In the previous issue, we looked at SAFEs, convertible notes, and priced rounds, the instruments that bring capital into a company. But capital is only useful if there is something worth investing in. For most startups, that something is not a building or a piece of equipment; it is intellectual property: the code, the brand, the content, and the processes that make the product work. As we noted in our first post, IP ownership is one of the building blocks every founding team should get right early. This issue looks at where IP ownership commonly breaks down, and the documents that close those gaps.
Understanding What You Actually Own
Designs, and content: Whatever the product is built from, code, design files, written content, proprietary formulas, or internal processes, someone created it. If that someone was a founder before the company existed, a freelancer hired for a single project, or an early employee without paperwork, the company may not actually own what it uses every day. Ownership does not transfer automatically just because work was paid for, or because the person who built it happens to be a founder. Open-source components and AI-assisted output add one more layer of uncertainty, since the origin of any given piece of work is not always traceable after the fact.
Software and Code. Software creates a particular set of ownership challenges. Code written before the company existed, contributed by a freelancer without a written agreement, or generated with AI assistance does not automatically belong to the company, regardless of who paid for it or who is now running it. Ownership requires an explicit written transfer, and that transfer is easy to overlook precisely because the work feels informal. Software is automatically protected by copyright from the moment it is written, though this only covers the code itself, not the underlying ideas or functionality. Patent protection can extend to what the software actually does, but has historically been difficult to obtain, requiring courts to find a concrete technical improvement rather than a mere abstract process.
Patents: A patent grants the holder an exclusive right to an invention, meaning others cannot make, use, or sell it without permission, for a limited period, typically 20 years from the date of filing.To be granted, an invention must be novel and non-obvious, and patents are frequently challenged or invalidated on the basis that the invention was already known or anticipated by prior art.An invention that is never documented or filed does not protect anyone, regardless of how original it is. Founders sometimes delay filing because there is no finished product yet, or because they assume an idea is too early to protect. In practice, the date that determines who has rights to an invention typically depends on when (and whether) it was filed, not on who thought of it first. Filing is also not quick or cheap: costs and review periods grow with the scope of protection sought, and each additional country requires its own separate filing process.
Trademarks: A brand used commercially for years without ever being registered is not necessarily protected. In several jurisdictions, the first party to file can have priority over the first party to actually use the name, and a startup operating informally can later discover that someone else holds the rights to its own name in a key market. Registering a trademark is simpler than a patent, but it is still a jurisdiction-by-jurisdiction process: registration in one country does not extend to another. Some mechanisms ease this burden: the EU Trade Mark covers all member states through a single EUIPO filing, and the Madrid System allows a single international application to designate multiple countries simultaneously. It is also important that trademarks be registered in the company’s name rather than the founder’s, in order to avoid ownership disputes down the line. Trademark protection also requires continued use over time: in many jurisdictions, registrations may become vulnerable to cancellation if the mark is not actively used in commerce, although the specific standards and proof requirements vary across jurisdictions.
Web Domain: The same gap exists with the company’s web domain: trademark rights and domain registration sit in entirely separate systems, so securing one is no guarantee of the other. A startup can register a trademark only to find the matching domain already taken, or the reverse. For that reason, and counterintuitive as it may seem, companies should carefully assess the availability of relevant domain names at an early stage and, in many cases, allow that consideration to inform, or even determine, the choice of the company’s name.
Confidential information and know-how: Internal processes and proprietary know-how are often shared informally in conversations, shared drives, or onboarding materials without any confidentiality obligation attached. Once information has been shared without that protection in place, it becomes difficult to treat it as confidential later. This becomes particularly important once the company begins entering into NDAs with third parties, as the existence of protection may in some cases depend on whether the information was identified as confidential at the time of disclosure. A counterparty may later argue that information shared without any confidentiality designation was not protected. For that reason, companies should establish internal practices from day one requiring employees to clearly label sensitive materials (for example through “Confidential” legends, headers, or watermarks) across documents and communications.
Deciding What’s Worth Protecting
Before filing anything, it helps to treat patents and trademarks as deliberate investments, not paperwork formalities. Protection is territorial: legal costs multiply with every jurisdiction added, since there is no single filing that covers every market a startup might enter. Some regions ease this: the EU’s Unitary Patent, for instance, covers multiple member states through a single filing and a single renewal process. Mechanisms like this are worth checking for before defaulting to separate national filings, but they remain the exception, and most jurisdictions still require their own process.
