Investor IP diligence is a list. What it contains, and why the timing hurts, is covered in What Investors Actually Check in IP Diligence. This is the working version: each item, what done looks like, and how to verify it yourself.
Work it months before the term sheet, while nobody has leverage.
1. Assignments From Everyone Who Touched the Technology
The inventor owns the invention until a written assignment says otherwise. Payment transfers nothing, and "work made for hire" is a copyright concept with no patent equivalent. The law is in Do You Own the IP Your Contractor Built?; this section is about proving it.
Build the contributor table. Every founder, employee, contractor, advisor, intern, and agency since inception, with dates and what they worked on. For each name, find the signed agreement and answer four questions:
- Does it assign patent rights, or only copyright and confidentiality?
- Does it use present-tense language ("hereby assigns"), or a promise to assign later?
- Does it reach work done before it was signed?
- Is it signed by the right parties, including the correct entity?
Founders are the usual gap. The invention often predates the company, and nobody assigned it in. The fix is a confirmatory assignment from each founder covering pre-formation work. While you are there, read each founder's prior employment agreement for invention clauses, and ask whether anyone was at a university at the time. Either can hold a claim.
Employees should have signed an invention assignment at hiring. Several states limit how far those clauses reach, so the clause should fit the state rather than a template.
Contractors and agencies are where most missing assignments live. Agency standard terms often keep the IP and license it to you. Read what you signed, and paper any gap now, while the relationship is ordinary.
Done looks like: a signed, present-tense patent assignment next to every name on the table.
2. Clean Chain of Title
Chain of title is the paper trail from each named inventor to the company raising the money. Each link is a written assignment. A missing link anywhere means the company may not own what it is pitching.
Where chains break: an assignment to an LLC that has since converted to a corporation; a name change never recorded; an inventor on the application who is not on the contributor table; a lender's security interest never released.
Verify it against the USPTO's own records. For every filed application, pull the USPTO assignment records and compare them to your signed documents. Recording is not required for validity between the parties, but under 35 U.S.C. § 261 an unrecorded assignment can lose to a later purchaser without notice, and recording is the first thing diligence counsel checks.
Done looks like: the USPTO record for each application shows an assignment from every inventor to the company's current legal name.
3. Patent Coverage That Matches the Product
Investors ask not only whether you have filed but whether what you filed covers what you sell. The gap between those is the most common weakness in an early-stage portfolio.
Provisionals cover only what they describe. A provisional filed on version one does not protect the features added in version three. Walk the current product against each filing and list what is new. Each new feature is a candidate for a new filing, and a disclosure risk if it has already shipped.
Know the deadlines, and have a plan for them. A provisional expires at twelve months with no extension, and the same twelve months is the window for foreign filing. One with no plan to convert reads, in diligence, as an asset about to disappear. Put every date in one table.
For non-provisionals, read the claims against the product. If a competitor built what you built with one change, would the claim still reach them? If not, the claims are narrow, and a continuation may be the fix.
Done looks like: a portfolio table with application numbers, priority dates, status, next deadline, and a one-line statement of which product features each filing covers.
4. The Trademark on the Name
The name is what customers remember, and a forced rebrand after a financing is a problem nobody plans for.
Clear it before you build on it. A clearance search covers the federal register, state registrations, and unregistered use in commerce. The federal register alone misses the common-law user who has operated under the name for years.
File for the company name and the lead product name in the classes that match what you actually sell. An intent-to-use application reserves the name before launch.
Own it in the company. Founders sometimes file in their own names. The filing, and the domains, should be held by the entity raising the money.
Done looks like: a registration or pending application for the company and product names, owned by the company, with the clearance search on file. Our trademark practice handles both.
5. Open Source Hygiene
Software companies will be asked what open source is in the codebase and under what licenses. The concern is copyleft: licenses such as the GPL and AGPL can require you to release your own source under the same terms when you distribute the software, or, under the AGPL, offer it over a network.
Produce an inventory. Run a dependency scanner, generate a software bill of materials, and attach a license to each component. Flag every copyleft component and note how it is used: linked or separate, modified or not, distributed or server-side only.
Account for inbound and outbound. Inbound includes third-party models, datasets, and APIs, each with terms that may restrict commercial use. Outbound includes code your engineers contributed to public projects and anything the company published. Publishing your own source is a public disclosure under 35 U.S.C. § 102 and starts the same clock as a product launch.
Done looks like: a current license manifest, a written policy on approved licenses, and a remediation note for any copyleft component that touches proprietary code.
What Goes in the Data Room
Diligence is not a quiz. It is a document request. Having the documents ready is most of what passing looks like.
Everything each section above ends with, plus confidentiality agreements, a written list of what the company treats as a trade secret, and a short note on freedom to operate, even if only a considered position.
A founder who can produce that set in an hour has already told the investor how the company is run.
The Short Version
Assignments from everyone. A chain of title that matches the USPTO's records. Filings that cover the product you actually sell, with the deadlines planned. A trademark on the name, owned by the company. An open source inventory with the copyleft components explained. Each is routine before the raise and leverage against you during it.
To work through the checklist before you go out, schedule a consultation. Fees are confirmed in writing before any work begins; see the patent cost guide.
Frequently Asked Questions
What IP documents do investors ask for in due diligence?
Signed invention assignments from every founder, employee, and contractor; USPTO assignment records for each application; a portfolio table with status and deadlines; trademark filings; an open source license inventory; and confidentiality agreements with a written list of the company's trade secrets.
Do founders need to assign their own inventions to the startup?
Yes. The inventor owns the invention until a written assignment transfers it. If the invention predates the company, each founder should sign a confirmatory assignment with present-tense language, recorded at the USPTO for any filed application.
Does a provisional patent application satisfy investor diligence?
It helps, if it actually describes the product being sold and the twelve-month conversion deadline is docketed and planned for. One covering an earlier version of the product, or about to expire with no plan to convert, is treated as a gap rather than an asset.
Why do investors care about open source in a startup's code?
Copyleft licenses such as the GPL and AGPL can require a company to release its own source code under the same terms, depending on how the component is used and distributed. Investors want an inventory of the licenses in the codebase and how any copyleft components are isolated.
This article is general educational information, not legal advice, and reading it does not create an attorney-client relationship. Patent law is fact specific and deadlines are unforgiving. For advice on your situation, schedule a consultation.