Most founders think about intellectual property twice: once when a term sheet arrives and diligence begins, and once when a competitor copies something. Both are late. By the time diligence starts, the facts are fixed, and the only question is how expensive they are to fix.
An IP strategy before the first pitch is not an expensive undertaking. It is mostly a set of decisions and a small number of filings, made in the right order. This article sets out what those are and why the sequence matters.
What an investor actually looks at
IP diligence in an early-stage round is narrower than founders expect. Investors are not usually assessing the technical merit of a patent claim. They are checking for defects that would make the company hard to sell later. In practice, that means four questions.
Does the company own what it uses? Not the founders personally, not a previous employer, not a contractor. The company.
Is the brand clear and protectable? Can the company keep using its name in its markets, and does anyone else have a prior right to it.
Has anything been disclosed that destroys patentability? Demo days, pitch decks, published papers, product launches.
Are there third-party dependencies that constrain the business? Open source licence terms, licensed technology, university agreements.
A company that answers all four cleanly moves through diligence quickly. A company that cannot answer them negotiates from a weaker position, sometimes with money held back in escrow, sometimes with a lower valuation, sometimes with the round delayed while the position is remediated.
Ownership: the defect that is hardest to fix later
Ownership problems are the most common finding and the most disruptive, because fixing them requires the cooperation of people who may no longer have any reason to cooperate.
The recurring patterns:
- A founder built the prototype before incorporation. In the absence of an assignment, the intellectual property may sit with the individual, not the company. If that founder later leaves on bad terms, the company has a problem.
- A departed co-founder contributed code or designs and left without executing an assignment.
- A freelance designer created the logo. Under Indian copyright law, the position on commissioned works depends on the arrangement, and the safe course is an express written assignment. Verbal instructions and a paid invoice are not an assignment.
- A founder developed the idea while employed elsewhere, using employer time or resources, and the previous employment contract contains an IP clause.
- Academic involvement. Work done in a university lab may be subject to institutional IP policy.
The remedy in every case is a written assignment executed by the individual in favour of the company, with consideration recited. Doing this in month one, when everyone is enthusiastic, costs almost nothing. Doing it in year three, when a former co-founder has realised they hold leverage, is a negotiation.
Founders should also ensure that employment contracts and contractor agreements from the outset contain assignment and confidentiality provisions. This is standard drafting and there is no good reason to be without it.
Disclosure: the defect that cannot be fixed at all
Patent law in most countries requires that an invention be novel at the date of filing. Public disclosure before filing can destroy novelty.
India provides a limited grace period in specified circumstances under the Patents Act, 1970, including certain disclosures at officially recognised exhibitions and in papers before learned societies, subject to conditions and time limits. This is narrow and should never be relied on as a plan. Many important jurisdictions offer no general grace period at all, so a disclosure that might be excusable in one country can be fatal in another.
For a founder this translates into a simple rule: if there is a patentable invention, file before you show it publicly. A provisional application in India is inexpensive relative to a round of pitching, establishes a priority date, and gives twelve months to file the complete specification and to decide about foreign filings.
What counts as disclosure is broader than founders assume. A pitch to an audience without confidentiality obligations, a demo day, a conference poster, a detailed blog post, an open beta, a published paper. A pitch under a signed non-disclosure agreement is generally not a public disclosure, but investors frequently decline to sign NDAs at seed stage, which is precisely why the filing should come first.
Brand: cheap to secure, expensive to change
Trademark clearance is the least glamorous item on this list and the one with the best return.
Before committing to a name, check whether it is available in the classes the business will trade in, whether an identical or similar mark is already on the register, and whether the domain and the principal social handles are obtainable. A name that fails any of these tests is better discarded in week one than in year two, after the customer base knows it.
Once cleared, file. Indian trademark practice largely turns on priority of filing, and the cost of an application is a rounding error against a rebrand. Our trademark page sets out the process.
Founders with international ambitions should also note that an Indian application can be used as the basis for an international registration under the Madrid Protocol if filed within six months, which preserves the Indian priority date in the designated countries. That six months passes quickly during a fundraise.
Matching the protection to the asset
Not everything should be patented, and a strategy that treats patents as the only instrument wastes money.
| Asset | Usual instrument |
|---|---|
| A technical invention with a real structural or process advance | Patent |
| Source code | Copyright, arising automatically; registration optional but useful evidentially |
| Brand name, logo, product names | Trademark |
| The visual appearance of a product | Design registration, filed before public disclosure |
| Algorithms, models, customer data, processes | Trade secret, protected by contract and access control |
| Content, documentation, UI copy | Copyright |
Two notes on this table. First, design registration under the Designs Act, 2000 is time-sensitive in a way founders often miss: prior publication can bar registration, so the design must be filed before the product is shown. See our design page. Second, software-related inventions in India are subject to the exclusions in Section 3(k) of the Patents Act, and whether a particular software invention is patentable depends closely on how it is framed and what technical effect it produces. This is a matter for specific advice, not a general rule.
What a pre-pitch IP position looks like
For most early-stage companies, a sufficient position is:
- Signed IP assignments from every founder, employee and contractor who has contributed.
- Employment and contractor templates containing assignment and confidentiality clauses.
- A cleared brand name with a trademark application on file in the core classes.
- A provisional patent application filed for any core invention, before public disclosure.
- Design applications filed for any product appearance that matters, before launch.
- An inventory of third-party and open source dependencies with their licence terms noted.
- A basic confidentiality practice: NDAs where counterparties will sign, access controls where they will not.
That is achievable in a few weeks and at a cost that is small relative to a seed round. It is also the list that diligence will run against, so building it in advance means diligence produces no surprises.
The honest caveats
An IP portfolio does not substitute for a business. Investors do not fund patents; they fund companies that can execute, and IP is one input among many. Filings are not guarantees, and a granted patent is not a guarantee either, since validity can be challenged and enforcement costs money.
What a sound IP position does is remove reasons to say no, preserve options that are otherwise lost permanently, and give the company something to negotiate with. Those are modest claims, and they are the accurate ones.
Where to start
Our innovation and startups practice works with early-stage companies on exactly this sequence, and the free consultation route exists so that founders can get an initial read without committing to anything.
If you are preparing to raise, or are about to show a product publicly for the first time, that is the moment to have the conversation. Reach us through the contact page.
