DILIGENCE, ALREADY DONE.
A startup only owns the IP that has been formally assigned to it, which is not the same as the IP its founders and contractors have built for it. Work created before incorporation, by a cofounder who later leaves, or by a contractor with no signed assignment, can remain legally outside the company unless someone fixes the paperwork. Diligence tests exactly this gap, asking for the assignment behind every asset in the company's product and pitch deck.
Every founder, contractor and asset assigned to the company, so the IP question in due diligence takes an hour instead of a month.
LAST REVIEWED
THE SITUATION
Every startup builds its early product with a mix of cofounders, friends, contractors and prototypes made before the company existed. The company is legally supposed to own all of it. It rarely does.
The gap is invisible until a term sheet arrives. Then the diligence checklist asks for every IP assignment ever signed, and the founders discover that the most important asset in the deck is only partially theirs.
WHAT BREAKS.
Pre-incorporation code never assigned
The original MVP, often written before the company legally existed, needs a specific assignment from its individual authors to the new entity, which many founders never complete.
Departing cofounder keeps a claim
A cofounder who leaves early can retain rights to code, designs or brand assets that were never contractually assigned to the company while they were involved.
Contractor agreements with no IP clause
External developers or designers engaged casually often sign contracts, if any, that never mention IP assignment at all.
NDAs that protect secrets but assign nothing
A standard non-disclosure agreement stops someone from talking, but does nothing to transfer ownership of what they built.
AI tools in the product stack
Product features built using AI tools trained on contested data can raise ownership and licensing questions an acquirer's lawyers will specifically ask about.
WHAT YOU CAN OWN.
COPYRIGHT
The company's product code, design and content are copyrighted works that must each be assigned to the entity individually.
TRADEMARK
The company name, logo and product brand should be registered as trademarks in the company's name, not an individual founder's.
DESIGN RIGHT
Design right rarely applies unless the startup makes a physical product with a distinctive visual appearance.
PATENT
A genuinely novel technical invention can be patentable, and early filing matters because most systems award patents on a first-to-file basis.
TRADE SECRET
Unpublished algorithms, customer data and internal processes can be protected as trade secrets if kept genuinely confidential.
LIKENESS
Likeness rights are only relevant if the company uses a founder's or public figure's image or voice in its branding.
FOUR STEPS.
DROP
Upload every contract, offer letter and contractor agreement you can find.
EXAMINE
Deed reads the stack and shows you what is properly assigned and what is not.
EXECUTE
Send retroactive assignment requests, updated agreements and cofounder IP transfers as signable links.
DEFEND
A single record you can hand to diligence lawyers, with every signature in place.
KEY FACTS
- 01IP created before a company is incorporated does not automatically belong to the company once it is formed.
- 02A departing cofounder retains any IP rights that were never contractually assigned to the company during their involvement.
- 03An NDA restricts disclosure of confidential information but does not transfer ownership of any IP created.
- 04Patent rights in most jurisdictions, including the US since 2013, go to whoever files first, not whoever invented first.
- 05Investors' legal diligence checklists specifically request IP assignment documents for every founder, employee and contractor.
QUESTIONS
+What is technology assignment and why does diligence care?
It is the paper that says the company, not a founder or contractor, owns the code and the brand. Investors care because without it, the company might not own what it is selling.
+How do I fix a missing assignment now?
Deed drafts a retroactive assignment and sends it to the person to sign. Once signed, it is added to the record with a timestamp.
+Do we need to track AI tools in our stack?
Yes. Acquirers are starting to ask. Deed keeps a record of which tools produced which artefacts and under what terms.
+What happens if a cofounder leaves without signing an assignment?
The company may not own the IP they contributed. A retroactive assignment should be negotiated and signed as part of any exit agreement.
+Does incorporating the company automatically transfer founder IP to it?
No. Incorporation creates a legal entity, but each founder must separately and explicitly assign their pre-existing and ongoing IP contributions to it.