For most Indian startups the real value sits in code, designs, brand names, and inventions, not in furniture or machinery. Yet founders routinely assume the company owns all of this simply because it paid for the work. Under Indian law that assumption is often wrong. Intellectual property (IP) is created by, and legally belongs to, a specific author or inventor first. Unless that person formally hands it to your company in writing, your startup may be building on assets it does not actually own. This lesson explains how to lock those assets down.
Why the company does not automatically own IP
The default rules cut against founders in three common situations:
- Founders before incorporation. Any prototype, code, deck, or brand you built before the company existed belongs to you personally, not the company. It has to be assigned in.
- Contractors and freelancers. Under the Copyright Act 1957, the author is the first owner. A freelance developer or designer working under a contract for service keeps the copyright in what they make unless they sign it over, no matter what your invoice says.
- Inventions and patents. The Patents Act 1970 treats the true and first inventor as the first owner. There is no provision that automatically vests employee inventions in the employer, so a signed assignment is essential.
Employees are a partial exception: Section 17 of the Copyright Act makes the employer the first owner of works made in the course of employment under a contract of service, unless the contract says otherwise. But this covers only copyright, only employees, and not patents. Relying on it alone leaves gaps.
How to assign IP correctly
Assignments must meet strict formalities to be valid:
- Copyright: Section 19 of the Copyright Act requires the assignment to be in writing, signed by the assignor, and to identify the work and specify the rights, duration, and territory.
- Patents: Section 68 of the Patents Act requires a written document, duly executed, that embodies all the terms and conditions governing the assignment.
The practical fix is a standalone IP Assignment Agreement or Deed for each founder and each contractor, not a vague line buried in a services contract. Founders sign a deed assigning all pre-incorporation IP to the company. Every contractor and consultant signs an assignment covering the specific deliverables they produce, with present-tense assigning language and, ideally, an obligation to sign further documents if needed. Do this at engagement, not later, because chasing a departed contractor for a signature is far harder.
Why investors check this in diligence
When you raise a round, investor lawyers run legal due diligence, and clean IP ownership is one of the first things they test. Missing founder or contractor assignments are a classic red flag: they mean the company you are selling shares in may not own its core product. This can delay closing, force a last-minute scramble to collect signatures, trigger indemnities and holdbacks, or reduce your valuation. Getting assignments signed from day one turns a potential deal-breaker into a two-minute check.
Trademark basics
Your brand name and logo are protected under the Trade Marks Act 1999 and Trade Marks Rules 2017. India follows the Nice Classification of 45 classes, where Classes 1 to 34 cover goods and Classes 35 to 45 cover services, so you file in the class or classes that match your business. A new application is filed through Form TM-A.
The government fee for e-filing is ₹4,500 per class for individuals, DPIIT-recognised startups, and small enterprises with a valid Udyam (MSME) registration at the time of filing, and ₹9,000 per class for companies and LLPs. A registration lasts ten years and can be renewed for further ten-year periods indefinitely. Before you commit to a name, run a search on the IP India public trademark database to check it is available. You may use the ™ symbol on a mark you claim, but only a registered mark can carry the ® symbol.
Your action checklist
- Sign a founder IP assignment deed for all pre-incorporation work.
- Make an IP assignment clause and deed standard in every contractor and employee agreement.
- Keep signed copies in one folder, ready for diligence.
- Register your core brand name and logo in the right class early.