What IP due diligence should a startup be ready for before fundraising

Question

My startup is raising a funding round and investors want to review our intellectual property before closing the deal. I have been reading conflicting things online and I would like to understand what Indian law actually says about this, which Act and Section applies, what the realistic timelines and costs are, and what I should be doing right now to protect my position. If the matter can be resolved without litigation I would prefer that route, but I want to know what my rights are before I agree to anything or sign any document.

MyVakeel Legal Desk · Accepted Answer

What IP due diligence should a startup be ready for before fundraising is governed in India primarily by Copyright Act, 1957, Section 17, Patents Act, 1970, Section 68 and Trade Marks Act, 1999, Section 45. The short answer is set out below, followed by the practical steps most people in this situation need to take. Read it alongside the specific provisions named, because the exact relief available to you turns on the facts you can prove on paper.

Investors typically require confirmation that all core intellectual property — code, brand, designs, patents — is validly owned by the company and not by individual founders, contractors or a former employer of a founder, since Section 17 of the Copyright Act, 1957 vests default ownership in the actual author absent an assignment, meaning unassigned contractor or founder-created IP is a common and material gap found in diligence.

Section 68 of the Patents Act, 1970 requires every assignment of a patent to be in writing and duly executed, and to be registered with the Controller under Section 69 to be admissible as evidence of title, so investors will specifically check whether founder or employee-invented patents have been properly assigned and recorded in the company's name, not left in an individual's name.

Section 45 of the Trade Marks Act, 1999 similarly requires registration of any assignment of a trademark with the Registrar for it to be effective against third parties, so diligence checklists commonly flag brand names, logos and domain names registered in a founder's personal name rather than the company's name as a red flag requiring cleanup before closing.

A standard startup IP diligence exercise also reviews open-source software licence compliance, since certain copyleft licences can create obligations to release proprietary code, along with confirming that all employees and contractors have signed IP assignment and confidentiality agreements and that no key IP depends on a former employer's undisclosed trade secrets.

What to do next: 1) Audit all patents, trademarks, copyrights and domains for correct company ownership; 2) Ensure every employee and contractor has signed an IP assignment agreement; 3) Register any pending assignments with the Patent and Trade Marks Registry before diligence begins; 4) Review open-source licence obligations affecting the product codebase.

If the other side has already issued a notice, filed a case or set a deadline, treat the matter as time-sensitive — most remedies under Copyright Act, 1957, Section 17 carry limitation periods, and a delay you cannot explain weakens an otherwise strong case. You can post the details on the MyVakeel forum for a practising advocate to review, or book a paid consultation with a Bar Council verified lawyer in this practice area.