Posted by Jennifer M. Settles, Esq.  August 14,  2026

Assignment of Inventions: Making Sure Your Company Owns What Your People Create

Your business’s most valuable assets may be things it created, such as software, designs, processes, product ideas, written content, and inventions. But here’s a question many owners never stop to ask: does the company actually own what its employees and contractors create? The answer isn’t automatic, and the document that usually settles it is an “assignment of inventions” (often part of a broader confidentiality and IP agreement). Getting this right is fundamental to protecting the intellectual property your business runs on.

Why Ownership Isn’t Automatic

Business owners often assume that anything created by their team automatically belongs to the company. The reality is more nuanced. Ownership of intellectual property depends on who created it, their relationship to the company, the circumstances of creation, and what agreements are in place. While work created by employees within the scope of their jobs often belongs to the employer, the lines can blur in certain cases.   For contractors, the default rules can leave ownership with the creator. Relying on assumptions instead of clear agreements is how companies end up with gaps in the very IP they depend on.

What an Assignment of Inventions Agreement Does

An assignment of inventions agreement is a contract in which the employee or contractor agrees that intellectual property they create in connection with their work belongs to, or is assigned to, the company. It removes ambiguity by establishing up front that the fruits of their work for you are yours. These provisions are commonly bundled into employment agreements, contractor agreements, or standalone confidential-information-and-invention-assignment agreements, and they’re a standard and expected part of protecting a company’s IP.

Why Every Business Needs Them

It’s not just tech startups that need these agreements. Any business whose value depends on things its people create, including branding, content, software, designs, customer-facing materials, and proprietary processes, benefits from clear IP ownership. Without assignment agreements, you may discover that key assets are owned by a former employee or contractor, or that ownership is murky enough to create real risk. The protection costs little to put in place and can be enormously valuable when it matters.

The Moment It Really Counts: Due Diligence

Nowhere does IP ownership get scrutinized more than when you raise money or sell your business. Investors and buyers conduct due diligence specifically to confirm that the company owns its intellectual property free and clear—and they expect to see assignment agreements from the people who built it. Gaps here can reduce your valuation, hold up a deal, or require a scramble to obtain assignments after the fact, sometimes from people no longer motivated to cooperate. Clean IP ownership is something sophisticated buyers insist on.

Get Them Signed Up Front

Timing matters. The best practice is to have employees and contractors sign appropriate invention-assignment and confidentiality agreements at the start of the relationship, before work begins. Trying to obtain assignments later (e.g., after someone has left, or once a specific valuable creation is in dispute) is much harder and sometimes impossible. Building these agreements into your standard onboarding for everyone who creates work for the company closes the gap before it can open.

Don’t Forget Contractors and Founders

Two groups are especially easy to overlook. Independent contractors, as discussed, don’t fall under the same default ownership rules as employees, so their agreements need clear assignment language. And founders themselves, who often create core IP in a company’s earliest days, sometimes before the entity is fully formed, should assign their relevant work to the company too, something investors and buyers specifically look for. Make sure everyone who contributes to your IP, from the newest contractor to the founders, has properly assigned it.

The Bottom Line

The intellectual property your business depends on is only truly yours if ownership has been properly secured – and that often requires assignment-of-inventions agreements with the employees, contractors, and founders who create it. Ownership isn’t always automatic, the gaps aren’t obvious until they matter, and they tend to surface at the worst time, during a financing or a sale. Putting clear agreements in place up front is a small, inexpensive step that protects the assets at the heart of your company’s value.

If you’re not certain your company owns everything its employees, contractors, and founders have created, that’s a gap worth closing before it surfaces in a deal. Schedule a free consultation to review your IP assignment agreements and protect what your business has built.   Contact us at www.jsettleslaw.com or (602) 617-3938. 

About the Author

Jennifer M. Settles makes business owners’ lives easier. With 25+ years structuring M&A deals, commercial contracts, corporate governance, and complex real estate transactions, including over two decades as lead in-house transactions counsel for major corporations, she brings big-firm firepower to the founders, dealmakers, and growing companies who need it most. Clients describe her as knowledgeable, refreshingly direct, and relentlessly focused on their best interests. Jennifer offers white-glove, direct-access service and transparent, predictable fees. Learn more or schedule a consultation.