RevolutionaryStartups

Employee Invention Assignment Agreements for Startups

Have every employee, contractor and intern sign a written agreement before they start work. It should assign to the company what they create for it, promise confidentiality, list prior inventions they keep, and require return of materials when they leave. Without a signed agreement, a freelancer often owns the code they wrote, even if you paid for it.

Startup lifecycle A to Z · Letter E · Stage: Build

By the Revolutionary Startups editors · Reviewed 11 November 2026 · 12 min read · 2,574 words

Who owns what an employee or contractor creates

Ownership of work product is not decided by who paid for it. It is decided by the law and by what was signed. The default rules differ for employees and contractors, and that difference is where startups get burned.

Employees

For copyright, the general U.S. rule is that work an employee creates within the scope of the job belongs to the employer as a work made for hire. Inventions work differently. An employee generally owns what they invent unless there is an agreement to assign it, with some limited exceptions depending on the job, such as being hired specifically to invent. That means relying on the default rule for patents is risky. A signed assignment removes the doubt.

Contractors and freelancers

For independent contractors, copyright generally starts with the contractor. A work made for hire for a contractor is possible only for certain listed categories of work and only with a written agreement saying so. Much software does not fit those categories neatly. So the safe way is a written assignment, a signed transfer of ownership to the company. Absent that, a freelancer who wrote your code may well own it, and you may only hold an implied license to use it. That is why the phrase freelancer owns code is a real search, not a myth.

Why this matters beyond ownership

Investors and acquirers will ask who built the product and whether those people signed over their rights. Missing paperwork is one of the most common problems found in diligence (the investor's or buyer's review of the company). Our guide on protecting IP before fundraising shows what they look for.

Work made for hire vs assignment

These two terms come up constantly and are often confused. They do different things.

PointWork made for hireAssignment
What it doesThe company is treated as the author from the startThe creator is the author, then transfers ownership in writing
Applies toCopyright onlyCopyright, patents and other rights
EmployeesApplies by default for work within the jobNeeded for inventions and as a backup
ContractorsOnly for certain categories, with a written agreementThe reliable method
Can the creator take it back?Generally noUnder U.S. copyright law, transferred copyrights can sometimes be terminated after a long period, a point a lawyer can explain

The practical answer is to use both: language saying the work is made for hire where the law allows it, plus a present assignment of everything else. This "belt and braces" wording is standard. See Wysebridge's free copyright law guide for how work made for hire works in practice, and our existing article on IP assignment agreements for the legal mechanics. This guide is about the hiring workflow around them.

What to sign on day one

The best moment to sign is before the person starts. After they begin, you may need to give something extra, called consideration, to make the new obligations binding, and the rules differ by state. A signed offer-letter package avoids that debate.

The core documents

Confidentiality for employees

A confidentiality agreement for employees defines what counts as company confidential information, restricts using or sharing it, and says the duties survive after leaving. It also helps you show that you took reasonable steps to keep secrets secret, which matters for trade secret protection. Wysebridge's free trade secret law guide explains why. For details on non-disclosure documents in general, see trade secrets and NDAs and when to sign an NDA.

Founders sign too

Founders are easy to forget. Every founder should assign the IP they created for the idea to the company, ideally when it is formed. It is a recurring gap in diligence. The co-founder equity split and a founders agreement are the natural moments to include this.

Contractors, freelancers and agencies

Contractors need more attention because they bring their own tools, may work for others and own more by default. A solid contractor agreement should cover the following.

Agencies and subcontractors

If an agency does the work, the agreement must bind the agency, and the agency must have its own signed assignments from its staff and subcontractors. Ask for that confirmation, since you only get what they own. For work that ends up being co-owned or shared with another company, see joint development and partnership IP.

Worked example

For example, a startup pays a freelancer a fixed fee to build its app. There is an invoice and an email thread but no signed contract. The freelancer wrote the code, so the freelancer is generally the copyright owner, and the startup probably has only a limited license. When an investor asks for proof of ownership, the startup has to track the freelancer down for a signed assignment. If the freelancer has moved on, wants more money or has died, the problem becomes expensive. A one-page signed assignment on day one would have prevented it. Our guide to copyright for software startups goes further into code ownership.

Interns, part-time helpers and moonlighters

Intern IP agreement

Interns are easy to treat casually and should not be. Whether an intern is an employee or not, they can create code, designs or content. Have them sign the same confidentiality and assignment agreement as other staff before the first day. If the intern is a student, check whether their school or a research program claims rights in work they produce. Some programs and scholarships do, and your agreement cannot override a prior obligation.

Prior inventions schedule

A prior inventions schedule is a list of things the person built or owns before joining, which they exclude from the assignment. It protects both sides. The person keeps control of their earlier work, and the company has a record that anything else created in the job is its own. Good practice looks like this:

Moonlighting and outside work

Staff may do side projects or work for others. Your policy should say what is allowed, what needs approval, and that nothing created using company time, equipment or confidential information belongs to the person. People who hold another job also owe duties to that employer, and that employer's agreement may claim anything similar to your product. Ask new hires whether they have such obligations. Asking early is a normal part of onboarding, not an accusation.

