Assigning IP to Your Company: The Formalities Most Founders Miss

What does Section 19 of the Copyright Act require?

Section 19 of the Copyright Act, 1957 governs the mode of assignment. Under sub-section (1), an assignment is not valid unless it is in writing and signed by the assignor or by a duly authorised agent. Under sub-section (2), the assignment must identify the work and specify the rights assigned, the duration of the assignment and its territorial extent. Sub-section (3) adds that the assignment shall also specify the amount of royalty and any other consideration payable to the author or the author's legal heirs.

Those 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.

Section 18(1) is relevant too. It allows assignment of copyright in a future work, but provides that the assignment takes effect only when the work comes into existence. So a founder or contractor can assign work not yet written, and the document should say clearly that it covers both existing and future works within a defined scope.

What happens if the assignment does not state a duration or territory?

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. Sub-section (6) provides that where the territorial extent is not specified, it is presumed to extend within India. These are the provisions founders find most surprising, because a sweeping assignment with no stated term or territory may not be the permanent, worldwide transfer everyone assumed.

For a company relying on an assignment executed at incorporation, a five-year horizon is not academic. A startup incorporated in 2022 that took a silent assignment from its founders could face questions about it in a 2027 acquisition. A company selling software to customers in Singapore or the United States needs rights outside India. The standard formulation is "for the full term of copyright, including any renewals and extensions, throughout the world".

Sub-section (4) is the one most often missed entirely. It provides that if the assignee does not exercise the rights within one year from the date of assignment, the assignment in respect of those rights is deemed to have lapsed, unless the assignment specifies otherwise. A company that takes an assignment of a dormant codebase or a brand it does not use for a year should have a sentence expressly excluding this lapse.

What cannot be assigned away

Section 57 gives the author special rights: the right to claim authorship of the work, and the right to restrain or claim damages for distortion, mutilation or modification that would be prejudicial to the author's honour or reputation. The section provides that these rights subsist independently of the author's copyright and even after the copyright has been assigned, wholly or partly.

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. Many templates include a waiver of moral rights, and whether such a waiver is fully effective under Indian law is not clearly settled, so do not treat it as a guarantee. A practical alternative is an express consent by the author to modification, adaptation and use without attribution for commercial purposes.

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 its own writing and registration requirements for assignments. Trade marks are governed by the Trade Marks Act, 1999, and an assignment of a registered mark should be recorded with the Registry. Domain names and social media handles are not intellectual property in the same sense, but they are often registered in a founder's personal name and need transferring as well.

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. Ask whoever drafts your documents to cover each category expressly rather than assuming one clause covers all of it.

Sample assignment wording you can adapt

The core operative clause of a founder or contractor assignment can be short. Here is a version that addresses each Section 19 point:

"The Assignor hereby assigns to the Company, absolutely, all copyright and other intellectual property rights in the Works described in Schedule 1, whether existing now or created in future in connection with the Company's business, including all rights to reproduce, adapt, translate, publish, communicate to the public, sell, license and commercially exploit the Works in any medium now known or later developed, for the full term of copyright including any renewals and extensions, throughout the world. The consideration for this assignment is ₹[amount], receipt of which the Assignor acknowledges. Non-exercise of any right by the Company shall not cause this assignment to lapse. The Assignor consents to the Company modifying and adapting the Works and using them without attribution."

Schedule 1 is where most documents are weak. Name the repositories, the date range of commits, design files, documentation, logos and domain names. A schedule that says only "all work done for the Company" makes it harder to show which work was covered.

How do you execute an assignment properly?

• Incorporate first. The company must exist to take the assignment, so pre-incorporation work is assigned by a deed signed after incorporation.
• Prepare a schedule of the works with enough detail to identify them later.
• Have the assignor sign personally. If an agency is assigning, check the signatory's authority and that the agency itself holds assignments from its own staff and freelancers.
• Pay stamp duty under the Indian Stamp Act, 1899 as applied in your State, or the State's own stamp law, at the time of signing.
• Pass a board resolution recording that the company accepts the assignment.
• Record trade mark and patent assignments with the relevant Registry or Patent Office where registrations or applications exist.
• Keep the signed and stamped original with the company's statutory records and log it in an IP register.

Do employees and agencies need separate assignments?

For employees, the starting point is different. Work made in the course of employment under a contract of service belongs to the employer as first owner under Section 17(c), so there is nothing to assign for that work. Many companies still take a confirmatory assignment from senior engineers and early employees, because it removes arguments about whether a particular piece of work was within their role, and it covers anything they built before formally joining.

For agencies, the issue is the chain behind them. An agency can only assign what it owns. If the agency used freelancers or a sub-contractor, ask for a warranty that it holds written assignments from every person who worked on your project, and an indemnity if that turns out to be wrong. Agencies also reuse their own frameworks across clients, and will not assign those. The practical answer is an assignment of the bespoke work you paid for, plus a perpetual, irrevocable, royalty-free licence of any pre-existing agency components embedded in it.

For interns and advisors, the position depends on whether there is a contract of service at all. Do not assume. A one-page assignment signed on the first day is the simplest fix.

A worked example

Two founders build a SaaS product for clinics from January to September 2024 and incorporate in October 2024. In November 2024 they sign a one-paragraph document stating that "all IP relating to the product belongs to the company". In 2026 a Series A investor's counsel reviews it.

Counsel's concerns are predictable. The document does not identify the works, does not state duration or territory, says nothing about consideration, and does not deal with the one-year lapse. Read against Section 19, it may operate as an assignment for five years limited to India. The fix is a confirmatory assignment deed, properly stamped, with a full schedule, signed before closing. It takes a week if both founders are still on good terms. If one has left, it becomes a negotiation, which is exactly why the formalities are worth getting right the first time.