VIC IP Australia - IP Ownership in a Startup Company?

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temp1234

Member
6 January 2020
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0
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Hi,

I have a question regarding IP ownership in a startup company.

Last year, I got an offer to join a startup company to help them develop software in exchange for a percentage ownership of the company (no salary until we got investment/revenue).

The company has a few other people involved (who joined before me) who all have shares in the company, however, since I have joined and worked for them (more than 40hrs/week, for months) I have not signed any legal documents (such as a shareholder agreement) and they have not assigned any shares to me (they are slow-moving).

I have solely developed software for the company with no assistance from them (they did not help with the software, they did not pay me, etc), some of which they have access to and use, some of which is only on my computer. The company is still pre-revenue and therefore have not made any money from selling the software.

Who owns the IP to the software? Can I tell them to stop using the software and remove all copies of it from their computers? Does the company own the software they have access to and I own anything I have not shared with them? Can I go start my own separate company that sells the exact same software?

Any help would be very much appreciated.
 

Rod

Lawyer
LawTap Verified
27 May 2014
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Situations like this are inevitably hard to compartmentalise and decide who owns what.

A lawyer needs to go through emails, minutes of meetings, and diaries to see what has been agreed.
 

Tim W

Lawyer
LawTap Verified
28 April 2014
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Sydney
I agree with Rod

The following comments come based on what you've said above,
missing facts missing, and with any unknown ifs, buts, and maybes not allowed for.

One thing to start - if it is actually a (properly set up) company,
then there's nothing special about it being a "startup".
As far as the law is concerned, a newly formed company is not any different to a company that is 10 years old.
And it makes no difference to the duties of the director(s).
Oh, and the term "pre-revenue" doesn't actually mean anything.
(The lawyers who read that word are all starting to wonder if it's trading while insolvent...)

Next thing(s)...
  • has it got any money?
  • Who controls that money on a day to day basis?
  • Are there bills and accounts? In whose name(s)?
    Who pays them, how, and with what money?
  • Is anybody getting paid?
  • Are the books/ accounts available for your inspection?
  • Have you been asked to put in any actual money?
    If so, in what form? A loan? Purchase of shares? Or...?
Like so many in your industry, this company is
almost certainly undercapitalised, probably already insolvent, and
run by people who might be good at their own job (coding, or whatever),
but are profundly and dangerously ignorant of their obligations
as directors and managers of a business.

Right now, absent any paperwork about being a shareholder,
you're probably an unsecured creditor employee.
The upside is that if you are not a shareholder, let alone a partner,
then your personal exposure to liquidation debts is minimal.
The downside is, that when this thing goes south,
probably at tax time this year, if not sooner,
you won't ever see any money.

Take steps now to recover and protect your own work.
Quietly.
And start preparing for when this thing goes under, ugly.