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Every investor due diligence process starts with the same question: does the company actually own what it says it owns?
For most tech startups, intellectual property is the single most valuable asset. It's what builds your brand, protects your technology, and creates the competitive edge investors are betting on. And yet, IP is consistently the thing founders protect last.
The result: scrambling to fix ownership gaps right when it matters most, during a fundraise, an acquisition, or a dispute with a former contributor.
Here's how to get it right from the start.
The four types of IP every founder should understand
Patents protect useful inventions and discoveries: machines, processes, software methods. A patent grants the inventor the right to exclude others from making, using, selling, or importing the invention for a limited time. Key rule: you must file a US patent application within one year of public disclosure or you lose the right entirely.
Copyrights protect original works of authorship in a fixed medium: software code, designs, written content. Copyright exists automatically when the work is created, but US registration within 3 months of publication unlocks stronger enforcement rights.
Trademarks protect product, service, and company identifiers: your brand name, logo, and package designs. Trademark rights can be lost if not enforced or assigned improperly. Use ™ on unregistered marks and ® only on registered marks for goods and services covered by the registration.
Trade secrets protect commercially valuable confidential information: business plans, formulas, customer lists, proprietary algorithms. Unlike patents, trade secrets have no expiration, but protection depends entirely on maintaining secrecy.
The one document that matters most: the PIIA
The Proprietary Information and Inventions Assignment Agreement (PIIA) is the foundation of your IP protection. It provides:
- Assignment of all IP developed during the person's service to the company
- Confidentiality restrictions on company information
- Non-solicitation provisions (typically 12 months post-termination)
- Computer, device, and password protections
Every person who contributes to your product, your code, your designs, or your content needs to sign a PIIA. Employees, contractors, advisors, co-founders. Everyone.
The critical detail: get the PIIA signed before the person's start date. Not on day one. Not "when we get around to it." Before they write a single line of code.
If you miss this window, you'll need a confirmatory IP assignment with additional consideration and legal fees. We've seen founders discover this gap during Series A due diligence, when the engineer who built the first version of the product left a year ago without ever signing an assignment. That's not a conversation you want to have with an investor's lawyer.
NDAs: necessary but not sufficient
Never disclose confidential information without a written NDA. Use a one-way NDA when your company is disclosing to a third party, and a mutual NDA when information flows in both directions.
But be realistic about what NDAs can do. They're difficult to enforce, expensive to litigate, and only as good as your ability to prove what was disclosed and when. NDAs are a minimum standard, not a complete strategy.
The real protection comes from limiting disclosure in the first place. Establish a policy for determining what qualifies as a trade secret, restrict access to people with a genuine need to know, label documents appropriately, and use encryption and access controls.
Protecting your brand
Your company name, product names, logos, and slogans are trademarks. Protecting them starts with a full trademark search before you adopt any new mark, because the last thing you want is to build brand equity in a name you can't legally use.
Seek federal registration for your primary marks. Register your company name and key marks in major domain TLDs, including defensive registrations for common misspellings.
Once registered, enforce your marks. Set up watch services, monitor competitors, and maintain quality control on any licensees. Trademark rights are "use it or lose it." If you don't police your marks, you risk losing them.
The contractor IP trap
Here's a detail that trips up a lot of startups: the work-made-for-hire doctrine generally does not apply to software developed by independent contractors.
Under US copyright law, work created by an employee within the scope of employment automatically belongs to the employer. But for independent contractors, the rules are different. Software doesn't fit neatly into the categories that qualify for work-made-for-hire status, which means the contractor may own the copyright to code they wrote for you, even if you paid for it.
The fix: always require a written IP assignment agreement with contractors. Don't rely on the assumption that because you paid for the work, you own it. Get it in writing.
Watch for conflicting obligations
When hiring, carefully inquire about potential employees' existing obligations. Prior employers may have non-compete or invention assignment agreements that could affect what the new hire can work on or what IP they can contribute.
"Moonlighting" by employees or contractors who work for competitors or maintain side projects can compromise IP ownership in ways that are expensive to untangle. PIIAs address this directly, but the key is thorough review during onboarding, not after a dispute arises.
The bottom line
IP protection isn't something you do once and forget about. It's a set of habits: signing PIIAs before start dates, using NDAs before disclosures, registering marks before competitors do, and documenting everything.
The startups that get this right aren't the ones with the biggest legal budgets. They're the ones that built IP hygiene into their process from the beginning.
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