Does your company actually own your product?
It sounds obvious: of course it does. Who else would?
Below is a story of two founders at either end of the journey. The answer to the above question is often not that simple.
Right now, I’m helping a company through an exit. The business is solid, the buyer’s eager, term sheet signed…and then diligence begins. Buried in the reps and warranties: a clause confirming full IP assignment from everyone who ever touched the product. Standard stuff for M&A folks, often unexpected for founders. That’s when things get interesting.
Suddenly, it’s at minimum a question mark, and at worst detective work: finding paperwork from old engineers, interns, and contractors, or chasing them to sign IP assignments that should’ve been signed years ago. If there’s any uncertainty, best case scenario, it’s days of delay. The product hasn’t changed, but every missing signature becomes a question mark over the deal.
While supporting that process, I popped into TechCrunch Disrupt, and met a very early-stage founder.
He’s excited. Building really cool stuff. “We’ve got students volunteering helping us build,” Proud of stretching his runway, and rightly so. And then I ask about IP protection. “They’ve got NDAs, so we’re covered.”
And there it is: The Moment.
Because right there I see how this story ends if nothing changes.
I tell him: “An NDA just stops them from disclosing your stuff. It doesn’t transfer ownership of what they create.”
He pauses. You can see the gears turning. For a second, he gets a glimpse of the future version of himself, the one trying to close a life-changing deal while hunting for signatures from people he barely remembers.
We look at his NDA together. There’s a small IP clause, but it doesn’t match California law. It needs tightening. The good news? At this stage, it’s an easy fix. Future crisis mostly averted.
Founders at the start don’t feel that pain yet. Founders at the end never forget it.
Do your future self a favor: make sure that anyone who ever touches your product signs an IP assignment to the company, yourself included. Some quick actions below.
Clearly this is not legal advice, and there are a lot more nuances, happy to discuss, ping me with questions.
60-Second IP Diligence Gut Check
If you had to hand this to a buyer tomorrow, could you say “yes” to all of these?
Do I have signed IP assignments for every employee, contractor, and agency? Do I have forms of exit affirmation for past folks? Note, different states and countries have different rules on language, be aware.
Can I show who created what, when—commits, drafts, versions tied to real people?
Are brand assets cleared, documented, and trademarks filed?
Are patents and provisional filings traceable through counsel?
Do I know all third-party components in my code and their licenses?
If you hesitate, you might have an IP leak. In no particular order, some common leaks (plug these fast)
a) Personal Gmail owns your domain, Git repo, or key accounts.
b) Early contractor never signed an assignment (and no exit cleanup).
c) Agency SOW missing “work-made-for-hire” + assignment language.
d) Unchecked trademarks (conflict one Google search away).
e) Copyleft code in core product without compliance.
The best diligence story ends simply:
When the buyer asks, “Do you own all of this?” you say, “Yes.”
And mean it.
Let’s build it better,
Alex
P.S. On those volunteers I mentioned earlier? There might be some legal employment diligence items that apply, since minimum wage laws cover interns and volunteers, but that’s a discussion for a different day.
