IP assignment agreement for startups in India: a guide
An IP assignment agreement transfers ownership of code, designs or inventions from the person who made them to the startup. In India it matters because the author is the first owner of copyright, so founder work from before incorporation and contractor work stay with the maker until a written, signed assignment moves them to the company.
By Akshay Kendurkar, CEO, MyStartupValley
Here's a question that stalls rounds: who owns your product? Most founders say the company. Indian law often says the person who wrote it.
That gap shows up in diligence, usually late. This guide explains why it exists, how assignment works under the Copyright Act and the Patents Act, what investors ask for, and a checklist. It's an explainer based on the official text of both Acts, not legal advice. Use a lawyer for your documents.
Why might your startup not own its own code?
Indian copyright law makes the author the first owner of a work. Code is a literary work. So code a founder wrote before incorporation, and code or designs a contractor made, belong to the person who made them until a written assignment transfers them. The company owns only what the law or a signed document gives it.
The definitions in the Copyright Act, 1957 say a literary work includes computer programmes, tables and compilations, including computer databases. An artistic work includes a drawing, including a diagram, chart or plan, whether or not it has artistic quality. Many design files fall here.
Section 17 then sets the starting point: subject to the Act, the author of a work is the first owner of the copyright in it.
There are exceptions. Under section 17(c), where a work is made in the course of the author's employment under a contract of service or apprenticeship, the employer is the first owner, unless they agree otherwise. Section 17(b) gives the commissioning person ownership only of a photograph, painting, portrait, engraving or film made for payment. Code, product designs and copy are not on that list.
Which work is most at risk?
Three kinds of work sit outside the employer rule: what founders built before the company existed, what freelancers and agencies delivered, and what advisers or friends contributed informally. In each case, no contract of service links the maker to the company, so the maker keeps ownership unless a signed assignment says otherwise.
- Pre-incorporation work. A company can't employ anyone before it exists. The prototype, the first repository and the pitch designs belong to the founders who made them.
- Contractor work. A freelancer works under a contract for services, not a contract of service. Paying an invoice doesn't transfer copyright.
- Informal help. A college friend who wrote a module, or an adviser who drew the architecture, is an author too.
Employees are safer, but not fully. Section 17(c) yields to any agreement to the contrary, and it covers only work made in the course of employment. Many companies still take an express assignment in employment contracts to avoid a later argument.
How does copyright assignment work in India?
An assignment of copyright is valid only if it is in writing and signed by the assignor or an authorised agent. It should identify the work, the rights assigned, the duration, the territory and the payment. Leave out the duration and the law deems five years. Leave out the territory and it presumes India only.
Those rules sit in section 19 of the Act. Its sub-sections create traps for a startup that uses a one-line assignment:
| Section | What it says | What to write |
|---|---|---|
| 19(1) | No assignment is valid unless in writing and signed by the assignor | A signed document, not an email |
| 19(2) | It must identify the work and specify the rights, duration and territory | List the work and all rights |
| 19(3) | It must specify the royalty and any other consideration | State the consideration, even if nominal |
| 19(4) | Rights not exercised within one year lapse, unless the assignment says otherwise | Say the rights do not lapse |
| 19(5) | No period stated means five years | State the full term of copyright |
| 19(6) | No territory stated means India | State worldwide |
Section 18 helps with future work. It lets the prospective owner of copyright in a future work assign it, and the assignment takes effect when the work comes into existence. That's why engagement contracts can assign work before it's written.
Section 18 also has a limit. An assignment doesn't reach a medium or mode of exploitation that didn't exist or wasn't in commercial use when it was made, unless it names that medium specifically. Broad drafting matters.
Paying for the work and owning the work are two different things.
How does patent assignment work under the Patents Act?
Only the true and first inventor, or the inventor's assignee, can apply for an Indian patent. So a startup applies as assignee, which needs a valid assignment. Under section 68, that assignment must be in writing, set out all terms in a document and be duly executed. The new owner should then register it with the Controller.
