Who Owns Your Startup’s IP? A Guide for UK Founders

Katsiaryna Pazniak

14.09.2026

Key takeaways

Copyright and inventions belong to their creator by default under UK law, not automatically to the company built around them.
An employer owns an employee’s invention only in specific circumstances set out in the Patents Act 1977, not simply because the employee was on its payroll.
Work built by a contractor, agency or co-founder before incorporation stays with them unless it is formally assigned to the company in writing.
Endorsing bodies for the Innovator Founder route expect the business to own, or hold exclusive licensed rights to, the IP on which its product depends.
At the settlement stage, the Home Office accepts IP protection combined with genuine R&D activity as one of several recognised measures of business growth.
A missing assignment can surface later as a gap in the company’s ownership chain, causing delay at exactly the point it matters most: due diligence or endorsement review.

Introduction

Many founders assume that because they started the business or paid someone to build its product, the company automatically owns the intellectual property behind it. Under UK law, that assumption is often wrong. Copyright, patents and other IP rights start out belonging to whoever actually created the work, and only move to the business through specific legal routes: an employment relationship that meets certain conditions, or a written assignment.

For entrepreneurs, this is not an abstract point. It becomes concrete the moment a business is scrutinised by someone else, whether that is an investor carrying out due diligence, a court resolving a dispute between former collaborators, or a Home Office caseworker deciding whether a company genuinely holds the assets on which its endorsement or settlement application relies.

Who owns copyright and inventions under UK law?

By default, the person who creates a work owns the copyright in it, and the person who devises an invention owns the right to patent it. A company does not automatically step into that position, even where it commissioned or paid for the work.
The main exception is employment. Under section 11 of the Copyright, Designs and Patents Act 1988, copyright created by an employee in the course of their employment belongs to the employer from the outset, unless the employment contract says otherwise. Whether someone counts as an “employee” for this purpose turns on the reality of the working relationship, not the label used in a contract.
Patents follow a narrower rule. Under section 39 of the Patents Act 1977, an employer owns an employee’s invention only where it was made either in the course of the employee’s normal duties, or duties specifically assigned to them, and the circumstances were such that an invention might reasonably be expected to result; or where the employee held a senior position carrying a special obligation to further the employer’s interests. Outside those situations, the invention belongs to the employee who made it. The Intellectual Property Enterprise Court’s decision in Prosyscor Ltd v Netsweeper Inc (2019) confirmed that “normal duties” are assessed on the substance of the role as it actually developed, not on where or when the work happened to take place, and that working from home or outside office hours does not by itself shift ownership back to the employee.
Where an employer owns a patented invention, the inventor may still be entitled to compensation if the patent proves to be of outstanding benefit to the business, under sections 40 and 41 of the same Act. In Shanks v Unilever [2019] UKSC 45, the Supreme Court awarded the inventor £2 million on this basis. Successful claims of this kind remain rare; the earlier case of Kelly and Chiu v GE Healthcare is one of the very few others to succeed, and even there, the award was substantially reduced by legal costs. For most businesses, the practical effect of these rules is straightforward: inventions made within an employee’s genuine job function belong to the company outright, with no separate payment due.

What about work built by contractors, freelancers or co-founders before the company existed?

Freelancers, contractors, and agencies retain ownership of what they create unless there is a written agreement transferring ownership. Paying someone to build a website, write code, or design a logo does not, on its own, confer ownership on the person who commissioned the work; at most, the courts may find an implied licence to use it for the intended purpose, which is a narrower and less secure right than ownership.

This matters most at the earliest stage of a business, before a company has even been incorporated. A founder who builds a prototype personally, or with a freelance developer, and later sets up a company to run the business, needs to formally assign that pre-existing IP to the new company. Without that step, the company may have no more than an informal licence from the founder, rather than ownership of the asset it is built on. The same applies where a co-founder created earlier versions of the product independently, or where a technical co-founder is still bound by an old employer’s IP or restrictive covenant terms covering related work.

Why does this matter for an Innovator Founder or Global Talent visa application?

It matters because endorsing bodies and the Home Office look past the pitch and check who actually controls the assets a business depends on. For the Innovator Founder visa, an endorsing body assessing whether a business is genuinely innovative, viable and scalable will expect the business itself to own, or hold clear and sufficient licensed rights to, the intellectual property behind its product. Where a business instead relies on IP still held by a founder personally, a former employer or an unpaid contractor, that gap can undermine the case that the business, rather than one individual, is the entity carrying the venture forward.

At the settlement stage, this becomes an explicit part of the assessment. Home Office guidance lists “the business has engaged in significant research and development activity and has applied for intellectual property protection in the UK” among the recognised measures of growth an applicant can rely on, alongside criteria such as job creation or revenue. Applicants are not required to meet every measure, but where IP is put forward as evidence of genuine progress, it needs to reflect a real, properly owned position rather than a filing made for its own sake.

A related issue arises for those applying under the Global Talent visa, particularly through the Tech Nation digital technology route, where an applicant’s case often rests on demonstrating a personal, exceptional contribution to a specific product or body of work. If the underlying IP was, in fact, created within, and owned by, a former employer, that history needs to be presented accurately rather than allowed to blur into a claim of independent ownership that it cannot support.

What should founders do to protect their position?

Get a written IP assignment from every contributor to the business, including co-founders, freelancers and agencies, ideally signed at or before incorporation rather than left until an investor or endorsing body asks for it. Review the employment contracts of any technical co-founder who built related work at a previous job, so any risk of a competing employer claim is identified early rather than discovered during due diligence. Register the IP that can be registered, such as trade marks and patents, in the UK and in any other markets the business plans to operate in, and keep a clear record of the research and development behind it. Where IP ownership is to be relied on as part of a business plan for an endorsement or settlement application, it is worth having that position checked before submission, rather than after a caseworker or endorsing body raises a question about it.

How Sterling Law can help

Sterling Law advises founders and entrepreneurs on the immigration side of building a UK business, including applications under the Innovator Founder visa, the Global Talent visa, and other UK visa options for entrepreneurs. We work with clients to ensure the business case for an application, including how it demonstrates ownership of key assets, is accurate and withstands scrutiny by an endorsing body or the Home Office.