State limits on assignment clauses

Rules differ by state, and some states restrict how far an employer can claim an employee's inventions. At a general level, several states have laws stating that an employee keeps inventions that were developed entirely on their own time, without the employer's equipment, supplies or confidential information, and that are not related to the employer's business or research. Agreements used in those states commonly include a notice that explains the limit.

Treat this as a reason to have counsel look at the final form, not as a place to experiment. Overbroad language can also damage the credibility of an otherwise sound agreement.

Templates vs attorney-drafted agreements

Early on, many startups start with a template and later have a lawyer tailor it. Both approaches are common. The question is how much risk you take on and where.

ApproachGood forWatch out for
Reputable templateFirst few hires, standard roles, tight budgetsWrong state rules, missing carve-outs, no fit with your actual product
Attorney-reviewed templateMost seed-stage companiesCost of review, but it is a one-time effort that you reuse
Fully attorney-draftedCore engineering, anyone who will create the main IP, senior hires, complex dealsHigher cost and the need to keep templates updated

A sensible plan is to get one attorney-reviewed set of forms (employee, contractor, intern) and reuse them. The cost is front-loaded and the benefit is that every future hire starts correctly. Another practical point: patent matters. If your business depends on patentable inventions, an IP lawyer or a registered patent practitioner can advise on invention disclosure wording. Wysebridge's directory of USPTO-registered patent attorneys and agents can help locate one for patent work, although it does not cover trademark or general employment lawyers. For those, use your state bar's referral service. Our guide to finding an IP attorney for your startup walks through the choice.

Exit interviews and return of materials

Protection does not end on the last day. Leaving is when information is most likely to walk out the door. A sound offboarding routine is simple and consistent.

  1. Remind the person of their continuing duties. Hand them a copy of the signed agreement and point out the confidentiality and assignment clauses.
  2. Collect everything. Laptops, drives, documents, notebooks, source code copies and physical prototypes. The agreement should require return of materials and deletion of copies from personal devices and cloud accounts.
  3. Shut off access promptly. Email, code repositories, shared drives, password managers, domain and social accounts.
  4. Hold an exit interview. Ask about work in progress, any ideas not yet disclosed, and where the person is going next, without pressuring them. Where appropriate, ask them to sign a short acknowledgment that they returned materials and have not kept confidential information.
  5. Capture the knowledge. Make sure undocumented work is recorded before the person leaves.
  6. Log it. Keep a dated record of what was returned and which accounts were closed.

Departures that are friendly rarely cause trouble. Departures that are tense need the same steps, followed with extra care, and often a lawyer's input before you send anything accusatory.

Where this fits in the startup lifecycle

Employee and contractor IP agreements belong to the Build stage of the startup lifecycle A to Z, since they matter from the first hire onward. Before this, the earlier guide on domains and brand protection covers securing the name. After this come trade secrets and NDAs and, when you raise money, the startup IP audit checklist, which tests whether the paperwork described here is actually in place.

Quick day-one checklist

If you want to understand the subject well enough to ask good questions, Wysebridge's 20-chapter IP law course covers patents, trademarks, copyrights and trade secrets.

Frequently asked questions

Does my company automatically own what an employee creates?

Not always. Copyrightable work created within the scope of a job is generally a work made for hire owned by the employer. Inventions are different: an employee generally owns them unless an agreement assigns them or an exception applies. A signed invention assignment removes the doubt, so every employee should sign one.

If I pay a freelancer, do I own the code?

Not necessarily. Independent contractors generally own the copyright in what they create unless there is a signed written assignment or a qualifying work-made-for-hire agreement. Payment alone often gives you only a license to use it. Get a signed agreement with a present assignment of rights before work starts.

What is a prior inventions schedule?

It is a list attached to an invention assignment agreement where a new hire names the inventions or works they already own and are excluding from the assignment. It protects the person's earlier work and records that anything else belongs to the company. A person with nothing to list should write "none" and sign.

Can a startup have an intern sign an IP agreement?

Yes, and it should. Interns can create code, designs and content, and without an agreement their ownership position can be unclear. Have them sign the same confidentiality and assignment terms as employees before starting, and ask whether a school or program claims rights in their work.

Can I use an online template for employee IP agreements?

Many startups start with a reputable template, but state laws on invention assignment differ and templates may not fit your product or staff location. A good approach is to have a lawyer review one set of forms once and reuse it. Use attorney-drafted agreements for key engineers and complex roles.

Should an agreement be signed before or after the employee starts?

Before, ideally as part of the offer. Signing later can raise questions about whether the employee received something of value in exchange, and the rules differ by state. If someone already started without paperwork, get the agreement signed promptly and ask a lawyer how to document the exchange.

What should happen when an employee leaves?

Remind them of continuing confidentiality and assignment duties, collect all devices and materials, close accounts, hold an exit interview and keep a written record. Ask them to confirm they returned materials and deleted copies. Have a lawyer involved if the departure is contentious or involves a competitor.

Key terms on this page

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Sources

General information, not legal, tax or financial advice. Reviewed 11 November 2026.