Question
We have been building a solid base of customers for our online service over the past 5 months and want to start a funding round. Right now we would like to know how we can best protect the business data and information that has accumulated so far, including customer data, prototypes, financial information. Legally speaking, what should we do to protect ourselves before talking to investors?
Answers: 2 public & 1 private
Yours is a very broad question, and you are probably looking at 2-3 categories of information which may be protected in different ways.
To the extent you have developed any new and useful technology (e.g., your prototype), evaluating its patentability and, in light of a positive finding, filing at least a provisional utility patent application to cover that technology may be a good idea. Filing state and federal trademark applications for word marks or logos with which you are offering your online service is also a no-brainer. The "look and feel" of your website or app may be protected under copyright.
I suspect most of the information about which you are concerned, however, is not protectable under patent, trademark, or copyright. Customer lists, financial data, and other business artifacts may be protectable under trade secret law which will vary state-to-state, but generally exists to protect against the misappropriation of information which is subject to substantial security efforts and is valuable by virtue of it being not-generally-known in the marketplace. Raw customer data that is merely public information (e.g., business name, address, points of contact), however, is often not inherently protectable.
Having an appropriately drafted non-disclosure agreement executed with a third-party potential investor is a way to contractually restrict its activities after you disclose information to it, but even NDAs have jurisdictionally-varying limits on the protective scopes.
In short: (i) identify and secure the IP assets you have; and (ii) for matter which you cannot protect under federal (patents, copyrights, and trademarks) or state (trade secrets) statutory schemes, have a contract in place which at least minimizes the risk that the potential investor takes unauthorized advantage of your disclosure.
These considerations are to be made regardless of whether you are just getting started or seeking investment. Contact an IP attorney to review the details of your enterprise and obtain actionable advice.
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