Who actually owns the IP
Founders, employees, contractors, and acquirers routinely disagree about who owns a given piece of intellectual property. The disagreement is almost always traceable to a document that was never signed.
When a company gets to a serious diligence event, whether that is an investment, an acquisition, or a major commercial partnership, the question that consumes the most time is rarely whether the company has good ideas. It is whether the company actually owns the ideas it claims to own. That question turns out to be harder than founders expect, and the answer turns out to be wrong more often than it should be. In almost every case, the cause is a missing or defective document that should have been signed years earlier.
Each of the major IP categories has its own ownership default, and the defaults do not all run in the same direction.
Copyright vests in the author of the work the moment the work is fixed in a tangible medium. If the author is an employee acting within the scope of employment, the employer owns the work under the work-made-for-hire doctrine. If the author is an independent contractor, the contractor owns it unless the work fits within one of nine specifically enumerated categories under the Copyright Act and the parties have signed a written work-for-hire agreement before the work is created. Software written by a contractor is not one of those nine categories. That means a startup that hired a contractor to write its core codebase, paid for the work, and never signed a written assignment does not own the code. The contractor does. A separate, signed assignment, not just an invoice and a payment, is what transfers the rights.
Patents are owned by the inventor or inventors at the moment the invention is conceived. If multiple people contributed to the conception of a claim, they are joint inventors with independent rights to license and exploit the invention. Employment alone does not assign those rights to the employer. A proper invention assignment agreement, signed at hire and covering both existing and future inventions made within the scope of employment, is the mechanism that gives the company ownership. Many companies discover during diligence that key inventors never signed one, or signed one that was never countersigned, or signed one with carve-outs that exclude the very inventions the company wants to claim.
Trade secrets are owned by the entity that develops them and takes reasonable steps to protect them. The “reasonable steps” requirement is doing real work here. A company that calls something a trade secret but does not restrict access, does not mark it as confidential, does not require non-disclosure from employees and contractors, and does not have any operational discipline around its handling will struggle to enforce trade secret rights when someone walks out the door with the information. Trade secret protection is not declared. It is demonstrated through the conduct of the business.
Trademarks are owned by the entity that uses the mark in commerce to identify the source of goods or services. Use, not registration, creates the rights. Registration strengthens them considerably, but a trademark owned by the founder personally and used by the company creates the same kind of ownership tangle that loose copyright assignments create. The mark should be owned by the operating entity, with a clean chain of title documented in writing.
The practical synthesis for any company that expects to undergo diligence is to do that diligence on itself, now, before someone else does it on you. For each significant piece of IP the company relies on, identify who created it, what their relationship to the company was at the time, and which written agreement (if any) transfers the rights to the company. The IP that survives this exercise is the IP you actually own. The IP that does not survive it is the IP you need to clean up. Doing the cleanup before a transaction is straightforward and inexpensive. Doing it during a transaction is expensive, slow, and often discounted into the deal.
Investors and acquirers are inclined to engage with companies that can confirm what they own. That confirmation is built one signed document at a time.