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Main Legal Issues for Technology Start-ups




Setting up a technology business is very easy but this also means that some crucial things can be overlooked. Nevertheless, it is always critical to check on these issues when starting so that they do not become a problem much later on.

Structure of business

Here the technology start-up has to consider various business structures and determine which structure suits it best. Examples here include sole proprietorships, partnerships, limited liability partnerships (LLPs) and companies. Sole proprietorships and partnerships are not separate legal entities from the persons who run them. This means that personal assets of the individuals running the company could be attached and executed if debts go unpaid. For the LLPs and companies, the business is a separate legal entity from the owners. Liability, in this case, is limited to the shareholding. For LLPs, it is widely the case but for one of the partners, the liability is unlimited. This is usually the managing partner.

From the above it would appear that a company is more advantageous than the other business structures. However, this is not the case. Setting up a company could take some time because of the legal compliance. One is also required to file several regulatory and administrative documents with the government year to year.

However, in the end, the company is a more suitable structure for a tech start-up. To this end, it would be important to draft a good shareholders agreement. This document protects shareholders’ interests in the company and regulates relations between shareholders.

Domain names and trademarks

Before registering a company name and domain name, it is advisable to conduct some due diligence to find out if that name has already been taken. This can be done online, and it takes a few minutes. One can also do a trademark search at the UK Intellectual property office. The aim is to ensure that the name of the proposed company is not similar or too similar to another company in a way that would bring about trademark infringement issues. The other reason is to avoid confusing customers.

One can also consider registering a business name as a trademark though this is not essentially very important. This mostly happens when companies become established. Nonetheless, it is something worth considering. When you register a company name at the companies office, all you have done is prohibited the use of that name by another company. However, this does not mean that you have registered a trademark. This will not prevent other people from registering a business with a similar name. It also means that goods and services can be branded with a name that is similar to your company. This can hurt the reputation of your company or inordinately cause confusion.

Website and software development

If you are planning to have independent software developers, it is proper to have a contract outlining the terms of service. Issues like when they are expected to have the software ready and to hand it over should be covered in that contract. Also, it is important to test the software internally and independently before making any payments to developers.

The code in the software is also intellectual property, and issues relating to this should be covered in the contract. Mostly, it is the developers who will own the copyright in the code but you can make an agreement that provides for otherwise. In any case, whether it is covered by the contract or not, there is an implied license for use of the software and code for the purpose of which it was created.

If you want to own the copyright, it would mean to have an agreement where the developer assigns the copyright to you. This has more advantages than merely having a license.

Third part material

If you plan on using the third-party material, it would be significant to consider matters of copyright infringement. This relates to music, texts, videos or pictures.

User-generated content can help increase traffic to a website, but it also poses some problems. This is because the material could be defamatory, illegal, copyright infringing or materials against public policy. As the owner of the website, one can be held to be liable even though you did not post the infringing material. It is thus important to have terms and conditions that prohibit the uploading of materials that may cause problems, and this is so if you intended to enable users to post content on the technology website.


You also need to make it clear that you reserve the right to take down any material at your discretion. This should however not be done in a manner that is similar to censorship. You should also develop a procedure where persons whose content is allegedly infringed can notify yourselves. This would also be developed hand in hand with a takedown procedure. This is the procedure for which you take down infringing material.

Cookies and personal data

You need to bear in mind new regulations introduced regarding cookies. The rules now require websites to obtain consent to store or retrieve information from a computer and a smartphone. One must also explain their use and purpose on the technology site.

The rationale for using cookies is very noble. It involves collecting of personal information of a user to make the overall user experience much better when browsing. However, this comes at the risk of privacy because information is collected from the user that then could become an infringement of privacy if no consent is obtained.

If you plan on processing user data on your technology website, compliance with the data protection act is imperative. Registration with the information commissioner’s office is also a must. Most business will process user data in one way or another hence to be on the safe side; you must take this issue seriously.

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