A large company wants to "partner." Before you trade paper, write down what the relationship is: customer, design partner, licensee, investor, or joint venture. List the IP you own and the IP you license. Agree in writing who owns new work and improvements, and prefer one owner with a license to the other over joint ownership. Under US patent law, each joint owner can make, use, and sell the invention without the other's consent and without sharing the money (35 U.S.C. § 262). Share technical detail in stages, and strike a residuals clause from the NDA. Keep a future sale open: no right of first refusal on an acquisition, exclusivity scoped by field and time, and no change-of-control consent. Expect the deal to disappoint. In BCG's 2019 survey, 55% of startups and 45% of corporates were dissatisfied with their partnerships.
This page covers the paper for a development, distribution, or co-selling deal with a larger company. If the partner is buying the product, the order form is on how to negotiate your first customer contract. If they want to test it first, use how to convert a pilot to a paid contract.
Name the relationship first
| Relationship | What they get | Usual paper | Watch for |
|---|---|---|---|
| Customer | Use of the product for a fee | Order form and MSA | Ownership of customer-specific work and feedback |
| Design partner | Early access and influence on the roadmap | Design partner or pilot agreement | Rights to features they asked for |
| Licensee | Defined rights to your technology, by field, term, and territory | License agreement | Exclusivity, sublicensing, and improvements |
| Investor | Equity and the rights in the financing documents | Term sheet and financing documents | A right of first refusal on a sale, information rights used commercially |
| Joint venture | Shared governance of a new business | JV or joint development agreement | Ownership of everything the venture builds |
Write down what each side contributes, pays, receives, and decides. If the partner wants rights from two rows, negotiate each on its own paper. A strategic investor asking for a commercial license in the term sheet is two deals.
BCG's 2017 survey of more than 400 deep-tech startups found 95% wanted long-term corporate partnerships and 57% had one. Among the obstacles it listed: a relationship neither side defined at the start.
Separate ownership from permission to use
Start with an inventory. List what you created, what employees and contractors created, and what you license from others. Mayer Brown warns that "work made for hire" does not reach patents, and does not reach most work by contractors. A copyright transfer is valid only in a signed writing (17 U.S.C. § 204). Mayer Brown recommends present-tense "hereby assigns" over "shall assign" in every assignment.
Then allocate the new work. Venable's guide to joint development agreements splits IP into background (what each party brings) and foreground (what the project creates). Each party keeps its background IP. Foreground gets an owner on purpose instead of by legal default.
| Who owns new work | When it fits | What you give up |
|---|---|---|
| You own it; partner gets a license in its field | The work extends your core product | Some revenue or exclusivity in the partner's field |
| Partner owns it; you get a license back | The work is custom to the partner's product | Control over improvements to that piece |
| Split by field of use | You and the partner sell in different markets | Room to expand into the partner's field |
| Joint ownership | Rarely the best answer | Control: each US patent co-owner can use and license non-exclusively without your consent |
Skadden's 2026 guidance on joint development agreements makes the same point: a clause that says jointly developed IP is jointly owned is often not enough. You still need terms for revenue splits, enforcement against infringers, and use during and after the relationship. Keep invention records as the work happens, since you will need them to show who created what.
Write improvements separately. Improvements to your background IP stay yours. Improvements to foreground IP follow the foreground owner. Decide which licenses survive if the deal ends.
Share in stages
| Stage | What to share | What to hold |
|---|---|---|
| First meetings | Problem, customer outcome, product demo | Architecture, data sources, roadmap dates |
| Evaluation under NDA | Results, integration needs, security answers | Source code, model weights, pricing to other customers |
| Signed development deal | What the scope of work needs, to named people | Anything outside the scope |
| Acquisition diligence | Data room access by role, logged | Crown-jewel detail until late in the process |
Read the NDA for three clauses. A residuals clause lets the recipient use information "retained in unaided memory" for any purpose, including to compete. Buchanan Ingersoll & Rooney advises startups to ask to delete it, and to limit disclosure if the larger company refuses. Watch for ownership language that claims new technology inside an NDA signed before anyone knows the scope. Buchanan also says a disclaimer of consequential damages should not cover breaches of confidentiality.
Keep trade secrets secret. US law protects a trade secret only if the owner took "reasonable measures to keep such information secret" (18 U.S.C. § 1839). A log of who saw what, and when, is part of that record.
The VEN session view: a partner that could compete with you does not need every technical detail at the first meeting. Explain the customer value and save the deeper material for a later stage.
Keep a sale open
| Term | What the partner asks | What to counter with |
|---|---|---|
| Right of first refusal on a sale | Matching rights on any acquisition offer | Delete it, or offer a short notice right with no matching |
| Exclusivity | No work with the partner's competitors | Named competitors, one field, a fixed term, tied to minimum purchases |
| Most-favored nation | Your best price and terms | Same product, comparable volume, similar customers, a set term |
| Assignment and change of control | Consent before the contract transfers or the company is sold | Assignment allowed to an acquirer of the business without consent |
| "Affiliate" definitions | License to the IP of you and your affiliates | Your IP as of signing, with no reach into an acquirer's patents |
| Perpetual terms | No end date, or renewals only they can stop | A term, a termination right, and a price review |
Varnum notes a right of first refusal on a sale can discourage third-party buyers. Brad Feld wrote in 2006 that a ROFR on an acquisition "materially handicaps the company." Mayer Brown flags the other five rows: each can surface in buyer diligence and cut the price or stop the deal.
