Assigning founder IP to the company
1. Core idea and who it's for#
The law does not assume that what a founder creates for their startup belongs to the startup. Without a written assignment, the founder personally owns the code, designs, lab notebooks, data and inventions, even after the company is formed. Investors' lawyers check this early in every round. A missing or weak assignment can delay a raise or kill it, especially if the founder concerned has since left.
The fix is simple and cheap when done at the start. Each founder signs an IP assignment , usually combined with confidentiality terms in a proprietary information and invention assignment agreement (PIIA), that:
- Transfers now ("hereby assigns") all IP relating to the business, including work done before incorporation.
- Lists exclusions: prior inventions the founder keeps, and anything owned by an employer or university.
- Covers the future, so later inventions in the company's field are assigned too.
- Meets the formalities in each country so the transfer is valid and can be registered.
Who it's for: every founder, at incorporation (4.01). It is also for founders cleaning up before a round, and for academic founders whose university may own part of the IP (2.01, 2.03).
The one-line rule: every founder signs a present-tense assignment covering everything they have done and will do for the company, with exclusions listed, before any money comes in.
2. Evidence#
One word can decide who owns a patent. In Stanford v. Roche (2011), a Stanford researcher had signed a university agreement saying he "agree[d] to assign" his inventions. Later he signed a visitor agreement with a company, Cetus, saying he "will assign and do hereby assign". The courts read Stanford's wording as only a promise to assign in the future, and Cetus's as a present transfer. Cetus, later Roche, held rights in the patents, and Stanford's claim failed. Federal funding under Bayh-Dole did not override that order. The lesson every startup lawyer draws: use "hereby assign", not "agree to assign".
Missing assignments are a top diligence finding. One startup law firm says investors find missing IP assignments at Series A more often than any other diligence issue. Cleaning up during a live raise means negotiating with founders who now have leverage, especially cofounders who have left.
Employer IP is the deeptech risk. The same firm calls employer-IP disputes the single most common deal-killer in hardware startup diligence. Many employment contracts assign anything that "relates to" the employer's business, which can catch a founder's side project in the same field (1.15). Some US states, such as California under Labor Code section 2870, limit overbroad clauses. Many don't.
India: formalities matter.
- A patent assignment is not valid unless in writing and duly executed (Patents Act section 68). It should be registered with the Controller using Form 16.
- Under section 69(5), an unregistered document may not be accepted as proof of title unless the Controller or a court allows it.
- Copyright assignments, which cover software, must be in writing and state the rights, duration and territory. If they don't, defaults apply: five years, India only. Assigned rights can also lapse if not used within one year, unless the deed says otherwise. A badly drafted founder assignment can therefore quietly expire.
3. Method#
Step 1: Make an IP inventory (1 to 2 hours per founder)
List everything that could matter:
- Code: repositories, including personal GitHub accounts.
- Designs and documents: CAD files, schematics, lab notebooks and protocols. Data: datasets and models.
- Inventions: invention disclosures and patent drafts.
- Brand: domain names, social handles and the logo.
For each item, note who created it, when, where (home, a lab or an employer's premises), with whose equipment or funding, and under which contracts.
Step 2: Check for other owners#
- Employers: read every current and former employment and consulting contract. Look at the IP clause ("hereby assign", "relates to the business", after-hours work) and any non-compete (1.15).
- Universities and labs: check the IP policy and any funding conditions, such as government grants or Bayh-Dole. If the institution owns it, you need a licence or assignment from them, not from the founder (2.01, 2.07).
- Co-creators: students, interns, freelancers or friends who contributed. Each needs their own assignment (4.10).
Step 3: Sign the founder assignment#
Include these terms:
- Present assignment: "hereby assigns (and agrees to assign)" all rights in company IP , defined broadly to cover inventions, works, software, data, know-how and designs relating to the business. It covers everything from the date work on the idea began, not just from incorporation.
- Future IP: inventions within the company's field while the founder is with the company.
- Schedule of excluded prior inventions: anything the founder keeps. If something is excluded but used in the product, grant the company a licence to it.
- Further assurance: the founder will sign filings and confirmatory assignments, with a power of attorney if they're unavailable.
- Moral rights waiver where the law allows, and confidentiality .
- Consideration: usually the founder's shares, or a nominal sum. State it explicitly. In India, a nominal stated consideration avoids arguments over whether the deed is valid.
In India and the UK, also add a long duration (the life of the rights) and worldwide territory for copyright. In India, add a clause stopping the one-year non-use lapse.
Step 4: Record and register#
- Record patent assignments: Form 16 in India, the USPTO assignment database in the US, and the UK IPO.
- Pay any stamp duty on the deed (India).
- File the signed deeds in the data room.
- Have confirmatory assignments signed for each new patent filing.
Worked example (illustrative)#
Three founders incorporate a Delaware company with an Indian subsidiary to build an MLbased crop-disease sensor.
- Inventory: the CTO wrote the core model in her personal GitHub over 8 months while employed at a large IT company. The hardware lead designed a prototype in a university lab during his PhD. The CEO registered the domain.
