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I am the "CTO" of a startup of 3 members. The main product will be a web application, and I have been developing it for the last 4 months -- no pay and under no legal agreement. One of my ideas for the application involved creating an algorithm, which I did and it works great. I see uses for it outside of the limited scope of our business.

My questions are:

Am I the owner of the algorithm? I have been working without pay and have not signed any legal documents, and am the creator of the original idea.

Do I need to file a patent for the algorithm and grant usage of the algorithm to the LLC that we are forming?

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If "developing an algorithm" is part of your role as the CTO of the startup then the IP belongs to the startup: not to you. This is because you created it as "work for hire". The fact that you have not been paid in this role is irrelevant, presumably the CEO and CFO have not been paid for the work they have done either yet their contributions are just as important as yours in the business.

Notwithstanding, algorithms can be patented in most jurisdictions. You or the LLC would need to hire a patent attorney to get this done. In any event, the implementation of the algorithm in code is protected by copyright.

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  • I think I'm going to license the software to the LLC and maintain the right to use it in other projects. The LLC agreement has not yet been signed/developed so I think this approach would work?
    – Matt Smith
    Aug 18, 2016 at 18:19

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