A Primer on IP Protection for Crowdfunding Projects

Crowdfunding is a new, Internet-driven method of finding the money to start a new business. Unlike traditional funding, crowdfunding does not offer investors a piece of ownership in a start-up. Instead, crowdfunding connects a start-up directly to its customers. The customers pledge money in return for a one-time reward.

While crowdfunding can build publicity and customer base, it also makes innovative ideas vulnerable to free-riding copycats. Intellectual property rights can help protect a crowdfunding project with respect to these risks. Such protection may also increase the chances that a project can transition into a healthy business. When considered early on, copyright and trademark registration offer cost-effective and speedy protection.

The crowdfunding campaign can be used as evidence of intent to use the trademark, as it shows that the project creator has promised to proceed with the project in exchange for pledges. An intent-to-use application (ITU) can be filed if the trademark is already being “used in commerce” but the applicant is still gathering proof of use, as is often the case for projects seeking to ramp up existing production.

The ITU thus is ideal for a crowdfunding project that is launching a new product or expanding a business, since it reserves a trademark ahead of actual sales.

Trademark and copyright protection is a cost-effective and quick way to prevent others from stealing innovative ideas. It also demonstrates to potential backers that the project creators are serious about pursuing the project.