Founder’s Guide, Part 1: Boost Your Valuation with IP and Trademarks

Both Utah’s tech and venture capital scene have been exploding recently. More and more Utah companies are being acquired and funded through venture capital financing rounds.


One thing that I have noticed is that startup business owners often leave a significant amount of money on the table in acquisition or venture deals because of a lack of careful and thoughtful upfront legal work.


There are two areas where startup owners may lose money in these transactions: (1) in the valuation of the company, and (2) in the negotiation of indemnification reserves.


Valuations of startups are typically based on a combination of the company’s EBITDA and a multiplier. The negotiation of the multiplier is often where business owners make or lose millions, or, in the case of those majestic unicorns, billions of dollars. Given there are market conditions and business aspects that influence the multiplier, but the ability to negotiate an above-market multiplier or being forced to take a below-market multiplier is generally a function of buyer or investor comfort with the cleanliness of the deal and lack of risk being assumed.


Indemnification reserves, on the other hand, are significant chunks of the purchase price in an acquisition that is not paid immediately to the seller but held in escrow for years to be used to pay the buyer if assumed risks turn into actual liabilities. Here is another place where startup owners gain or lose money.


One of the critical areas where startup business owners gain and lose money in these valuable negotiation points is in intellectual property ownership. There are three fundamental intellectual property rights:


  1. Trademarks
  2. Copyrights
  3. Patents


Trademarks

Most, if not all, businesses need a trademark or two (or ten). At the very least, they need to take into account the availability of trademarks in determining its business name and brand.


Step 1: Name and brand your business in a way that can be protected by a good strong trademark and register that trademark.

Nothing is worse than to start a business under a certain name and build a brand to learn that you have to change your brand because you are infringing on another business’s trademark. So the first moment in time that trademarks should influence your business is from before you form it and give it a name.


Step 2: Protect and enforce your trademark rights.

So now you have a business and a brand, what does a trademark do for your business? Trademarks protect against other companies using the brand you have created to advertise and sell competing goods and services under the same or confusingly similar brands or logos. This not only limits exact copycats from branding in your name or like you, but if their name is confusingly similar or their logo’s look is confusingly similar, you can protect your rights and block them from trying to take advantage of your hard work in establishing your brand.


If you notice that another company is using your trademark or a mark that is confusingly similar in your same space, to keep your trademark enforceable, you need to send them a cease and desist letter immediately and take whatever steps necessary to protect your trademark from being used and having its value diluted


Step 3: Keep your trademark current and don’t let its registration lapse.

Like diamonds, trademarks can be forever, but trademarks once registered, need to be renewed every five years and need to be used during that time to be extended.


Having strong and defensible trademarks can increase the value of your business significantly, especially when it comes to selling your business or raising money through venture capital or other channels. When potential buyers or investors come along, they are going to want to see that you have a strong and defensible ownership in your brand, and the best way to do this is to have registered trademarks. When a potential buyer or investor comes along and realizes that you don’t have a trademark or haven’t been protecting that, your valuation will immediately go down.


Copyrights

The next most commonly used intellectual property right in startups and businesses are copyrights. Copyrights are not just for visual art, literature, or music anymore, but now are commonly used to protect rights in source code and professional writing materials.


Copyrights are different from trademarks in that they are used to protect the unauthorized duplication, sale, or use of the copyrighted materials. This becomes most useful to tech startups that invest a significant amount of money in writing proprietary source code for their business that they want to protect from another company from using. So if you have done this and own valuable, proprietary code that is not open source, you should definitely get it copyrighted.


Also, unlike trademarks, and diamonds for that matter, copyrights are not forever. Copyrights only last 70 years. Like trademarks, potential buyers and investors who see that your source code is protected from imitators and other infringers will see a lower level of risk, and the strength of your owned rights will no doubt boost the value of your company.


Patents

Last but not least, Patents. Patents are generally the least used of these intellectual property rights. That is because they can be really expensive to register, and not every business lends itself to patents.


Patents are very common in the science and high tech companies who are making non-obvious and novel inventions. You can also use patents to protect non-obvious and novel business processes but to do so successfully. Those processes need to utilize some form of novel technology or science.


Like copyrights, patents are only valid for 70 years, and then after that, the technology can be used openly by anyone.


While patents are the least common form of intellectual property rights, patents are also usually the most valuable of the intellectual property assets of a company, especially at the time of acquisition or investment.


The Long and Short of It

While this is a very general explanation of the basics of intellectual property rights and how they can increase the value of your business, there is much, much more to say on these topics. The take-home lesson about intellectual property rights for the business owner is the stronger your portfolio of registered trademarks, copyrights, and patents, the better position you are going to be in to negotiate the highest purchase price or valuation of your company and also decrease indemnification reserves.


Schedule an Intellectual Property Review and Audit

Does your company need to review its intellectual property ownership and opportunities? Not knowing where you are at in regards to your intellectual property can cause problems in the future when negotiating additional funding or selling your business.


At Freeman Lovell, we have a team of attorneys that can help you analyze the strengths and weaknesses of your intellectual property. By clicking on the button below, you can set up an intellectual property review and audit with one of our attorneys. Then we can help you create a plan to secure your intellectual property interests for the future.

Scaling Your Startup: Is Your Next Hire a Contractor or an Employee?

