Getting founder IP into the company

Why this is the most common diligence failure

The sequence is almost universal: the founder invents, the company is incorporated later, and everybody assumes the two are the same thing. They are not. The invention belongs to the natural person who devised it, and Indian law requires assignments of patent rights to be in writing.

When counsel asks for the assignment from each named inventor in a data room, the absence is easy to spot and awkward to explain.

What a clean position looks like

A written assignment from each founder, executed with correct legal names, expressly covering the pre-incorporation period as well as work after it. Employment agreements containing a present assignment of inventions rather than a promise to assign. Equivalent clauses for consultants, contractors and interns. And every assignment recorded with the Patent Office.

It costs an afternoon at the start. It costs a re-priced round if left to the end.

What to actually do

• Execute assignments covering the pre-incorporation period specifically.
• Use present assignments, not promises to assign.
• Record every assignment with the Patent Office.
• Do this before the data room opens.