That investment is easier to justify in some cases than others. A genuinely novel invention, with no close equivalent on the market, is more likely to be patentable and worth defending. A feature that several competitors already offer in similar form is less likely to clear the novelty bar, and may not be worth the cost of trying. The same logic runs in reverse for trademarks: in a crowded category, where several companies compete for the same buyer’s attention, a distinctive, registered name carries more weight, precisely because differentiation through the product alone is harder to achieve.
For inventions worth protecting, there is still a choice to make. A patent requires publicly disclosing how the invention works, while a trade secret protects the same information by keeping it confidential indefinitely. Regardless, a trade secret only works if the information stays genuinely confidential. It offers no protection if a competitor reaches the same result independently or reverse-engineers the product. Choosing between the two is a strategic decision, not a default.
Formalizing Protection: Assignment, CIIA, and Registration
Assignment Agreements. A Founder IP Assignment Agreement and a Contractor Agreement with an assignment clause solve a specific problem: they transfer ownership of something that already exists. Founders should sign one at incorporation, covering anything built before the company existed. Every contractor or freelancer should sign one before starting work, not after delivering it, an assignment obtained after the fact depends on someone’s willingness to cooperate, and that cooperation is not guaranteed.
CIIA. A Confidential Information and Invention Assignment Agreement works differently. Where an assignment agreement transfers something specific that already exists, a CIIA is a standing agreement signed by each employee at the start of the relationship, covering confidentiality and any invention created for as long as the employment continues.
Registration. As a practical matter, founders should approach intellectual property protection in three steps: first, secure relevant web domains; second, register trademarks in key jurisdictions; and third, assess whether patent protection is strategically worthwhile. The first two are usually essential because domains and trademarks operate on separate first-come-first-served systems, making delay costly. Patents, by contrast, are more industry- and strategy-dependent: for some companies they are core assets, while for others they may not justify the cost and complexity. Where patents matter, timing is critical, since public disclosure may forfeit protection. Many companies therefore begin with provisional applications to secure an early filing date while deferring the expense of a full application. Founders should also account for the significant internal burden of patent prosecution, which often requires years of ongoing collaboration with counsel and active involvement from someone deeply familiar with the invention, typically the founder.
Closing these gaps calls for a range of solutions, some straightforward, others considerably more involved, but a few practical steps keep the process manageable:
- Have every founder sign an assignment agreement at incorporation, covering anything created before the company existed.
- Get a signed assignment agreement from every contractor before work begins, not after it is delivered.
- Sign a CIIA with every employee on day one, and make sure every contractor’s agreement carries equivalent confidentiality and assignment terms.
- Prioritize proof of use for trademarks, keep a simple, dated record of commercial use from day one, and before filing a patent or trademark in a new country, budget for the added cost and timeline, since both scale with every additional jurisdiction and usually call for local counsel to manage.
Put together, the risks above and the documents that resolve them map as follows:
| IP Asset | Common Risk | Solution |
| Designs and Content | Created by freelancers or contractors without written transfers; AI-generated assets with unsettled copyright status | Contractor Assignment Agreements with explicit IP transfer clauses |
| Code and Software | Written by founders before incorporation, by contractors without assignment agreements, or with AI tools whose output may not be owned by the company | Founder & Contractor Assignment Agreements; clear AI usage policies |
| Patents | Invention undocumented, or filed too late | Early filing, before public disclosure or relying on trade secret protection instead |
| Trademarks | Brand used without registration; no record of use | Early registration + retained evidence of commercial use |
| Confidential information | Shared without any confidentiality obligation | CIIA + consistent internal practices |
Getting this right is a matter of strategy: deciding early what actually needs protecting and choosing the right tool for each asset. Assignment agreements and CIIAs are simple to put in place and cost little beyond the time it takes to sign them, and they secure the company’s ownership of what it already has. Patents and trademark registrations are a different kind of commitment, real costs, real timelines, and a separate process in every jurisdiction where protection is sought. What ties all of this together is something we introduced in our first post: a clean chain of title: clear, written proof that everything the company uses today was properly transferred to it. These gaps rarely surface during everyday operations; they tend to surface when the company is raising capital or closing a partnership, exactly when there is the least time to fix them and the least leverage to negotiate the terms of doing so. In the next issue, we turn to organization and governance: the lightweight practices that keep a startup deal-ready as it grows.
