IP ownership – lock it down

This post falls under the boring yet crucial category. As a seed fund we are routinely working with companies that are very young. It is common for these companies to have early collaborators come and go before the core founding team gels. You try people out, rely on some outside help and try and bootstrap your way towards a fundable idea. All good.

An issue that has come up time and again in our seed fundings is Intellectual Property (IP) ownership. I’m not talking about patents per se. My concern is making sure that anyone and everyone who has ever contributed to the code, product or even idea has assigned their rights to that code, ideas, etc to your company in perpetuity.

The last thing you want is to actually achieve real success and build real value only to have someone come along and claim they’re a co-founder and entitled to their share of it. For this reason, I will never fund a company until I see that every person that has ever been associated with it has signed over their IP rights.

This is one of the many reasons why startups need lawyers who come from this space. But until such time as you have that lawyer, here are two templates to get you started:

IP assignment for Independent Contractors (i.e. not employees)

IP assignment for employees.

  • Great point. In your opinion, is there much of a difference between using templates like these and actually getting a lawyer involved? My assumption is no.

    • I think you can get started without a lawyer, though you should make sure the template works for your Province or State. Sooner than later though, you will need a lawyer.

  • Rob Hyndman, a great lawyer in Toronto told me has some free templates available here:

  • Absolutely! The first document my co-founder and I signed is a transfer of intellectual property agreement to ensure that the incorporated company retains all of the IP we developed and will continue to develop in perpetuity. Beyond the legal implications, executing such an agreement from the very start is important in committing all the founders/partners to the singular goal of increasing the value of the company, not the value (or leverage) of any particular individual or partner.

    I'd also add that the sooner the better. You don't want to operate on a handshake as you and your founders/partners develop the ideas, prototypes and code for your product or company. The longer you leave this, the more exposed your company will be to IP claims down the road.