By Adrienne Langmo • February 18, 2026
For small business owners in Utah, growing the team is an exciting milestone and you’ve likely faced the classic question: Should I hire an actual employee, or can I just find a "guy who knows a guy" and pay him via Venmo? While it might be tempting to treat an employee (W-2) and an independent contractor (1099) as interchangeable based on your budget, the IRS and the Utah Labor Commission see things very differently. Misclassifying a worker isn't just a clerical error; it can lead to significant back taxes and penalties. Here is a practical look at the differences to help you stay compliant while you scale. The Independent Contractor (1099) Think of a contractor as a separate business entity that you have hired to perform a specific project or attain a specific result. They are specialists who bring their own "secret sauce" to the table. Autonomy : They generally use their own equipment, set their own hours, and work from their own locations. The "What" Not the "How" : You have the right to control the result of the work, but not the specific methods used to achieve it. Financial Independence : They pay their own self-employment taxes, health insurance, overhead, and will typically invoice you for their services. They may have other clients besides your business. The Employee (W-2) An employee is someone who is fully integrated into your business operations. They are part of the daily rhythm of your company and are under your direct supervision. Direction and Control : You dictate when they work, where they work, and the specific sequence of their tasks. You provide the equipment to complete those tasks. Business Integration : Their services are usually a "key aspect" of your regular business activity. If your business is a bakery, the person baking the bread is likely an employee; the person fixing the oven is likely a contractor. Employer Obligations : You are responsible for withholding income taxes and paying a share of Social Security and Medicare. In Utah, you’ll also need to ensure you're covered for Workers' Compensation and Unemployment Insurance. The Bottom Line: Control The government looks closely at the reality of the working relationship , not just the title you put on a contract. Your degree of control , or lack thereof, is key. Ultimately, if it looks like a duck and quacks like a duck, they’re going to treat it like a duck. Taking the time to classify correctly now prevents headaches down the road. We are here to help you craft, review, and amend employment and contractor agreements and navigate any other issues that may arise as you scale your workforce.

Is Your Team Oversharing With AI?

By Adrienne Langmo • January 8, 2026
AI is undoubtedly amazing. On one single platform I can direct it to, for example, “write me a 400-word blog post about the legal risks of private employees use of AI directed at Utah small to medium-sized businesses.” And then ask it to illustrate that post with an image of a robot in a skirt suit. (And now you’ll wonder if I even wrote this post myself…. I did. But I did not sketch the image myself.) And we all know AI has real limitations. We’ve heard the stories about AI hallucinations, where it simply invents an answer. And often AI simply gets it wrong. For example, I often use AI to pull up the citation to a statute and often it produces a link to a bill that hasn’t been enacted, a bill that’s been repealed, or a similar statute that’s applicable to a different industry than the one I asked it to find. But there’s also legal risks in using “Open Access” or “Free Tier” AI versus “Enterprise” or “Business” AI. Open access/free tier AI is the version you can use for free on a web browser or on app on your computer or smart phone. With many of these tools, user inputs may be stored or used to improve the model. Enterprise or business AI, by contrast, is a commercial‑grade system that typically offers encryption, enhanced privacy controls, and contractual data‑security commitments. If you do not have the latter­­—enterprise AI— then you really may want to find out what your employees are inputting into an unsecured AI tool. Is it client or employee information, like personally identifiable information? Medical information? Company trade secrets? Financial information? Depending on your company size and the type of information input into an unsecured AI tool, employees may be creating legal risk under Utah’s data breach notification law, the Utah Consumer Privacy Act (for businesses that meet its thresholds), federal privacy laws, even anti-discrimination laws and contractual confidentiality obligations you have made directly with your clients. The New Year is a great time to review old policies, create new ones, and train staff on these concerns. We are here to help you navigate these emerging issues! -By Adrienne Langmo

RIFs and Furloughs, the Federal Way

By Adrienne Langmo • September 30, 2025
As the federal fiscal year draws to a close, thousands of federal employees face an unsettling possibility if a continuing resolution is not passed: not just another shutdown and temporary furlough, but permanent layoffs through Reduction in Force (RIF) notices. This week, the Office of Management and Budget (OMB) instructed federal agencies to consider issuing RIF notices to employees (if certain conditions are met) rather than the usual temporary Furlough notices issued during shutdowns. This is a big shift. But it does not mean layoffs are guaranteed. If they occur, federal employees are protected by a robust set of legal rights. There’s still a process before a RIF can be properly issued, complete with notice rights, retention rights, appeal rights and such other rights that the OMB does not purport to usurp. That said, we understand that the anxiety of this uncertain moment is real. Here are some tips to best prepare for the unknown, come the end of the federal fiscal year: Download Your eOPF, ASAP o Your electronic Official Personnel Folder may become inaccessible during a shutdown. Download it now to preserve your employment records. Download Your last 3 Performance Appraisals, ASAP o Include mid-year reviews and commentary. These documents may affect retention rights in a RIF. Also save records of other awards, commendations, and other notable performance records. Save Key Communications o Save emails, memos, or notices from HR or supervisors about your employment status or shutdown protocols. Ask Questions o Supervisors, HR, and union reps are navigating this too. Don’t hesitate to ask questions. If you receive a RIF notice or suspect you were subject to procedural violations, don’t hesitate to reach out to us for our advice. We are here to help. Shutdowns may be political. Your livelihood is personal. Let us help you safeguard it. -Adrienne Langmo, Partner