Assigning IP to Your Company: The Formalities Most Founders Miss

What Section 19 requires

Section 19 of the Copyright Act, 1957 governs the mode of assignment. It requires assignment to be in writing signed by the assignor, and under sub-section (3) the assignment must specify the rights assigned, the duration of the assignment and the territorial extent.

Those three particulars are the ones that get omitted. A clause saying that all intellectual property created shall vest in the company names none of them. Whether such a clause achieves what was intended depends on its wording and the facts, but drafting it properly costs nothing extra and removes the argument entirely.

The five-year default

Sub-section (5) provides that where the assignment does not specify the period, it shall be deemed to be for five years from the date of assignment. This is the provision founders find most surprising, because it means a sweeping assignment with no stated term may not be the permanent transfer everyone assumed.

For a company relying on an assignment executed at incorporation, a five-year horizon is not academic. It is a good reason to state the duration explicitly, and the standard formulation is for the full term of copyright, throughout the world, rather than leaving it to a default nobody intended.

What cannot be assigned

Section 57 preserves the author moral rights, including the right to claim authorship of the work and to restrain distortion or mutilation that would be prejudicial to their honour or reputation. Those rights sit with the author independently of who owns the copyright, and a contract purporting to assign them does not change that.

In practice this rarely obstructs a startup, since the commercial rights are what a company needs. It matters more where a founder or contractor might later object to how the work is used or attributed, and it is worth knowing that a waiver of moral rights in your template is not doing what its drafter hoped.

Copyright is not the whole picture

Copyright covers the expression, which for a software company means the code, documentation, designs and content. Patentable inventions are governed by the Patents Act, 1970, which has its own provisions on who may apply, and trade marks and designs have their own assignment formalities.

For most early-stage companies copyright does the heavy lifting, but an assignment drafted only around copyright leaves gaps where there is genuinely patentable subject matter or a brand of value. Worth flagging to whoever drafts your documents rather than assuming one clause covers all of it.

What a workable assignment looks like

• In writing, signed by the assignor, whether that is a founder, contractor or agency.
• Specifying the rights assigned, expressed broadly but explicitly.
• Specifying duration, normally the full term of copyright rather than silence.
• Specifying territory, normally worldwide.
• Identifying the work with enough particularity to be meaningful, including pre-incorporation work where relevant.
• Executed after incorporation where the assignee is the company, since the company must exist to take the assignment.