When you form a multi-member LLC to build a business—especially in creative, tech, or innovation-heavy industries—there's often an assumption that everything created under the LLC umbrella is owned by the company. But that's not always true. In fact, when it comes to intellectual property (IP) like software code, branding assets, product designs, and proprietary processes, the LLC may not actually own what it thinks it does unless steps are taken to clearly secure ownership.

At Business Law Group, we frequently help clients identify and close gaps in ownership, especially in closely held LLCs where the lines between “the business” and “the members” are blurry. One of the most common (and risky) gaps we see? No written IP assignment between the members and the LLC.

Here's what business owners and founders need to know:

No Assignment = No Clear Ownership

Under U.S. law, ownership of IP defaults to the creator—not the company. That means if one of your LLC members creates a logo, writes code, develops a formula, or invents something—even if they did it with company resources—the LLC does not automatically own it.

Unless there's a written agreement assigning that intellectual property to the LLC, the member retains personal ownership. That can become a major issue if:

• The member leaves the company;

• A dispute arises between members;

• You seek outside investment or plan to sell the business;

• You get hit with a cease-and-desist from your own former member.

Member-Managed vs. Manager-Managed: Why It Matters

In a member-managed LLC, all members are actively involved in running the business. That often blurs the line between “member” and “worker,” but the law doesn't assume that members are employees or agents for IP purposes. So unless you've addressed IP ownership clearly in your operating agreement or via standalone assignment agreements, there's a risk that critical assets live in a gray area.

In contrast, a manager-managed LLC might be more likely to have designated responsibilities and employment-style relationships, making it easier to classify who's acting on behalf of the company. But even in that case, the LLC should get it in writing.

What Counts as IP?

Intellectual property includes more than just patents or trademarks. In the startup and small business world, this often includes:

• Logos, slogans, and branding materials

• Websites and domain names

• Customer databases

• Proprietary software or apps

• Business methods or processes

• Content, training materials, or product manuals

• Trade secrets and formulas

If your LLC uses it to create value or differentiate itself, it's probably IP—and it needs to be clearly owned by the company.

Fixing the Problem (Before It Becomes a Dispute)

If your LLC never had members sign an IP assignment, or your operating agreement is silent on the issue, the good news is: it's not too late. But the fix must be intentional.

Here's what we typically recommend:

1. Execute IP Assignment Agreements: Have each member (and contractor or employee, if applicable) sign a short, clear agreement assigning to the LLC any IP created in connection with the company's business.

2. Update Your Operating Agreement: Add provisions stating that any IP developed by members for the business is automatically assigned to the LLC.

3. Identify What's at Stake: Review what assets the company is relying on. If your business plan, software, brand, or client lists aren't clearly owned by the LLC, that's a risk worth correcting.

4. Document Future IP Clearly: For any new ventures, build IP ownership into your formation documents and member onboarding process from the start.

Don't Let Unassigned IP Undermine Your Business

Whether you're building a tech startup, a creative agency, a manufacturing business, or any company that relies on innovation, IP is the core asset. But too often, founders assume their LLC owns what it doesn't—until a conflict, exit, or deal makes it painfully clear.

At Business Law Group, we help businesses clarify ownership, protect their assets, and reduce risk. If your operating agreement or IP documentation needs a second look, we're here to help you get it right—before it becomes a problem.

Let's talk. Reach out to schedule a review of your LLC's IP structure or request a customizable IP assignment template for your members and employees.