Founder IP assignment and confidentiality agreements

General information as of October 10, 2026. It is not legal advice, and it describes United States federal statutes only. A lawyer can say who owns a particular piece of work and what a particular agreement does.

Code can be written before a company exists, or by people who have not yet signed anything with it. That raises a plain question: who owns this? The answer comes from statutes on copyright, patents and trade secrets, and from the documents that move rights from a person to a company. This article reads those statutes, describes what the two common agreements do, and lists questions for counsel.

Copyright starts with the author

Section 201 of the Copyright Act says that copyright in a work vests initially in the author or authors, and that the authors of a joint work are coowners of copyright in the work. For a work made for hire, the same section says the employer or other person for whom the work was prepared is considered the author and, unless the parties have expressly agreed otherwise in a written instrument signed by them, owns all of the rights.

The definition of a work made for hire sits in section 101. It has two parts: a work prepared by an employee within the scope of employment, or a work specially ordered or commissioned for use in one of nine listed categories if the parties expressly agree in a written instrument signed by them that it shall be considered a work made for hire. The listed categories include a contribution to a collective work, a part of an audiovisual work, a translation, a compilation, an instructional text and a test.

Three observations follow, each a question for counsel and not a conclusion:

• Whether a founder who is not yet an employee counts as one, and what scope of employment means for a founder, depends on facts these texts do not describe.
• The second part of the definition lists categories. Counsel can say whether software written by a contractor falls within one of them.
• Where a work does not qualify, the statute starts from the author, not the company.

A transfer needs a signed writing

For authorship that does not belong to the company by default, the route to ownership is transfer. Section 204(a) says a transfer of copyright ownership, other than by operation of law, is not valid unless an instrument of conveyance, or a note or memorandum of the transfer, is in writing and signed by the owner of the rights conveyed or such owner’s duly authorized agent.

That sentence explains why an assignment agreement exists. A conversation, an email thread with no signed instrument, or a shared understanding that the code is the company’s is not what the statute describes. An IP assignment is the signed instrument. Whether a particular email or a message satisfies the statute is a legal question for counsel.

Patents are assigned in writing too

Section 261 of the Patent Act says applications for patent, patents, or any interest in them are assignable in law by an instrument in writing. It also says an interest that constitutes an assignment, grant or conveyance is void as against any subsequent purchaser or mortgagee for a valuable consideration, without notice, unless it is recorded in the Patent and Trademark Office within three months from its date or prior to the date of such subsequent purchase or mortgage.

Two points are worth taking to counsel. The statute separates the writing that makes the assignment from the recording that protects it against a later purchaser without notice. And the recording rule has its own time period, so the timing of an assignment and the timing of its recording are both facts for a record.

What counts as a trade secret, and why confidentiality terms exist

Not everything a founder knows is a patent or a copyright. The federal definitions at 18 U.S.C. 1839 describe a trade secret as financial, business, scientific, technical, economic or engineering information, including formulas, designs, methods, processes and programs, in any form, if two conditions are met: the owner has taken reasonable measures to keep the information secret, and the information derives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable through proper means by, another person who can obtain value from it.

The first condition is the one a company controls. A confidentiality agreement is one way a company records the measures it takes, and the statute’s words, reasonable measures, are the standard counsel will talk about. Whether any specific measure is reasonable depends on facts that these sources do not describe.

The notice a confidentiality agreement may need

A second provision bears directly on drafting. Section 1833(b) says an individual shall not be held criminally or civilly liable under any federal or state trade secret law for disclosing a trade secret in confidence to a government official or to an attorney solely to report or investigate a suspected violation of law, or in a filing made under seal. Paragraph (3) then says an employer shall provide notice of that immunity in any contract or agreement with an employee that governs the use of a trade secret or other confidential information, and that an employer that does not comply may not be awarded exemplary damages or attorney fees in an action against an employee to whom notice was not provided. Paragraph (4) says the term employee includes any individual performing work as a contractor or consultant.

So a confidentiality clause is not only a promise to keep things secret; the statute attaches a notice requirement to it. Counsel can say whether a given founder, contractor or advisor agreement carries the notice and how a policy cross-reference fits.