Section 6 of the Patents Act, 1970 lists who may apply: the person claiming to be the true and first inventor, that person's assignee, or a deceased inventor's legal representative.
Section 68 covers validity: an assignment of a patent or a share in one isn't valid unless it is in writing and the agreement is reduced to a document embodying all the terms and duly executed.
Section 69 covers registration. The person who becomes entitled must apply to the Controller to register the title. Under section 69(5), a document not entered in the register won't be admitted as evidence of title, unless the Controller or court directs otherwise. Recognised startups also get fast-tracked examination and fee rebates, as the Startup India scheme page sets out. Our guide to diligence on deeptech startups covers how investors weigh patents.
What do investors ask for in IP diligence?
Investors ask for a signed assignment from every person who built the product: founders, employees, contractors and agencies. They check that patents and applications stand in the company's name with assignments registered, and that no founder still holds core IP personally. A gap found late can hold up the close.
A June 2026 note by Legitpro Law says IP problems are common in diligence: software developed by contractors without assignment agreements, and technology built before incorporation and never formally transferred. It adds that deals more often collapse over such unresolved issues than over valuation.
Expect the investment agreement to carry founder representations that the company owns its IP, and a condition to fix any gaps before money moves. Put the assignments in your data room before anyone asks. Our due diligence document checklist shows where they fit, and answering investor diligence questions covers how to explain a gap you're fixing.
What should an IP assignment checklist include?
List every person who created product IP, get a signed assignment from each one, make sure each document names the work, rights, duration, territory and consideration, and register patent assignments. Then keep the signed originals where diligence can find them.
- Map contributors: founders, employees, interns, freelancers, agencies and advisers, with what each one built.
- Founders: sign an assignment to the company covering everything built before and after incorporation.
- Employees and interns: put an express assignment clause in every contract.
- Contractors: assign IP in the engagement contract, including future work, before work starts.
- Drafting: state all rights, the full term, worldwide territory, the consideration and that rights won't lapse for non-use.
- Patents: file in the company's name as assignee, and register assignments with the Controller.
- Records: keep signed copies, and check open-source licences in your code.
None of this is legal advice. The sections above are summaries of the official text, linked in this post. Ask an IP or corporate lawyer to draft and review your assignments, including stamping and execution, before your next round.
Questions
Does my startup own the code I wrote before incorporation?
Not automatically. Under section 17 of the Copyright Act, 1957, the author is the first owner of copyright, and a company that didn't exist yet can't be your employer. The usual fix is a written assignment from each founder to the company, signed by the assignor, covering the work made before incorporation.
Who owns work made by a freelancer or agency in India?
The freelancer or agency, unless a written assignment says otherwise. The employer rule in section 17(c) covers work made under a contract of service, which is employment. A contractor works under a contract for services, so the startup needs a signed assignment, ideally in the engagement contract before work starts.
What must a copyright assignment say under Indian law?
Section 19 says it must be in writing and signed by the assignor. It should identify the work and state the rights assigned, the duration, the territory and the consideration. If duration is left out, the law deems five years, and if territory is left out, it presumes India only.
What do investors check about IP in diligence?
Investors look for signed assignments from every founder, employee and contractor who built the product, patent filings in the company's name with assignments recorded, and no IP still held personally by a founder. A June 2026 law firm note lists contractor code without assignment and pre-incorporation tech as common red flags.
Sources: Copyright Office, The Copyright Act, 1957, Chapter I (definitions) and Chapter IV (sections 17 to 19A), accessed 10 Nov 2026 · IP India, The Patents Act, 1970, sections 6, 68 and 69, accessed 10 Nov 2026 · Legitpro Law (Rishika Jaiswal), Road Beyond the Term Sheet: Legal Considerations in Startup Funding, Legal 500 Market Intelligence, 11 Jun 2026 · Startup India, Startup India scheme page (IPR benefits), accessed 10 Nov 2026
For more on how startup funding works in India, read the MyStartupValley blog or visit mystartupvalley.com.