IP Assignment & Work-for-Hire — Who Really Owns Your Startup’s Assets?

Startups must ensure that all IP created by founders, employees, or contractors is legally assigned to the company. Failure to do this early can derail future deals and funding.

Why it Matters

If your company doesn't own the code, designs, content, or inventions your team creates, you may not legally control your product. Investors and acquirers will flag this immediately. IP ownership starts with written assignments — not assumptions.

Founders Checklist

Use IP assignment agreements with all employees, contractors, and co-founders
Ensure employment and contractor contracts include “work-for-hire” and assignment language
Include invention assignment for anything created during company time or using company resources
Keep signed copies in your data room
Confirm ownership of legacy or outsourced code before launch or fundraising

Founder Fails

Used outsourced devs > no IP agreement > couldn’t raise VC
Cofounder built MVP before incorporating > IP not properly transferred
Fired engineer > later claimed ownership of core code

When to ask for Help

Before signing any contractor or employment agreement
To review or revise your IP assignment clauses
During due diligence or an M&A/fundraising event
If founders contributed IP before incorporation
When hiring overseas or freelance contributors

Frequently Asked Questions

Q: Doesn’t the company automatically own what employees create?
A: Yes — in most cases for W-2 employees, but not for 1099 contractors unless you have it in writing. Still, best practice is explicit assignment from everyone.

Q: What’s a “work-for-hire” clause?
A: It’s a legal phrase stating that the company owns anything created during the course of work. It must be in a signed agreement — verbal agreements don’t count.

Q: What about founders — do we need to assign IP to the company?
A: Absolutely. Each founder should sign a Founders IP Assignment Agreement to transfer any personal IP (e.g., prototypes, designs) into the company.