What the two agreements do

An IP assignment moves ownership of described work from a person to the company, in a signed writing. A confidentiality agreement records the information the person will keep secret and the terms on which they may use it. Both belong in a company’s files. The sources above describe the legal setting; the documents themselves are private and vary. These are the questions to settle before signing:

• Parties. Who assigns and who receives? Is it the founder personally, the company, or both?
• Subject. Does the assignment cover code, designs, inventions, domain names, brand, data and documentation, and how are they described?
• Timing. Does the wording assign work already done, work to be done, or both? Counsel can explain how that wording operates.
• Prior work. What did the founder own or build before the company, and is any of it excluded, licensed or assigned?
• Third-party code. Does the work include open-source components, or material owned by an employer or a client? The article on open-source licenses describes how licenses attach conditions.
• Confidential information. How is it defined, what are the exclusions, how long does the duty last, and does the agreement carry the section 1833 notice?
• Other rights. Which other rights, in the United States or abroad, does the assignment address?
• Recording. For patents, who records, when, and where is the evidence kept?

Where this shows up later

The article on IP, contracts and access diligence describes how a reviewer can read assignments, contractor agreements and access records together, and the seed data room checklist shows where they are filed. The article on founder equity splits and vesting covers the stock side, since both concern what a founder brings to the company and on what terms.

Questions to bring to counsel

The questions to ask your counsel before you sign offers a general list. For these agreements:

1. Who wrote each part of the product, and under what arrangement: founder, employee, contractor, advisor?
2. Which statutory route gives the company ownership of each part: work made for hire, or a signed assignment?
3. Is there a signed instrument for every contributor, including those who left?
4. What did each founder bring from before the company, and how is it treated?
5. Which patents or applications exist, and are the assignments recorded?
6. How is confidential information defined, and do the agreements carry the section 1833 notice?
7. Where are the signed copies kept, and who can find them?

What this article cannot tell you

It does not say who owns your code or any invention. That turns on facts and on law the statutes only begin to describe, such as who the author was, the nature of a working relationship and what each document says.

It describes federal statutes only. State law on employee inventions, restrictions on non-competition and non-disclosure terms, and the law of other countries are outside its scope, as is trademark ownership.

It gives no template and does not say what a particular clause should contain. The statutes were read on October 10, 2026. Laws are amended, so a decision should rest on the current text and on counsel who has seen the actual documents.

In the data

These figures describe U.S. businesses in general, not WE’s results. Each one names its source.

• Information sector
• All private industries

Show the data as a table

Share of establishments still open, by years since opening, 2015 opening-year group

Years since opening	Information sector	All private industries
Year 0	100.0%	100.0%
Year 1	80.8%	79.6%
Year 2	70.0%	69.1%
Year 3	60.8%	61.4%
Year 4	53.3%	55.4%
Year 5	46.8%	50.2%
Year 6	42.6%	46.4%
Year 7	38.6%	43.6%
Year 8	35.4%	40.3%
Year 9	33.0%	37.4%
Year 10	30.0%	34.7%

Establishments, not companies: one company with two locations counts twice.

Sources: BLS Business Employment Dynamics, Table 7, Information (NAICS 51) , Data through March 2025 ; U.S. Bureau of Labor Statistics, Business Employment Dynamics, Table 7 , Data through March 2025

Retrieved 2026-10-15. Values are the published survival rates since birth, copied as printed.

Sources

1. 17 U.S. Code section 101: Definitions, Legal Information Institute, Cornell Law School . Accessed October 10, 2026.
2. 17 U.S. Code section 201: Ownership of copyright, Legal Information Institute, Cornell Law School . Accessed October 10, 2026.
3. 17 U.S. Code section 204: Execution of transfers of copyright ownership, Legal Information Institute, Cornell Law School . Accessed October 10, 2026.
4. 35 U.S. Code section 261: Ownership; assignment, Legal Information Institute, Cornell Law School . Accessed October 10, 2026.
5. 18 U.S. Code section 1839: Definitions, Legal Information Institute, Cornell Law School . Accessed October 10, 2026.
6. 18 U.S. Code section 1833: Exceptions to prohibitions, Legal Information Institute, Cornell Law School . Accessed October 10, 2026.

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