15 July 2022

Escrow – the unsung hero of IP protection

Submitted by MyPressportal Team

Entrepreneurs are often advised by friends and family to protect their intellectual property (IP) as soon as they can during the start-up stage of their businesses, preferably before taking their new products or service to market.

And often, they are directed to one of four types of IP protection – copyrighting, patenting, design registration or trademarking.

Similarly, established businesses and large corporates make use of the same four types of IP protection. Just think how often you see the symbols designating these and other types of protection alongside brand names and on products – ©, ® and ™.

But, entrepreneur, established business, big corporate alike, they are all ignoring another simple, yet highly-effective means of protecting IP – active escrow.

According to Escrow Europe CEO, Andrew Stekhoven, IP protection through copyrighting, patenting, design registration or trademarking is often dependent on the country the IP originator and the IP challenger are domicile or nationalised.

He claims IP escrow is the unsung hero of IP protection as it is irrefutable proof of your copyrights on an international basis – because it shifts the burden of proof in the event of a hostile ownership challenge.

IP escrow is the safekeeping – vaulting and verification – of your IP by an independent and neutral escrow specialist. It is the gold standard, he says.

“Costly formal registration procedures are not necessary to secure your copyright or copyrights,” Stekhoven says. “The author of a product, or their employer, automatically secures this right provided the ‘work’ meets certain legal criteria.

“However, if someone infringes the copyright of your product, you must be able to demonstrate that you are entitled to such rights.

“Obviously, you can document the product development internally. That, though, requires very high levels of effort and time for this to become anywhere near ‘bulletproof’. In addition, internal documentation by definition is disputable.

“IP escrow verification, on the other hand, offers indisputable proof of your copyright. A unique fingerprint of your product is made, and timestamped with every escrow deposit.

“From this, you can be provided with a Certificate of Deposit and Registration, which is internationally recognised in most jurisdictions, confirming the necessary details. Finally, the IP material in secured vaults, to be retrieved and matched with the fingerprint whenever necessary.”

According to Stekhoven, by depositing IP – including IP such as software source code and databases – with a company like Escrow Europe, you are not only documenting your copyrights, but protecting the integrity of your company's know-how.

It further discourages copyright infringement by employees (current and former) and freelancers. And should you, as part of a co-operative partnership be obliged to offer your partners access to sensitive company information, you can prevent abuse of this access from going unpunished at a later time.

“Last but not least, should you ever want to sell your company,” he says, “it probably will be vital to the prospective buyer that you can prove or at least document the ownership of the IP rights. It’s a cinch with IP escrow.”

A summary of the benefits provided by IP escrow include:

  • Proof of ownership/copyright – It provides a sound and demonstrable audit trail that can be presented to a court as evidence that you created the product when you said you did.
  • Back up of know-how – Know-how, probably the most precious asset of your company, is regularly stored. If employees leave your employment, their ‘works’ remain accessible to you.
  • Discourages infringement – copyright registration works preventatively, in particular with regards to employees, both current and former.
  • Risk limitation joint ventures/cooperative agreements – in setting up JVCs or cooperative agreements one often has to exchange very confidential proprietary information. Prior registration prevents misuse at a later stage.
  • Integrity of copyright in case of freelance workers – to acquire copyright on the work of freelancers who do work on your projects, you need a written statement from them that they transfer their copyright to you. By registration of their output, you close the loop; they cannot claim rights (partial or otherwise) at a later stage.