Case Study: Startup Risked Losing Core IP - Here’s Why

A few months ago, I got a call from a founder in full startup mode.

They were in the early days—full of energy, big ideas, fresh hires, and momentum everywhere. The software they were building had real potential, and the team was moving fast.

But in all the excitement, they’d missed something crucial. Something that could derail everything.

They hadn’t locked down the intellectual property (IP).

They had hired developers to build their core software. But what happens if one of those developers walks away? Who owns the code?

The founder hadn’t thought about it, but suddenly, they realized this could become a massive problem.

And then it hit them like a ton of bricks. They were at risk of losing everything they’d built.

Let me share with you what the main issues were.

(1) Who Owns the Core Tech?

The founder quickly realized that the developer, who had written all the code, could claim ownership over the software.

If the developer decided to leave, they could walk away with the very thing the entire company relied on.

The software was the beating heart of the business. Without it, they had nothing.

(2) No Confidentiality Agreements

To make matters worse, none of the employees or contractors had signed any confidentiality or IP agreements.

That meant the developers could not only claim ownership but could also take the company’s proprietary knowledge and share it with anyone - even a competitor.

(3) Legal Disaster Waiting to Happen

The founder could already see where this was going: potential legal battles that would drain the company of time, money, and energy.

It was a lawsuit waiting to happen, and for an early-stage startup, one legal fight could be the end.

They were building something great. But if they didn’t act fast, they might lose it all.

When they came to me, they knew they couldn’t afford to let this slide. So, we jumped into action.

(1) Ironclad IP Ownership Agreements

We immediately stepped in to draft IP ownership agreements for all employees and contractors.

These agreements clearly stated that any inventions, codes, or algorithms developed during their tenure belonged to the company, not the individual.

We specifically focused on Proprietary Inventions Assignment Agreements (PIAA).

This ensured that any intellectual property created while working for the company would be owned by the company, not the developer.

(2) Implementing Confidentiality Agreements

We also put together confidentiality agreements to protect any sensitive information the developers had access to.

These agreements made sure that once someone left the company, they couldn't disclose trade secrets, or proprietary information, or use it against the company later.

(3) Establishing Clear Terms for Contractors

For contractors, we ensured that the IP rights were properly assigned to the company and that there was no ambiguity around ownership.

Contractors are often overlooked when it comes to IP, but their work is just as important.

We made it crystal clear that any software, designs, or systems they created would belong to the company.

With these new agreements in place, the founder could finally breathe again.

-> The company secured ownership of all code, inventions, and software created by employees and contractors.

No risk of someone walking away with the software.

-> With confidentiality agreements in place, employees and contractors couldn’t share proprietary information or trade secrets - even after leaving the company.

-> The contracts made it clear that any work done by contractors belonged to the company, ensuring there were no gray areas or disputes over ownership.

-> The founder could now grow the business with confidence, knowing that their intellectual property was fully protected from potential legal challenges.

The best part?

As the company continued to grow, the legal structures we put in place ensured that their IP was protected from day one.

If you’re a startup, don’t wait until it’s too late to lock down your IP. You might think, “It’ll be fine,” but one day, it won’t be.

Get those agreements signed upfront - protect what you’re building.

It’s the foundation of your company, and without it, everything you’re working toward could be at risk.

Also, if you haven’t already, audit your existing contracts with employees and contractors.

Are there clear terms about IP ownership? Do you have confidentiality agreements in place?

If not, now’s the time to draft them. It’s far easier to protect your business early than fight for control later.

If you need my help in drafting, updating, or reviewing your agreements, then reply "CONTRACT HELP" and I'll send you details on working together!