PIIA and IP assignment

Investors buy a company that owns its product. If the code, models, brand and customer contracts still live with individuals or a prior employer, diligence stops. Every founder and employee should sign a Proprietary Information and Inventions Assignment Agreement (PIIA, sometimes called CIIAA).

Paying an invoice is not the same as owning the copyright. Contractors need assignment language in their agreements too.

The big idea

A PIIA is a deed for intangibles. It typically:

• Assigns work product created for the company to the company
• Confirms no conflicting obligations (or discloses them)
• Covers confidentiality
• Sometimes includes a limited non-solicit (enforceability varies by state)

The analogy breaks when the work was never the founder's to assign — code written on an employer's laptop, a university's lab, or a contractor who never signed.

Walking through it

Two founders incorporate, buy stock and sign PIIAs the same week. Six months later they issue $1.5M of post-money SAFEs. At Series A, counsel's IP checklist is mostly checkmarks.

Compare that to a team that "kept it informal" for a year: last-minute assignments, reconstituted ledgers and a week of delay while everyone re-signs — often with leverage shifted toward the investor because closing pressure is high.

Common mistakes

• Assuming invoices assign copyright. They do not, unless the contract says so.
• Ignoring a prior employer. Code on their hardware is often theirs.
• Promising advisor equity in email instead of a small grant with a signed assignment.

Check yourself

A freelancer built the v1 mobile app and was paid on invoices with no IP clause. Who owns the code?

Probably the freelancer, until they sign an assignment. "We paid" is not title.

Why do investors care about PIIAs before they care about your logo?

They are buying the entity's assets. If the product sits outside the company, the stock is a shell.

Key takeaways

• A PIIA assigns work product, confidentiality and (often) invention rights to the company.
• Founders, employees and contractors all need assignment language.
• Prior-employer and university IP cannot be wished onto the cap table — disclose or rewrite.
• Missing assignments are cheaper to fix at month one than during a term-sheet scramble.

Further learning

Back to the incorporation map, then formation diligence.