Why Should Startup Founders Consider Signing These Intellectual Property Agreements At The Outset of Their Business Journey?

A problem arises if one of the founders leaves before entity creation and takes his rights to certain intellectual properties (“IP”) along with him. The IP created sometimes never gets transferred to the startup company at all. One way to protect against someone else who inadvertently owns part of your IP is to adopt a standard form agreement that can be signed by anyone involved in the project: founders, employees and contractors alike. There are two types of IP agreements to consider:

IP Assignment Agreement

An IP assignment agreement is a necessary document to be signed by the founders of any business to ensure that all IP rights created by any of the founders before forming the business will be assigned to the new business entity. This is usually done as part of the formation process and often in full or partial payment for the founders’ shares.

For startups who intend to attract investors or venture capital firms in the future, it’s worth noting prospective investors will invest only in companies that clearly own their IP. Often, the valuation of a startup’s IP portfolio is what investors and venture capital firms determine when considering buying in. A potential investor wants to see that the Company owns the IP that the founders developed before the Company was incorporated. The way you’d achieve that is through a founder IP assignment agreement. 

Confidentiality and Proprietary Rights Agreement

Similarly, when we talk about employees after the corporation is formed, you need to make sure your concepts and inventions stay in business — instead of walking out the door with your employees. A Confidentiality and Proprietary Rights Agreement will help you do just that, ensuring that all of the ideas and inventions your employees, contractors, service providers or founders create at work remain the property of your Company.

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