Some of the most expensive mistakes a startup can make happen before it ever opens for business. Founders may spend months developing a product and building a brand without checking whether another company has rights to a similar name. James Peters has seen businesses manufacture products under a proposed brand name, only to discover they might not be able to sell the inventory. A lawyer with more than 20 years of experience in the legal industry, Peters is managing director of North America at Lawhive, an AI-powered legal services company that helps individuals and businesses access licensed attorneys.
Trademarks are only the beginning. Problems involving patents, copyright ownership, and other legal protections can surface long after a company has launched. Peters identifies five common legal mistakes that founders often overlook, and explains how those early decisions can come back to haunt a business once customers and investors are involved.
1. Falling in love with a name before checking who owns it
Even with the domain safely registered, a startup may have no idea that another business already has rights to a similar name for related products or services. The conflict may not surface until much later, when the company has invested heavily in its brand and changing the name involves far more than updating a website.
“The domain being available is not automatically a green light. That’s one of the most common misconceptions I see,” Peters says. A trademark clearance search should cover names already used or protected for related goods or services, not just exact matches. Similar names can conflict even when spelled differently.
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The U.S. Patent and Trademark Office received more than 824,000 new trademark application classes in fiscal 2025, up 7.4 percent from the year before. Peters has seen founders discover conflicting rights only after attracting customers. Rebranding can mean replacing packaging and paying designers again, while customers learn an entirely new name.
2. Showing off an invention before checking patent options
Early customer demonstrations are often how a startup learns whether a new technical process or hardware design has a market, so founders have good reason to get their inventions in front of people. What they may not realize is that those demonstrations, or even an early offer for sale, can affect their options for patent protection.
“Founders don’t necessarily need to file a patent application on day one, but they should identify what might be patentable early enough to make an informed decision about filing,” Peters says. That conversation belongs before a conference demo or public product page, not afterward.