A Proprietary Information and Inventions Assignment Agreement, or PIIA, requires a founder to protect company confidential information and assign covered intellectual property to the company. Covered property can include software code, product designs, algorithms, technical methods, inventions, documentation, and other work created for the business.
Founders should settle ownership terms before incorporation and execute the assignment when the company forms. A company cannot receive property before it legally exists, so formation documents often pair the PIIA with an assignment covering relevant work created earlier. Incorporation by itself does not transfer a founder’s code, designs, or inventions.
The default rule gives intellectual property to its creator unless the creator expressly assigns it. In Stanford v. Roche, the Supreme Court confirmed that an original inventor owns an invention unless the inventor assigns those rights. Founder status, stock ownership, and work performed for the planned startup do not replace a written assignment. Without one, a technical founder may personally own the code on which the company depends.
A PIIA covers more than a standard nondisclosure agreement. An NDA requires someone to keep specified information confidential, but it does not ordinarily transfer ownership of work product. A PIIA combines confidentiality duties with present or promised assignment language. It commonly requires the signer to return company materials and help the company document, register, or enforce its rights later.
A short intellectual property clause inside an employment agreement may accomplish the assignment if its language covers the relevant work and applicable state law. A standalone PIIA usually provides a clearer record because it addresses confidentiality, ownership, return of materials, and continuing cooperation in one document. Founders in California also need state-specific language because California limits which employee inventions a company may claim. An attorney should tailor the agreement before the founders begin building valuable intellectual property, rather than trying to reconstruct ownership during investor review.
Yes, every founder should sign a PIIA or another agreement containing an effective written IP assignment. Founder status and stock ownership do not transfer intellectual property to the company. Under the default ownership rule, each creator retains ownership until the creator expressly assigns those rights.
Co-founders often create the largest ownership gap. A technical co-founder may write the core code before incorporation, while the other founders assume the company owns it once formed. Without an assignment covering that earlier work, the co-founder may continue to own an essential part of the product.
Each founder should sign separately because one founder cannot assign another founder’s rights. The agreement should cover relevant work created before formation and inventions developed while working for the company. Counsel should tailor the assignment to applicable state law and document any pre-existing IP that the founder intends to keep.
Employees need written invention-assignment terms, but companies often include them in the offer letter or employment agreement rather than using a separate PIIA. Those terms should assign work-related intellectual property and protect confidential information.
A standalone PIIA is preferable when the employment contract contains only a thin assignment clause. A full PIIA can address return of company materials, assistance with patent filings, prior inventions, and required legal notices. California agreements must also respect statutory limits on assigning inventions developed entirely on an employee’s own time without company resources and unrelated to company work, as explained in this PIIA overview.
Contractors often create the largest IP ownership risk because paying an invoice does not transfer copyright. Under 17 U.S.C. §§ 101 and 201, a contractor generally owns original work unless a written assignment transfers it or the work qualifies under the narrow work-made-for-hire rules. Software and product designs may fall outside those rules. Your contractor agreement should therefore assign all relevant rights, cover work created before signing when appropriate, and require further cooperation on patent filings or other ownership records.
Advisors need a separate advisor agreement with confidentiality and IP assignment terms suited to their services. A founder PIIA or employee agreement does not cover an advisor, and equity compensation does not transfer ownership. The advisor agreement should identify covered work while excluding unrelated inventions, prior materials, and obligations to another company. Every contractor and advisor should sign before contributing code, designs, research, or product strategy.
Use an agreement tailored to each contributor’s legal relationship with the company. A founder PIIA does not automatically cover employees, contractors, or advisors.
California law limits the inventions a company may claim from a founder who also works as an employee. California Labor Code Section 2870 generally excludes inventions developed entirely on personal time without company resources. The exclusion does not cover work related to the company’s business or anticipated research, or work resulting from services performed for the company.
A prior inventions exhibit addresses IP that the founder created before signing the PIIA. The founder should identify excluded software, designs, patents, or other work with enough detail to distinguish them from company IP. Under common PIIA drafting, a blank exhibit represents that the founder has no prior inventions to exclude. That representation can create an ownership dispute if the founder later claims that important code remained personal property.
An exclusion also requires practical review when the startup depends on the listed IP. The company may need a separate assignment or license allowing it to modify and commercialize the work. Otherwise, the exhibit can confirm that the founder owns technology the company needs but lacks permission to use.
California does not stand alone on invention-assignment limits. Similar statutes apply in Delaware and Illinois, as well as Kansas, Minnesota, North Carolina, Utah, and Washington. Counsel should review the founder’s work location, the agreement’s governing law, and the company’s use of excluded IP before anyone signs.
Investor counsel will review whether every founder, employee, contractor, and advisor assigned relevant intellectual property to the company. A missing PIIA raises a title question over the company’s code, designs, or inventions. Diligence guidance classifies unassigned IP as a critical issue that can make an investment unbankable until resolved.
A retroactive assignment can fix the gap, but the company needs the contributor’s cooperation. A current co-founder usually has an incentive to sign because the financing benefits the company. A departed co-founder or contractor may refuse, become unreachable, or negotiate from a stronger position. Payment for completed work does not by itself transfer a contractor’s copyright.
Investor counsel may delay closing while the company identifies who created each part of the product and obtains the proper signatures. Counsel may also require a separate technology assignment for work created before incorporation. If a former contributor claims ownership of core code or refuses to sign, the investor may require the company to settle the claim, replace the affected work, or resolve the issue as a condition to closing.
Remediation becomes harder as time passes because the company loses practical leverage when a contributor leaves. Before opening a financing data room, founders should audit all product contributors, collect existing agreements, and secure assignments for uncovered work. If someone cannot be located or will not cooperate, counsel should document the gap and assess the ownership risk before investor diligence begins.
PIIA cleanup works best before investors request the company’s intellectual property records. Counsel can identify every contributor, confirm which agreements were signed, and prepare assignments for missing founder, employee, contractor, or advisor work.
Template sites leave founders to decide which inventions require disclosure and whether contractor language actually transfers ownership. Zecca Ross Law Firm provides attorney-led review and regularly fixes formation and ownership documents prepared through self-serve platforms. A lawyer can also account for California invention-assignment limits, Arizona operations, and cross-border ownership issues involving non-U.S. founders or foreign entities.
Flat-fee legal support gives founders a defined scope and cost without relying on a document library or paying BigLaw rates. Speak with an attorney before the raise begins, while every contributor remains available to sign and diligence deadlines have not started.
A signed PIIA provides inexpensive insurance against ownership disputes during investor diligence. Founders should complete it while every contributor remains available and cooperative, not after a term sheet prompts questions about who owns the code or inventions. Zecca Ross Law Firm offers attorney-led, flat-fee help to resolve assignment and prior invention issues before they delay a closing.
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