"Hereby Assigns": The Two Words That Make IP Assignments Actually Work

Every time I review a consulting agreement, contractor agreement, or CIIAA, I look for two words: hereby assigns. They're the clearest evidence that an IP assignment actually works—that ownership transfers now, at the moment the IP is created, rather than at some uncertain point in the future.

A significant portion of a startup's value is the IP created by its founders, employees, and contractors. If the company doesn't have clean title to that IP, it has a problem—one that tends to surface at the worst possible time.

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Present Assignment vs. Agreement to Assign

A present assignment transfers ownership at the moment IP is created:

"Contractor hereby assigns to the Company all right, title, and interest in and to any intellectual property created in the course of performing services under this Agreement."

The key word is hereby—"by this document, right now." The moment the contractor creates something within scope, ownership vests in the company automatically. No further action required.

An agreement to assign is a promise to transfer IP in the future:

"Contractor agrees to assign to the Company all right, title, and interest in any inventions created during the term of this Agreement."

This doesn't transfer legal title. Courts recognize it can give the company an equitable interest—more than a bare contract right, but less than ownership. A court can enforce it through specific performance, and usually will. But equitable title is weaker in ways that matter: it can lose to a competing present assignment from the same inventor, it may not suffice for patent prosecution, and it leaves the company dependent on a court to perfect its ownership if the assignor becomes uncooperative.

The leading case is Stanford v. Roche (2011). A researcher signed a "will assign" agreement with Stanford, then later signed a "does hereby assign" agreement with a third party for the same inventions. The Federal Circuit held the present assignment conveyed legal title, defeating Stanford's earlier equitable interest. The Supreme Court affirmed on related grounds. When two competing claims exist, a present assignment wins.

The Payment Problem

Some agreements condition the IP assignment on payment:

"Upon receipt of full payment, Contractor hereby assigns all intellectual property created under this Agreement to the Company."

This means the contractor owns the IP until paid in full. That turns IP into a hostage in any billing dispute. The company pushes back on an invoice, the contractor says "I own the IP until you pay." The startup is between rounds and slow-pays by 30 days—during that window, the company arguably doesn't own what the contractor built.

The fix is simple: the assignment should be effective upon creation of the IP, not upon payment. The contractor's right to be paid exists separately under the contract. Payment terms and IP ownership should not be linked.

Why This Matters for Startups

• Due diligence. Every investor and acquirer reviews IP chain of title. "Agrees to assign" language is a diligence finding that requires cleanup—getting confirmatory assignments signed from every contributor. If a key contributor is no longer on good terms with the company, that can range from expensive to impossible.
• Investor reps. Standard venture financing documents require the company to represent it owns its IP. If your agreements don't actually effectuate an assignment, that rep may not be accurate.
• Patent prosecution. Filing patents generally requires ownership or an executed assignment from the inventor. An agreement to assign may not be sufficient for the USPTO.
• Enforcement. Standing to sue for IP infringement typically requires ownership. An unexecuted agreement to assign leaves you in a weaker position.

What Good Looks Like

Six things to look for in any IP assignment clause:

1. Present tense language. "Hereby assigns" or "hereby irrevocably assigns." Not "agrees to assign," "will assign," or "shall assign."
2. No payment contingency. Assignment is effective upon creation of the IP, full stop.
3. Broad scope. Covers inventions, works of authorship, discoveries, improvements, trade secrets, and other IP created in connection with the services.
4. Work made for hire + assignment backstop. For copyrightable works, state they are "works made for hire" to the extent permitted by law, with a present assignment as backup. For independent contractors, work-for-hire only applies to nine enumerated categories under 17 U.S.C. § 101—much startup work product, including standalone software, may not qualify. The assignment backstop covers what work-for-hire doesn't.
5. Cooperation clause. The contractor agrees to execute further documents to perfect the assignment—belt-and-suspenders, not the primary mechanism.
6. Power of attorney. An irrevocable power of attorney allowing the company to execute assignment documents on the contractor's behalf if they're unavailable. This is the safety net.

Cleaning Up Existing Agreements

If your existing agreements have "agrees to assign" or payment-contingent language, the fix is a confirmatory assignment—a short document where the individual confirms all IP created during their engagement is assigned to the company, using present-tense language.

Get these signed while relationships are good. A quick email to a current contractor about "corporate housekeeping" is easy. Tracking down a contractor from two years ago who feels underpaid is not.

For new agreements, just fix the template. Confirm it says "hereby assigns," confirm there's no payment condition, and move on. Five-minute fix, five-figure problem avoided.

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This post is informational and does not constitute legal advice. For guidance on your specific situation, get in touch.