- Checks:
- The CTO's employment contract assigns anything "related to the employer's business". The employer does analytics consulting, not agriculture or sensors. She gets a short written waiver from her former employer, confirming no claim.
- The university owns the prototype design under its IP policy. The company takes an exclusive licence for it (2.07), rather than relying on the founder's assignment.
- Assignments: each founder signs a present-tense PIIA with the parent company, effective from the start of work. The CTO lists one unrelated earlier project as an exclusion. The CEO assigns the domain.
- Result: at seed diligence, the chain of title is complete. The investors' counsel signs off in a week.
4. India, US and UK differences#
| India | US | UK | |
|---|---|---|---|
| Patents | In writing and duly executed (s.68). Register with the Controller on Form 16 (s.69). Unregistered deeds may not be accepted as proof of title. |
In writing (35 USC 261). Record at the USPTO within 3 months to protect against a later buyer. |
In writing, signed by or for both parties (Patents Act 1977 s.30(6)). Register at the UK IPO. |
| Copyright and software |
Written and signed (s.19). State rights, duration and territory, or the defaults apply: 5 years and India only. Lapses if unused for a year unless the deed says otherwise. |
Written and signed (17 USC 204). Work by employees can be "work made for hire". |
Written and signed by the assignor (CDPA s.90). Future copyright can be assigned (s.91). |
| India | US | UK | |
|---|---|---|---|
| Employee inventions |
Depend on the contract. There is no general statutory rule, so use clear clauses. |
Depend on the contract, with state limits such as California's section 2870 |
Patents Act s.39: belong to the employer if made in normal duties, or if the employee has a special duty. Directors usually have one. |
| Moral rights | Authors keep special rights (s.57). Waivers are of uncertain effect, so include a covenant not to assert them. |
Limited (visual art only) |
Can be waived in writing |
| Stamp duty and tax |
Stamp duty on assignment deeds varies by state. Assigning IP that already has value for shares or cash can be a taxable transfer, so value it early. |
IP contributed for founder stock at formation is usually tax-free under section 351 if the founders control the company |
Assigning IP for shares can have income tax and CGT effects. Get advice if the IP has value. |
Points for cross-border structures:
- Where the IP sits: decide which entity owns it, the parent or the R&D subsidiary (4.03). Assign to that entity, and use an intercompany agreement for the other.
- Indian founders of a foreign parent: assigning IP created in India to a foreign parent is an export of IP. It needs fair value, transfer-pricing support and FEMA compliance. Assign it before value builds up.
5. Scripts, mistakes and related playbooks#
Scripts#
To co-founders at incorporation:
"Investors will check that the company owns everything we've built. Let's each sign the same IP assignment today, list anything we want to keep as an exclusion, and put the signed copies in the data room."
To a former employer, asking for a waiver:
"I'm starting a company working on [field], which is unrelated to [employer]'s business. My contract has an invention assignment clause. Could you confirm in writing that [employer] claims no rights in [project], which I developed on my own time and equipment?"
To a departed co-founder (cleanup):
"We're preparing for a round, and the lawyers need a signed confirmation that the work you did for the company belongs to it. It doesn't affect your vested shares. Here's the short confirmatory assignment. Can you sign this week?"
Common mistakes#
- "Agree to assign" wording, which is only a promise, not a transfer.
- Assigning only from incorporation, leaving the months of work before it with the founder.
- Ignoring employer or university claims until diligence (1.15, 2.01).
- Forgetting contributors: interns, freelancers and student helpers each need their own assignment (4.10).
- Indian copyright defaults: no duration or territory stated, or the one-year lapse not excluded.
- Not registering patent assignments, which weakens proof of title in India.
- Code in personal accounts. Move repositories and domains into company-owned accounts.
- Assigning valuable IP late, which creates tax and transfer-pricing problems, especially across borders.
Related playbooks#
- 1.15 Employer IP clauses and turning a side project into a company
- 2.01 Who owns your invention?
- 2.07 Licence anatomy, clause by clause
- 3.12 Co-founder breakups: buybacks and good/bad leaver terms
- 4.01 When to incorporate
- 4.09 Employment contracts, NDAs and invention assignment
- 4.10 Contractor and consultant agreements
Sources#
- Venable, Stanford v. Roche: the importance of precise contract drafting
- Perkins Coie, The Supreme Court clarifies invention ownership under Bayh-Dole
- CASRAI, Stanford v. Roche and invention assignment
- Mondaq, If your employment agreements use this one word, your patents may be in jeopardy
- Promise Legal, Founder IP assignment and Invention assignment and employer IP risk
- IP India, Patents Act section 68
- iPleaders, Assignment of IP rights in India
- The Legal School, Section 68 of the Patents Act
- Indian Kanoon, Copyright Act section 19
This playbook is general information, not legal advice. Have a lawyer draft or review your assignments, especially where an employer, university or another country is involved. Last checked November 2026.