Articles > Intellectual Property

Does Our Business Own Software We Had Developed?

December 15, 2020   Daniel KatzPhilip Evangelou

An agreement must exist which gives you an explicit right to own software that is being developed for you. Provided there is an agreement, you will have exclusive ownership. This will allow you to copy, distribute, modify or sell the code as you please.

The Copyright Act 1968 (Cth) categorises coding as a literary work that is capable of being subject to copyright. As such, in the absence of a written agreement, developers will own the unique codes that they write. This article will explain how the ownership of such software can legally be transferred into your hands. 

How to Acquire Ownership of the Software

As previously mentioned, a written agreement ensures that you own the software that is being developed for you. However, there are a few different agreements that you should be aware of:

  • Software Developer Employment Agreement: You can employ a developer under a general employment agreement. Here, you must include a clause that transfers all intellectual property (IP) created by the developer. This will ensure that you own the software. Additionally, you will own any other code created by the developer during their course of employment. 
  • Software Development Agreement: In circumstances where you outsource a developer, they will send a software development agreement. If you wish to assume ownership of the software, it is essential that the agreement includes an IP assignment clause. In essence, this clause will transfer the IP rights to you. Alternatively, if the software is already developed, an IP assignment agreement can be offered. This will provide you with ownership. It is important to be wary of licence clauses, however. This clause will ensure the IP rights remains in the hands of the developer.
  • Open Source Software: There is code that is provided online for free in order to help developers. It is important to note the word ‘free’. This is because developers often use this to guide their coding. If this is the case, neither you nor the developer can have exclusive ownership of the open source software. This is normally accounted for in the written agreement. 

What to Include in Your Written Agreement

Drafting agreements relating to copyright and IP can be quite complex and confusing. Here are a few terms that should be added into your agreements:

  • The duties of the developer.
  • Ownership rights.
  • An IP assignment clause if needed.
  • The ability of either party to sell, use or modify the code/software.
  • Necessary courses of action in relation to infringement claims made by 3rd parties.
  • Acknowledge the use of open source software and ensure it is characterised as a limitation.

To Sum Up

It is a common fallacy to assume that you own everything that has been created or developed for your business. Assuming ownership can have serious legal implications with regards to copyright law. Therefore, it is important to know the different agreements available.

If you would like to speak with our IP lawyers, just contact us via 1300 337 997 or by filling out the contact form.

About Daniel Katz

Daniel KatzDaniel is a legal intern at OpenLegal, placed in our legal content team. He is currently studying a Bachelor of Laws at the University of Technology Sydney. Daniel's interest lies in economics and media/startup law.

About Philip Evangelou

phillipPhil is a director at OpenLegal. He has over 16 years experience working in private practice and in-house counsel in Sydney and London, giving him expertise in employment law, IP, finance, leases, dispute resolution, insurance and contracts.