IP Assignment Agreement: How to Transfer Intellectual Property Rights

You hired a developer to build your app. The code is done. But who actually owns it? Without an IP assignment agreement, the answer might surprise you. In India, the default copyright owner is the creator, not the person who paid for it, unless there's a written agreement saying otherwise.

IP Assignment vs IP License

Types of IP That Can Be Assigned

• Copyright: Software code, content, designs, music, films. Governed by the Copyright Act 1957. Assignment must be in writing (Section 18).
• Trademarks: Brand names, logos, trade dress. Governed by the Trade Marks Act 1999. Can be assigned with or without goodwill.
• Patents: Inventions and processes. Governed by the Patents Act 1970. Assignment must be in writing and registered with the Patent Office.
• Designs: Product designs. Governed by the Designs Act 2000.
• Trade Secrets: No registration system. Protected through NDAs and contractual obligations.

Employee IP: Who Owns What?

Under the Copyright Act 1957 (Section 17):

• ✅ Work done during employment in the course of employment → employer owns the copyright by default
• ✅ Work done by freelancers/contractors → the creator owns the copyright unless assigned in writing
• ⚠️ "Course of employment" is narrow: Personal projects, side work, and work outside job scope may belong to the employee

Critical for startups: If your co-founder built the product before incorporation, the co-founder owns the IP, not the company. You need a written IP assignment to transfer it to the company.

7 Essential Clauses in an IP Assignment Agreement

1. Description of IP: Precisely describe what IP is being assigned, code repositories, design files, patents, trademarks, trade secrets. Be exhaustive.
2. Scope of Assignment: All rights, title, and interest. Worldwide. Perpetual. In all media and formats, now known or later developed.
3. Consideration: What the assignor receives in return. Can be monetary or equity. Must be explicitly stated for enforceability.
4. Warranties: Assignor warrants they own the IP, it doesn't infringe third-party rights, and no prior assignments or licenses exist.
5. Moral Rights Waiver: Under Indian copyright law, moral rights (Section 57) cannot be fully waived but can be addressed by agreeing not to assert them.
6. Future IP: Cover work in progress, future improvements, and derivative works. "All IP created in relation to [project] during and after the term."
7. Cooperation Clause: Assignor agrees to execute any further documents, provide source materials, and assist with IP registration filings.

Common IP Assignment Pitfalls

• ❌ No written agreement with freelancers: They own the copyright by default
• ❌ Pre-incorporation IP not assigned: Founders' work before company formation stays with the founder
• ❌ Using open-source without checking licenses: Some licenses (GPL) require all derivative work to be open-sourced
• ❌ Not recording the assignment: Patent assignments must be recorded with the IP office to be effective against third parties
• ❌ Vague IP description: "All intellectual property" without specifics creates enforcement problems

Key Takeaways

• ✅ Assignment = ownership transfer; License = permission to use
• ✅ Freelancer/contractor work requires a written assignment agreement
• ✅ Employee work in the course of employment belongs to the employer by default
• ✅ Pre-incorporation founder IP must be formally assigned to the company
• ✅ Patent assignments must be recorded with the IP office
• ✅ Always describe the IP being assigned in precise detail

Frequently Asked Questions

Who owns IP created by an employee in India?

For works created during the course of employment and as part of the employee's duties, the employer owns the copyright under Section 17 of the Copyright Act 1957. However, for patents, the default owner is the inventor unless there is a written assignment. Freelancers and contractors retain IP ownership unless assigned in writing.

What is the difference between IP assignment and IP license?

Assignment permanently transfers all rights, title, and interest to the assignee, similar to selling a property. A license grants permission to use the IP under specified conditions while the original creator retains ownership, similar to renting a property. Licenses can be exclusive or non-exclusive.

Does an IP assignment need to be registered?

For trademarks, assignment must be registered with the Trademark Registry. For patents, the assignment must be recorded with the Patent Office. For copyrights, registration of assignment is recommended but not mandatory. However, an unregistered copyright assignment may face evidentiary challenges.

What IP clauses should startup founders include?

Every startup should have IP assignment clauses covering pre-incorporation IP (code, designs, ideas contributed before incorporation), employee IP assignment, contractor IP assignment, background IP vs foreground IP distinction, and a clause ensuring all future IP created for the company is automatically assigned.

Related reads: Founders Agreement Checklist · Non-Compete Clause India · Franchise Agreement Guide