There is no reliable public benchmark yet for how often partnership terms block or reprice startup acquisitions.
The VEN session framing, from startup and M&A attorneys: ask how each proposed right would affect the next customer, the next investor, and a buyer, before the company relies on a sale the agreement could complicate.
Settle the partnership in order
Strategic partnership
- Name the relationship. Customer, design partner, licensee, investor, or joint venture.
- Write each side's contribution. What each party gives, pays, receives, and decides.
- Inventory your IP. Owned, licensed, and the assignment records behind each.
- Sign a mutual NDA without residuals. Keep ownership terms out of it.
- Plan disclosure by stage. Name the people who see each file and log it.
- Allocate new work. One owner per piece, with a license to the other side.
- Write improvements and survival. Who owns improvements, and which licenses outlast the deal.
- Scope exclusivity. Named competitors, one field, a fixed term, and a performance condition.
- Check exit terms. No ROFR on a sale, assignment to an acquirer allowed, narrow affiliate language.
- Review with counsel and sign. Tell your board what the agreement gives away.
Mistakes that cost the next deal
Agreeing to joint ownership to end an argument. Your co-owner can license the patent to your competitor without paying you.
Letting the NDA decide ownership. Ownership of new work belongs in the development agreement, once you know the scope.
Signing a residuals clause with a likely competitor. Anything their engineers remember becomes theirs to use.
Granting exclusivity with no field, term, or minimum. You lose the partner's competitors as customers, and so does any buyer.
A right of first refusal on a sale. Bidders hesitate to spend on diligence when one party can match.
Counting on the partnership for sales. In BCG's 2019 survey, 42% of startups said their sales-opportunity expectations were at least somewhat fulfilled.
Not legal advice. Have counsel review the NDA, the development agreement, and any commercial rights in a financing before you sign.
Sources
- 35 U.S.C. § 262, Joint owners. Absent an agreement, each joint owner of a patent may make, use, offer to sell, sell, or import the invention without the consent of and without accounting to the other owners.
- USPTO, MPEP § 301, Ownership/Assignability of Patents and Applications. A license transfers less than full ownership and can be limited by time, territory, or field of use.
- 17 U.S.C. § 204, Execution of transfers of copyright ownership. A transfer of copyright ownership is not valid unless in writing and signed by the owner.
- 18 U.S.C. § 1839, Definitions (trade secret). A trade secret requires that the owner has taken reasonable measures to keep the information secret.
- Venable LLP, Structuring Joint Development Agreements. IP Quick Bytes, 17 March 2026. Define background and foreground IP; each party retains background IP; allocate foreground ownership deliberately rather than by default rules; address licenses, improvements, and survival.
- Skadden, My IP Is Not Your IP: Clear Terms Are Key in Joint Development Agreements. 11 February 2026. Identify preexisting IP; a joint-ownership clause alone often fails to prevent disputes; plan revenue splits, enforcement, and use during and after the relationship; keep invention disclosures.
- Mayer Brown, Proactive Contracting for Tech Startups: Will Your Commercial & IP Agreements Help or Hinder an Exit?. Glende, Young, McPherson, December 2023. Exclusivity, MFNs, assignment and change of control, affiliate definitions, perpetual obligations, IP assignment, present-tense grants, NDAs.
- Buchanan Ingersoll & Rooney, More About "Boilerplate" Non-disclosure Agreements. 5 July 2017. Residuals clauses and unaided memory; ask to delete, otherwise limit disclosure; no consequential-damages disclaimer on confidentiality; keep ownership language out of NDAs.
- Varnum LLP, Protect Startup Flexibility: Corporate Venture Capital Deal Terms. ROFRs on a sale can discourage third-party buyers; limit exclusivity and licensing by scope, duration, triggers, and performance.
- Brad Feld, Right of First Refusal. Feld Thoughts, April 2006. A ROFR on an acquisition materially handicaps the company; corporate investors often ask for one.
- BCG, What Deep-Tech Startups Want from Corporate Partners. Soussan and de la Tour, 3 April 2017. More than 400 deep-tech startups; 95% want long-term corporate partnerships, 57% have one; obstacles include a relationship not defined from the start.
- BCG, After the Honeymoon Ends: Making Corporate-Startup Relationships Work. Brigl et al., 13 June 2019. 187 corporates and 86 startups surveyed in Germany, Austria, and Switzerland; 55% of startups and 45% of corporates somewhat or very dissatisfied; startup expectations at least somewhat fulfilled for sales opportunities 42%, market access 44%, reputation 59%.
- VEN (Venture Executive Network). Founder sessions with startup and M&A attorneys, 2026. Name the relationship before negotiating it; separate ownership from permission to use; stage disclosure to partners that could compete; test each right against the next customer, investor, and buyer. Not a survey. No closed-session numbers.
Related
- Go-to-market
- How to negotiate your first customer contract
- How to convert a pilot to a paid contract
- Selling to the enterprise as an early-stage startup
- Data moat for AI startups
- Term sheet red flags
- Series A diligence checklist
- Should an AI startup file patents?
Founders who have signed development deals with larger companies will pressure-test your ownership split, disclosure plan, and exit terms in a VEN session.