IP Due Diligence: Who Really Owns the Start-up’s Intellectual Property?
For any foreign investor looking at a Turkish tech or innovation company, one of the first questions in an IP review should be: “IP due diligence: who really owns the start-up’s intellectual property?” The start-up’s core value is usually its software, algorithms, brand, designs and content – but in practice those assets may have been created over years by founders, ex-partners, freelancers, agencies and even universities or technoparks.
A clean cap table is not enough; you also need a clean IP ownership table. Below is a practical roadmap.
1. Founders and Former Partners: Chain of Title from Day One
Many Turkish start-ups begin as a side project before the company is incorporated. The first version of the code, design or brand often belongs, by default, to the individual developer or designer, not to the later-founded company.
Key due diligence questions:
- Was the initial product (MVP, prototype, first codebase) created before the company existed?
- Have all founders and early contributors signed IP assignment agreements in favour of the company?
- Are there any former co-founders who left without signing a separation or assignment document?
If a former partner still owns part of the code or brand, they may assert rights at the worst possible moment – for example, right before an exit or funding round. Investors commonly require corrective assignments as a closing condition.
2. Employees vs Freelancers: “Work for Hire” Is Not Automatic
From a legal perspective, it is crucial to distinguish between employees and freelancers/independent contractors:
- For employees, many legal systems, including Türkiye, allocate certain IP created in the course of employment to the employer. However, the safest practice is to include express clauses stating that all works created within the scope of employment are assigned to the company.
- For freelancers, the opposite presumption generally applies: the freelancer remains the author and owner unless there is a written assignment or a sufficiently broad license. Paying an invoice or agreeing on a fee does not automatically transfer IP.
In due diligence you should therefore examine:
- Employment contracts of developers, engineers, designers and product staff;
- Service contracts with freelancers, consultants and development shops;
- Whether they contain clear assignment language (present and future works, global territory, all forms of use) and robust confidentiality provisions.
If a critical module of the platform was written by an independent contractor who never assigned rights, the start-up’s ownership of its own product is vulnerable.
3. Agencies and Design Studios: Brand, UI/UX and Website
Branding, UI/UX and marketing materials are frequently produced by agencies or design studios. These contracts often provide only a limited license, not full ownership, or they rely heavily on third-party stock elements.
Due diligence should check:
- Does the agency agreement say that the IP in all deliverables is assigned to the start-up, or only licensed?
- Are there territorial, sectoral or time restrictions on use?
- Did the agency use stock photos, fonts, templates or third-party code, and under what licenses?
If key elements of the brand are non-transferable or subject to restrictive stock licenses, the investor may insist on rebranding or re-design as part of the post-closing plan.
4. University and Technopark Projects: Shared or Reserved Rights
Many Turkish start-ups emerge from university research projects, TÜBİTAK grants or technopark programmes. In such cases, universities and technoparks usually have their own IP regulations and may claim:
- Co-ownership of patents, software or other results;
- A non-exclusive right to use the technology;
- A share in commercialisation income;
- Rights over future improvements or derivative works.
During IP due diligence, investors should request:
- All project agreements, research contracts and grant documents;
- Any spin-off, technology transfer or license agreements with the university or technopark;
- Internal IP policies of the relevant institution.
Without a clear understanding of these documents, the start-up may not own its core technology outright, which can affect valuation and deal structure.
5. Assignment vs Licence: Words Matter
Founders sometimes use “transfer”, “assignment” and “licence” interchangeably, but legally they are very different:
- An assignment transfers ownership of the IP.
- A licence only grants permission to use the IP, under defined conditions.
For a secure IP position, you should verify that:
- Documents intended to transfer ownership contain strong assignment wording (“hereby assigns and transfers all rights, title and interest…”);
- Formal requirements under applicable law (written form, signatures, identification of works) are met;
- Licences granted to key customers, distributors or partners do not unintentionally give away exclusive or perpetual rights that undermine the company’s freedom to operate.
6. Open-Source Software: Compliance, Not Panic
Almost every serious tech start-up relies on open-source software. This is not a problem; it becomes a risk only when used without attention to licence terms.
In due diligence, the investor should seek:
- A list of open-source components used in the product;
- Identification of their licences (MIT, Apache, GPL, LGPL, etc.);
- Confirmation that the start-up complies with obligations such as attribution, inclusion of licence texts and, where applicable, source code disclosure.
If problematic copyleft components are deeply embedded in proprietary code, a remediation plan (refactoring or replacement) may be required.
7. Practical Takeaways for Foreign Investors
For foreign investors, robust IP due diligence on a Turkish start-up means:
- Mapping all contributors: founders, ex-founders, employees, freelancers, agencies, universities, technoparks;
- Reviewing all relevant contracts for clear chain of title;
- Checking for hidden rights in public institutions and partners;
- Assessing and mitigating open-source licence risk.
Only when “who really owns the start-up’s intellectual property?” can be answered with confidence and supported by documents does the start-up’s IP portfolio become a reliable foundation for investment, acquisition or scaling.
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