How to make sure your company owns its code, brand and know-how.

This is general information, not legal advice. IP law is technical, and a short conversation with an IP solicitor or a registered trade mark attorney is good value before any significant decision.

Why it matters

For most tech startups, the value of the company is its software, data, brand and know-how. If those are owned by individuals rather than the company, an investor or acquirer is buying an empty shell. IP gaps are one of the most common findings in due diligence, and they are usually easy to fix early and awkward to fix late.

Who owns what by default

• Employees. In UK law, copyright in work an employee creates in the course of their employment generally belongs to the employer. Contracts should still say so clearly and cover inventions and other rights.
• Contractors, agencies and freelancers. By default, the person who writes the code or creates the design usually owns the copyright, even though you paid for it. You need a written IP assignment signed by them.
• Co-founders. Anything written before the company existed, or outside any employment contract, belongs to the person who wrote it until they assign it to the company.
• Volunteers and advisers. Treat them like contractors: get a written assignment and confidentiality terms before they contribute.

Step by step

1. Audit what exists. List the codebase, designs, content, domain names, data sets and brand assets, and who created each one.
2. Collect assignments. Have each co-founder sign an assignment of pre-incorporation IP to the company. Put IP clauses in every employment contract, contractor agreement and agency contract going forward. Check that agencies have themselves secured rights from their staff and subcontractors.
3. Own the accounts. Domain names, code repositories, cloud accounts, app store listings and social handles should be registered to the company, with more than one admin.
4. Check open source. Keep a list of open source components and their licences. Most permissive licences are low risk for SaaS, but some copyleft licences impose obligations, especially if you distribute software. Investors increasingly ask for this list.
5. Protect the brand. Search the UK trade mark register and the wider market before committing to a name. Then apply to register your trade mark with the UK Intellectual Property Office in the classes that cover what you sell. Software and SaaS businesses often look at classes 9 and 42, but check with a specialist. Consider other countries before you launch there.
6. Keep secrets secret. Much of your advantage is know-how that cannot be registered. Use confidentiality clauses in contracts, a non-disclosure agreement where it genuinely helps, and access controls. Accept that most investors will not sign NDAs; share selectively instead.
7. Be careful with patents. In the UK, computer programs as such are excluded from patent protection, although some software-implemented inventions with a technical effect can be patentable. Do not assume either way. If you think you have a patentable invention, speak to a patent attorney before you publish or demo it publicly, because public disclosure can destroy novelty.

Worked example

Tallyhive, a Glasgow events platform, built its first version with a freelance developer and a design agency. During a seed round the investor’s lawyer asks for IP assignments. The freelancer has moved abroad but signs a short assignment within a week; the agency’s contract assigns rights only on full payment, and one invoice is still disputed. Tallyhive settles the invoice and receives a confirmatory assignment. They also discover the name clashes with an existing UK trade mark in a related class, so they rebrand the product before launch rather than after. Every new contract now uses the same IP clause.

Common mistakes

• Assuming that paying for work means you own it.
• Registering domains and repositories in a co-founder’s personal name.
• Choosing a brand without checking the trade mark register.
• Publicly demoing a possible invention before taking patent advice.
• Relying on NDAs instead of good access control.

What to measure

• Percentage of contributors (past and present) with a signed IP assignment.
• Critical accounts held by the company with at least two admins.
• Open source components without a reviewed licence.