A problem we encounter with startling regularity is a team of founders where some or all of them have not assigned the relevant intellectual property they’ve developed to their company. This may not seem like a big deal when the value of unassigned IP is hard to determine, but it can become one if the IP turns out to be critical to the company’s business. A founder can use unassigned IP to extract a high price from the company (and his fellow founders) at a critical time, such as when the company is seeking financing and the potential investors insist (as they will) that the company obtain the IP rights. Worse yet, if a founder leaves a company his IP goes with him, which may make it impossible for the company to continue to do business.
Founders should assign IP when they receive their initial stock in a company by executing a simple assignment agreement. The assignment should be worded broadly to encompass any IP the founder may have developed that is relevant to the company’s business, and any IP the founder wishes to exclude from the assignment should be explicitly called out.