Can my startup idea be a spinoff of a popular company?

TLDR: Keep in mind the various protections the popular company may have on its IP and also review any agreements with the company.

When considering whether an idea for a start-up can be a spinoff of a popular company, legally, you should keep in mind that particular company’s rights to its intellectual property and any existing contracts between you, the company, and/or its affiliates.

With respect to the company’s IP, you can broadly think about patent (e.g., utility and design), copyright (e.g., original works of authorship, including code), trademark (e.g., logos or slogans), and trade secret (e.g., customer lists) as the main sources of IP. While this doesn’t capture everything in the IP world (for example, there could be possible non-public company information), it’s a good place to start thinking about areas you should avoid in terms of your product, marketing, or other business activities.

In addition to company IP, you should consider existing contracts with the company and its affiliates. If you don’t work for the company, you should check whether you have agreed to any terms of service with the company or consider whether you may enter into future agreements with that company, its suppliers, and its customers, among other affiliates. It is possible to be liable for a “tortious interference with a third party contract,” so you should be sensitive of any existing company agreements and relationships when launching your business.

If you are employed at the company, you should be extra careful to consult an attorney regarding any existing confidentiality, non-competition, or non-solicitation agreements, as well as any other circumstances (e.g., using company time or property to build your spinoff will likely give the company a claim to whatever you have built). This scenario can create the most significant hurdles in launching such a spinoff project.

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