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Key areas of legal exposure for tech startups

On Behalf of | Oct 28, 2022 | Business Formation & Planning |

When people start a technology company, they will face many challenges as they establish themselves and grow. Michigan founders and investors alike should remain aware of their legal exposure as they work to build a company. There are a few areas where legal issues are most likely to spring up, and planning ahead to mitigate risk in these areas is often a wise decision. These key areas can include: 

  • Intellectual property:  Tech businesses should ensure that they have all the patents and trademarks needed to build and market their business appropriately. It is not uncommon for start-ups to pick a name or develop a brand only to face a third-party legal challenge by a company already operating under that moniker. Doing research and making sure paperwork is in place for all intellectual property is key to starting off on the right foot in this area. 
  • Consumer contracts: Tech companies can be highly exposed if their consumer contracts do not take risk mitigation into consideration. Including disclaimers, liability caps and other details that are clearly laid out in contract terms is very important when selling products or services. Contracts should also be reviewed by a legal professional to make sure they are clear and legally sound.
  • Investor misalignment: Investors can be one of the biggest assets to a tech start-up. However, they can also represent a legal liability, especially if they feel misled or don’t fully understand the business. Finding investors whose experience is relevant to the tech company’s particular mission and vision can help with risk analyses and growth. 

Starting any kind of company carries legal risks. Tech companies, even if they are based in Michigan, often have clientele in many jurisdictions and seek a wide reach, both of which can add to the legal complexities. It can therefore prove invaluable for technology companies to seek support from legal advisors early and often as they grow. 


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