Most software-company IP problems are not dramatic “someone stole our patent” stories. They are chain-of-title, open-source, contractor, and process problems that become visible only when a financing, a major customer deal, or an acquisition forces the company to explain exactly who built what and under what rules.
This checklist is designed for software founders who want a more practical diligence roadmap: own the code, understand the dependencies, control the AI workflow, and know which filings actually matter.
In This Guide
- Start with chain of title, not filing fantasies
- Open source governance is part of diligence
- AI and data controls now belong on the checklist
- Choose the protection tool that fits the asset
- Filing and recordation priorities
- Build the diligence room before investors ask
- Copy/paste internal IP diligence checklist
- Bottom line
Start with Chain of Title, Not Filing Fantasies
The first IP question in most startup diligence is simple: does the company clearly own the technology it says it owns?
- Founder IP. If the core product began before incorporation, the company should have clean founder assignment paperwork.
- Employee-created IP. Every person building the product should be covered by invention-assignment and confidentiality paperwork.
- Contractor-created IP. Independent contractor relationships need explicit assignment language. Paying an invoice does not automatically transfer IP.
- Access evidence. Repositories, design systems, cloud accounts, and documentation should be organized enough that the company can identify who contributed and under what agreement.
Open Source Governance Is Part of Diligence
Open source is not the problem. Poor open-source process is the problem.
A software startup should know:
- which third-party components are in the stack;
- which licenses apply;
- whether any license terms create source-disclosure or distribution obligations; and
- who inside the company is allowed to approve new dependencies.
The goal is not zero open source. The goal is explainable use.
AI and Data Controls Now Belong on the Checklist
AI tooling creates a new layer of IP diligence questions. Startups should be able to explain, at a minimum, what outside tools employees are using, whether confidential information is being uploaded to those tools, what rights apply to outputs, and how the company thinks about training data, datasets, and model provenance.
Even if the company is not building an AI-native product, internal use of generative AI can still create confidentiality, ownership, and process questions if nobody is tracking the rules.
Choose the Protection Tool That Fits the Asset
- Copyright often fits code, documentation, UI materials, and other expressive assets.
- Trademark fits names, logos, and brand architecture.
- Patents can matter for specific technical functionality, but they are not a universal answer and they carry disclosure, cost, and timing tradeoffs.
- Trade secrets can be powerful where the company can actually maintain secrecy through real controls.
The common startup mistake is not under-filing or over-filing in the abstract. It is failing to match the filing strategy to the asset, budget, and business model.
Filing and Recordation Priorities
- Brand clearance and domain strategy. Do not fall in love with a product name before checking availability.
- Patent decisions. If the company has a genuinely protectable technical advance, the timing of provisional versus nonprovisional filing should be discussed before public disclosure habits get sloppy.
- Copyright registration and recordation. These can be useful for enforcement posture and chain-of-title clarity, especially when key assignments should be easy to verify later.
- Assignment recordation. Where the company is relying on recorded transfers, the recordation step should actually happen.
Build the Diligence Room Before Investors Ask
The best diligence room is boring. It contains the founder assignments, employee PIIAs, contractor IP assignments, brand records, open-source inventory, and any core filing receipts in a structure that someone outside the company can follow without detective work.
That kind of boring is valuable. It reduces cost, speeds diligence, and makes the company look mature sooner.
Copy/Paste Internal IP Diligence Checklist
Use the checklist below as an internal operating document for product, legal, and engineering coordination.
SOFTWARE STARTUP IP DILIGENCE CHECKLIST
(copy/paste internal working list)
Chain of title
[ ] Founder pre-incorporation IP has been assigned to the company.
[ ] Every employee with product or code access has signed a PIIA or equivalent agreement.
[ ] Every contractor agreement includes clear IP assignment and confidentiality language.
[ ] Repositories, design files, and infrastructure access are tied to identifiable contributors.
Open source and third-party code
[ ] We maintain a current inventory of open source components and applicable licenses.
[ ] We know whether any codebase includes copyleft or source-disclosure obligations.
[ ] We have approval rules for adding new third-party libraries.
AI and data
[ ] We understand what external AI tools employees may use and on what terms.
[ ] We track material datasets, model inputs, and output review processes.
[ ] We have a policy for confidential information and source code exposure in generative AI tools.
Registrations and filings
[ ] Core brands, domains, and naming are cleared and monitored.
[ ] We have a view on whether any patent filing is worth the cost and disclosure tradeoff.
[ ] We have a plan for copyright registration or recordation where it adds real value.
Diligence room
[ ] Assignment agreements, PIIAs, contractor agreements, brand records, and filing receipts are stored centrally.
[ ] Key IP decisions, exceptions, and risk areas are documented in a way a buyer or investor can actually follow.Bottom Line
For software startups, IP diligence usually starts with ownership discipline, access discipline, and dependency discipline. If those pieces are clean, the company can make far better decisions about trademarks, patents, trade secrets, AI tooling, and transaction readiness.
Related Montague Law Resources
- Technology Assignment Agreement Template for Startups
- How to Protect Your Startup’s IP Before It’s Too Late: The Technology Assignment Agreement
- The Startup Hiring & Equity Paperwork Playbook (From Formation to Late-Stage)
- Startup Legal Mistakes Checklist: A Founder-Friendly Guide to Staying “Fundable” and Out of Trouble
- Startup Venture Financing Explained: From SAFEs and Notes to Series A and Beyond
Helpful Official Sources and Forms
- USPTO Trademark Search
- USPTO Patent Online Services
- U.S. Copyright Office Registration
- U.S. Copyright Office Recordation
- U.S. Copyright Office: Copyright and AI
- Open Source Initiative Licenses
- USPTO Assignments Recordation Branch
Need help with startup documents, equity structure, or diligence cleanup? Schedule a time with John Montague.
This article is for general educational purposes only and is not legal, tax, HR, or accounting advice.
