Launching a new product is a complicated process. You have to do everything from finding investors, to securing a supply chain, to finding distribution – not to mention, simply designing the product to begin with.
Once those hurdles have been cleared, there are more challenges still awaiting in the legal arena.
There are many potential problems that await entrepreneurs if they haven’t taken the necessary steps to avoid legal problems. In fact, legal concerns can cripple or even permanently stop a budding entrepreneur from creating his or her product.
Here are some common legal mistakes that new product developers make when they bring their new product to the marketplace.
Mistake #1: Moving too fast
In the race to get their product before the consumer, a startup can often rush through the production process, leaving important matters unattended to. Each product category, like industrial products, food products, etc., has its own series of laws and regulations that apply.
Medical products, for example, have dozens, if not hundreds of regulations that cover everything from liability to how the products are marketed.
The faster a product goes through the development process, the more likely an inexperienced entrepreneur is to overlook or miss certain regulations. Yes, it’s important to get a product into the marketplace, but it’s also important to make sure you’ve covered all your legal bases.
Mistake #2: Thinking that keeping a low profile will protect your product from litigation
Don’t assume that because your product launch is a small one, or that because you’re selling from business-to-business without a high public profile, that you can fly under the radar.
There’s a concept called the “perpetual plaintiff,” which means a person who has no problem initiating legal procedures against companies that they feel have done them a disservice, regardless of the size.
Any company – even if that company consists only of you – has the potential to be sued, and it’s important to make sure you’ve hired a legal team that can defend your product no matter what.
Mistake #3: Not taking your business’s individual circumstances into consideration
Don’t fall victim to the “everyone else is doing it” mentality. Even if you’re taking operational ideas from a highly successful company, it’s important to take care of your own legal needs when developing and manufacturing your product.
Creating your own business plan, your own succession plan and your own business entity agreement are crucial for the success of your product. Don’t bother with what you think other companies are doing; do what you need to do to protect your own business.
Mistake #4: Not knowing intellectual property laws
The concept of intellectual property grows increasingly broad seemingly by the minute, and different laws apply to different concepts. You’ll need to figure out early on how intellectual property laws apply to your product, and keep track through your legal team of how they might be changing.
This policy applies to trademarks, patents and trade secret laws. These are all very different concepts, and they all have to be adhered to stringently.
Mistake #5: Not filing a patent in time
Always remember that if you want to patent your invention, you have to file the application for a patent within one year after the idea is used in public, published, or offered for sale.
Mistake #6: Not getting legal help
This would seem to be an obvious way that new product startups can get into trouble, because how else can you avoid legal problems if you haven’t hired a legal team? But since many startups begin their corporate lives strapped for ready cash, there are things that can fall by the wayside.
It might not seem like a big deal as you design and develop your product, but you will need almost certainly need skilled legal help to guide you through the processes of patenting, trademarking or copyrighting your idea. Skimping on the lawyers now can mean big problems later.
Want to learn more about legal issues and setting up a product-based company? Read our post “Legal Issues to Consider When Setting Up Your Company.“