The number of Internet-connected devices is rising from year to year, achieving all-time highs by reaching a growth rate of 14% per year and 22 billion devices worldwide in 2026. This boom is driven by human innovation and the need for smart solutions – from lighting to domestic robots – in every aspect of our lives.
In the world of IoT, many CTOs face a nightmare scenario. A hired partner builds a working device but refuses to transfer full control over its ‘brain’. The partner locks the firmware in proprietary libraries and hides the PCB schematics, forcing the company into a dependency on the supplier (so-called vendor lock-in). As a result, the device only works as long as the external partner is able to service it.
Behind each such solution is someone’s idea, design and execution, secured by tight non-disclosure agreements (NDAs) with high penalties and tight deadlines. Creating never-before-seen IoT devices is undoubtedly one of the most exciting parts of this sector. However, it is also in this area that the greatest intellectual property restrictions arise, which can block the development of your product.
What is Intellectual Property?
In short, the law protects all creations of the mind, including inventions, designs, source code, Altium PCB schematics, DevOps pipelines, and names. It is all connected with the ownership and commercialization of inventions. It should never be underestimated. Intellectual property includes patents for inventions and processes, trademarks like logos distinguishing products, and designs protecting a product’s visual appearance.
IP is what makes you stand out on the market, keeps you competitive, and grows your business. But in the process of IoT device development, we often use the help of partners. It is important to acknowledge who takes responsibility for what. One partner does the firmware, the other one the software, and all of this is mixed into one device. And here is the part where the complexity of intellectual property comes in.
What are the four types of Intellectual Property?
While talking about intellectual property in IoT device development we can distinguish for types of it:
- Background IP – the base of knowledge brought by the investor to the partner; it is the basis for further work and basically the starting point for a project.
- Foreground IP – all of the design, software, and firmware developed by a partner during the project duration.
- Sideground IP – refers to knowledge produced during the project but outside its scope. It means it is created by a development partner but is not directly connected to the project itself.
- Postground IP – the intellectual property produced by any of the partners after the project ends.
Background IP vs Foreground IP
These two types of intellectual property are especially important for any Internet-connected device project development. They define what the team brings to the project as a foundation and what they create during development.
The Background IP might be just a simple design of a project or an idea, which a partner should then reforge into a market-ready device. But also specific industry “know-how” or existing trade secrets. And the ownership of these rights always stays on the investor’s side. You can come to a partner with an already existing device in version one with an idea for adding the Matter protocol to it to make it version two. At that point, everything you share with the contractor is confidential, and they can’t make any changes to version one.
And here we have Foreground IP, which is created during the project development. It is the tangible engineering output partner produces for you. Implementing the Matter protocol requires the contractor to write code and potentially add a new module to the device. Using their own resources and developers during development does not grant the contractor ownership of the final outcome.
Who owns the IP created IoT development project?
As we mentioned earlier, there are four types of IP, and all of them are created at different stages of the project by different participants. And here is the question: “Who owns the IP created during the IoT development project?”. The short answer is: You.
Why? There are different types of agreements, but the critical point is that you should own all foreground IP, besides the background IP you brought to the project. It is your project and idea, and you are paying for the development of it. All the lines of code and designs created in the process of IoT device development should be handed over by your partner to you.
So, it is important to secure your intellectual property by signing NDAs. In the process of development, there are many partners involved. And because we can’t directly control each of the businesses involved in the process, we rely on non-disclosure agreements.
Any act of sharing confidential information should be preceded by a signed, enforceable NDA. It not only protects companies that share background information but also gives them leverage in court if necessary. It affects not only investors but also partners who are responsible for development. An understandable NDA clarifies responsibilities for both parties and outlines how rights are transferred. This limits misunderstandings and legal issues, preventing delayed time-to-market and costly court processes.
Should you patent your IoT device?
Besides securing your IP from partners involved in the development process, you should also think about the competition. Because “the game never stops.” While we focus on launching new devices as soon as possible, we might overlook the risk that someone could like our idea enough to copy it.
That’s why at the early stages of project development, and even the company’s development, we should patent our ideas. Some particular features or applications might be so unique that they will give us a competitive advantage; patenting IoT devices these days is essential.
By patenting our device, we are not only securing intellectual property but also elevating our invention’s value. Patents do more than just keep competitors away; they create possibilities for future inventions based on already existing ones. It’s like building a sand castle: we start with one tower, then we add another and another one. The project starts growing, and previously developed parts are the foundation for future ones
What are the risks of not securing IP ownership?
Imagine a situation where you found a contractor to develop a market-ready product based on your idea. The partner builds your features, but you lacked an NDA. Your legal team didn’t analyze it, or ownership transfer was unclear.
Incomplete NDA IP clauses can cause trouble during product updates. They may prevent development by anyone except the original contractor. Poorly drafted NDAs may include clauses making future development impossible for anyone except the original contractor. You end up locked into one contractor, and without them, you would have to start everything from scratch.
How WizzDev handles IP ownership?
We provide full intellectual property ownership. It means once the project (or a specific milestone) is paid for, you own everything from the source code to all the documentation – technical specs, manuals, and test procedures like scripts and protocols used to verify the software, and also designs, such as PCB schematics and UI/UX layouts.
Unlike some agencies, we are not locking you into staying with us for the whole product lifecycle. Thanks to that, you can always modify your product and make changes to it at any stage after we finish the contract. We don’t believe in holding your product hostage. That’s why we use tools like Jira, GitHub so the client sees the IP being created in real-time, not just in a zip file at the very end.
It’s our way of working to deliver a transparent project, with pre-set milestones. Track progress in real time and enjoy full IP ownership transfer to investors.
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Please Note: This material is an educational explainer, not legal counsel. We recommend consulting with a legal professional before starting any IoT project. It is your responsibility to perform due diligence and fully understand the terms, conditions, and proposals of any business agreement you enter into.
