The Pre-Incorporation IP Trap: Why the Code You Wrote Before Registering Might Not Belong to Your Company

Most founders write the first version of their product before the company legally exists — a prototype, an MVP, a set of designs, sometimes a freelancer's first pass at the codebase. It feels obvious that once you incorporate, all of that becomes company property. It isn't automatic, and the gap this creates is one of the more damaging, entirely avoidable due-diligence problems a startup can carry into a funding round or acquisition.

The Default Rule: The Author Owns the Work, Not the Company

Section 17 of the Copyright Act, 1957 sets the default: the author of a work is its first owner. If you personally wrote the code, designed the interface, or drafted the content, you own it — personally — the moment you create it. That ownership doesn't sit in limbo waiting for a company to show up and claim it.

Why Incorporating Later Doesn't Retroactively Transfer Pre-Incorporation IP

There is no rule under which forming a company automatically sweeps in IP that already belonged to a founder personally. The company you incorporate is a distinct legal person from you — it starts existing at incorporation, and it doesn't inherit your prior personal property just because you're now its director or shareholder. If the IP is going to become the company's, something has to actually transfer it.

The Employment Exception Is Narrower Than Founders Think

Section 17(c) of the Copyright Act carves out an exception for work made in the course of the author's employment under a genuine contract of service — in that case, the employer owns it by default. But this exception only applies once a genuine employer-employee relationship exists. A founder working on a prototype before the company exists isn't anyone's employee yet — there's no employer to invoke the exception on behalf of.