Who Really Owns Your Startup's IP?

"Most founders assume their company owns what it builds. It doesn't, at least not automatically. Under U.S. law, the person who creates intellectual property owns it unless they've assigned it in writing. That means your company may not own its core code, designs, or brand even if you paid for them. I've seen financings delayed, acquisitions fall apart, and founders lose control of their own products because they never secured clear IP ownership."

"Then the lead investor's counsel asked for proof that the company owned all of its source code. It didn't. The developer had never signed an IP assignment. He technically owned the core backend code that powered the entire platform. The investor froze the round until the issue was resolved. The developer, realizing his leverage, demanded both compensation and equity before signing."

Under U.S. law, the person who creates intellectual property owns it unless they assign it in writing. Founders, employees, contractors, and advisors do not automatically transfer IP rights to a company by working for it or receiving payment. Without written assignments, the company is using the work under an implied license that is insufficient for investors or acquirers. Missing IP assignments can delay financings, scuttle acquisitions, and allow individual creators to demand compensation or equity. The common fix is to obtain signed IP assignment agreements and proprietary rights provisions from every contributor early. Early diligence on IP ownership preserves valuation and deal momentum.

Read at The IP Law Blog