DragonVenture's Edwin R. Yeh Interviewed by Channel 26; Provides Advice on Intellectual Property Issues for Aspiring Entrepreneurs Still Working in Large Companies

San Jose, USA, May 23, 2001 - Edwin R. Yeh, Vice President of Technology for DragonVenture, Inc. was interviewed live today by Jo Wan, a reporter from a local popular Mandarin television news program on KTSF Channel 26. The news was broadcast by Channel 26 on both its 7:30 p.m. Mandarin Chinese Newscast and 8:00 p.m. Cantonese Newscast. Jo Wan, a well-known reporter/anchor, was the reporter on the story.

1. Before you join the company you should disclose with as many details as possible any inventions, trademark, or intellectual properties that you might have invented, are in the processing of inventing, or that you will invent. This is a typical part of the proprietary information or invention disclosure. This will establish that you had those ideas and rights prior to joining the company and provide some supporting documentation that some of your ideas existed prior to your employment with your company and therefore was not stolen from the company.

2. During your time at the company. It is advised that you keep detailed logs of any research or development that you are making that will potentially become a new startup business. Specifically, you should indicate the time and the location of your efforts. It is extremely important that the entrepreneurs do not utilize company time, proprietary information, and company equipment (including computers and network equipment) to perform any of the research and development activities.

3. Right before you leave the company there's nothing more important than to part on good terms and not burn any bridges. You should also be very careful in signing away any non-compete type of agreements. If necessary, you may want to sign such documents with certain explanations (citing your prior disclosures, etc.).

Although these three precautions are fundamental to protecting your intellectual property, Yeh mentioned that these are still defensive and passive methods. He elaborated on the importance of changing the mindset from "merely protecting your own interest" and expanding it to a newer mindset of "winning together ".

Many engineers of Asian-American origin focus and excel in their technical fields. However, one of the pitfalls often seen is the neglect in maintaining and expanding relationships with other colleagues in different departments of the company and upper management. Often they part from the company because they think they can do better than their boss (and often they do). But The point is that they may part without the blessing from their previous company and colleagues, thereby seeding and fueling future troubles.

By adjusting the mindset a bit using the concept of "winning together", Yeh encourages aspiring entrepreneurs to network, to build bridges instead of burning bridges, and to part with your employer's blessing and give back.

Yeh suggested four methods aspiring entrepreneurs may wish to take. Once again, instead of watching out selfishly for one's own interest, DragonVenture encourages entrepreneurs to share. Instead of doing everything by oneself, many successful entrepreneurs succeed by partnering and sharing.

1. Recommendation -- The simplest and most easily accomplished one is to ask for recommendation letters. Just as recommendation letters are used for applications to graduate schools, recommendations serve as an endorsement of your ability and contribution to your previous company, and also may be used as evidence that your previous company is already familiar with what you intend to do.

2. Board of Advisors -- You may wish to invite your boss or other mentors in your previous company to be a member of your startup's board of advisors by giving them a seat to influence the direction of the company and a few thousand shares of stock. Again, this way you have someone entrenched to watch out for you while at the same time disclosing what you are doing.

3. In-Kind or Goodwill -- If what you are doing is very tightly coupled with your previous employment and you can anticipate potential lawsuits if you become successful, you may want to begin by parting the company on good terms and be open minded about "giving" some shares back to the company. This is called "in-kind investment" or "goodwill" giving them a percentage of your future company in-kind without getting any investment from them.

4. Investment -- This is the best scenario but requires clearly very good relationships with upper management which you could have accumulated if you emphasized that while working at your previous company. In this case, you actually have your previous company invest in your new venture.

The point of these last two methods is to give your previous company an incentive to see you succeed. Secondarily, you are effectively disclosing to them prior to your success that you are working on certain areas which they now have knowledge of.

In fact, at least two of DragonVenture's portfolio company adopted these methods. One of its companies in the wireless space had shareholders of their previous company invested in the newly formed startup - utilizing the fourth method mentioned above. Another company had a group of founders from Intel. Whenever you have a group of people leaving a company to form another company in similar space, special caution must be taken. In this case, they utilized the third method. The result was not only that they preempted any future law suits from their previous employer but they were able to continue to maintain close ties and get early access to the future roadmap in addition to get introductions to customers and get revenues.

The bottom line is that this adjustment of mindset from protecting yourself to winning together. From keeping the biggest piece of the pie, we encourage that entrepreneurs to be open, to partner, to share. Share with your investors, your incubators, and even your competition. Partner with your previous companies - they may become your strategic partners, companies to vouch for you, or even become your customers. The focus should on seeing whether the company is steadily increasing overall values rather than what percentage of the company you own.