Question: I had some friends help me in the very early stages of my startup. For example, one of them helped design our logo. Another one helped me with an instructional video explaining our product (the video can now be found on YouTube). I hate to be obnoxious, but should I have these folks sign an IP assignment agreement assigning the IP they helped me create to the company? Do I or should I pay them anything? I don’t want to be a jerk about this, but I also don’t want to be a fool. Can you help me out?
Answer: These are really good questions. Yes, you should most definitely have these folks sign an IP assignment agreement. It doesn’t have to be obnoxious. It doesn’t have to be long. Your lawyer can help you prepare a simple legal document for them to sign. It frequently can be as short as a single page. You can explain that the company needs this for its records/due diligence files as it goes out to raise money. Be sure to pay your friends something. An IP assignment without any consideration could fail for lack of consideration.
Similarly, if you hire someone to consult for you, don’t have them sign a full blown consulting agreement but not pay them anything. The critical parts of most consulting agreements are the IP provisions. You want to make sure whatever IP your consultants create for you belongs to your company. This won’t happen if you don’t pay your consultant anything. The IP assignment provisions might fail for lack of consideration.