those that have tried to run a business know how hard it is to keep your wits when putting out daily fires.

I have pulled together some key mistakes I have made myself, as well as seen friends, partners and clients make, hoping that maybe others will not repeat them. One thing about the school of experience is that it will repeat the lesson if you flunk the first time.

To make it more pithy than the usual “top 10 mistakes list” I have tried to gather the experiences into IP, product, financing and founders categories.

So the Top 3 IP (Intellectual Property) related mistakes are:

1. Failing to understand basic licensing terms

“Open Source” and “General Public License” are not an invitation to an all you can eat IP buffet. You may cripple your entire business model by inappropriately using such licensed components in your products.

Such copyleft licenses may then require your product to also be made available under the same license – something that could easily scare away your prospective investors. You have to be ready to give an overview of your strategy and how IP effects are managed. Mind you – I have nothing against open source initiatives, in fact they often lead innovation in this sector – but just make sure you know when and how to use this material!

2. Not safeguarding the company IP

While entrepreneurs all agree that their inventions and trade secrets are the most valuable parts of their business and a key to their future, entrepreneurs nonetheless regularly disclose key aspects of their technology without any confidentiality assurances in place.

Even if formalities have been followed and NDA’s signed, rarely are the terms of the NDA actually then followed in practice. Despite clear contract language in professional NDAs, most startups do not maintain access logs, label their documents confidential, provide written notices prior to disclosures to their employees, subcontractors and partners, or fulfill other standard NDA requirements.

Even if all formalities are followed, companies have lost their shirts by trading with unscrupulous suppliers, partners or competitors. Giving the “family jewels” to partners in countries with no patent coverage or weak IP protection shows poor judgment to prospective investors.

3. Failing to establish who owns the critical IP

Most startups do not have a real handle on their IP ownership – and if the CEOs are pressed, they are often unable to tell you what IP can be fairly claimed by the company, its founders, employees, programmers, contractors, clients, strategic or consortium partners.

This happens because the founders do not have a disciplined IP policy.

Since the money goes to the guy holding the key IP – it is imperative that you get your documentation straightened out as soon as possible. If you can’t discipline yourself and can’t afford the legal fees put a start-up savvy lawyer on your advisory or management board and you can get useful IP strategies and documentation for a symbolic chunk of equity.

Photo: Eesti Ekspress