Who Owns the Code? Copyright in Software Development

When you hire a contractor to build your product, you may not own what they create. Here's how copyright ownership really works in software.

Founders are often surprised to learn that paying for software does not automatically make them its owner. Under copyright law, the default rule is frequently that the creator — not the person who pays — owns the work. For companies built on software, that gap can be existential.

Employees vs. Contractors

Work created by an employee in the course of employment generally belongs to the employer. But work created by an independent contractor usually belongs to the contractor unless there is a written assignment. Many startups build their first product with contractors and freelancers, then discover during due diligence that they never secured ownership of their own codebase.

Get the Assignment in Writing

The fix is straightforward but must be done deliberately: every contractor, freelancer, and collaborator should sign a written agreement assigning copyright (and waiving moral rights, where applicable) in everything they create for you. This should be in place before work begins, not negotiated after a dispute.

Open Source and Third-Party Components

Modern software is assembled from many parts. Open-source licences carry obligations — some permissive, some far-reaching — and incorporating the wrong component can impose conditions on your own code. An ownership and licensing review maps what you actually own, what you license, and what obligations come attached.

Clean IP ownership is one of the first things investors and acquirers examine. Establishing it early turns a potential deal-breaker into a non-issue.

By Motif Intellectual Property — Motif Insights