IP assignment is the process of transferring intellectual property rights from creators — founders, employees, contractors — to the operating company so the business owns what it builds and sells.

How it works

Before or during venture financing, lawyers confirm all founders, employees, and contractors signed invention assignment agreements transferring work product to the company. Prior employer IP must be cleared — no conflicting obligations from past jobs. Open-source code usage is reviewed for license contamination. If IP was developed at a university or prior startup, explicit assignment or license documents are required. Acquisitions of IP from third parties need bill-of-sale records. Investors’ counsel runs IP diligence checklists; gaps become closing conditions. Delaware C-corps typically hold IP at the top-level entity; international structures may assign into a holdco. Failure to assign before fundraising forces rushed fixes or deal collapse.

Why it matters

• Founders: Implement IP assignment from day one for every contributor — including pre-incorporation work documented via founder IP assignment to the company.
• Investors: Unclean IP is a hard stop. Acquirers perform the same diligence; defects surface again at exit.

Common mistake

Assuming incorporation automatically assigns founder IP. Incorporation alone does not transfer pre-existing inventions without explicit assignment agreements.

Related ideas

Invention assignment agreement, PIIA, open-source compliance, and holdco structure relate to IP ownership chains.