IP ownership · Contractors
Does a company own what a contractor builds without an assignment clause?
Published
The short answer
Usually not. Under US copyright law, a contractor who writes your code or designs your product keeps the copyright unless a signed writing transfers it to your company. Paying the invoice typically gets you a license to use the work, not ownership of it. A technology company owns what it creates only if its contractor, collaboration and licensing paper says so, which is the point of my essay on how a technology company owns what it creates.
If contractors built part of your product, you can find out where you stand this week, from paper you already have.
What you actually hold when the paper is silent
Most likely, a license. Courts often find that a company that paid for custom work has an implied, nonexclusive license to use it. That lets you keep running the code. It doesn't let you stop the contractor from reusing it, licensing it to someone else, or selling it to your competitor.
The gap tends to surface at the worst moment. An investor's diligence list or a buyer's IP schedule asks for a signed assignment from everyone who built the product. A missing one becomes a finding, and the person who holds the copyright can name their price before your deal closes.
A "work made for hire" label rarely saves it. For an independent contractor, the Copyright Act (17 U.S.C. § 101) limits work made for hire to nine listed categories, and software generally isn't one of them. A clause that calls your code a work made for hire, with no assignment behind it, can leave ownership right where it started.
Ownership is settled in the contractor agreement, years before any filing
The usual startup advice points you to trademark and patent filings, or to an IP attorney once a question comes up. Filings matter. But a filing protects what your company already owns. It can't fix a chain of title nobody wrote down.
That's why I treat ownership as a drafting decision. In my practice it sits next to the paper you sign with the people building the product: independent contractor agreements, confidentiality and data access agreements, and licensing and collaboration terms. The aim is a company that owns what it creates and shares rights on its own terms.
A worked example: the freelance first release
Say a freelance developer built your first release under a statement of work covering scope, rate and deadline, and nothing else. Today the developer owns the copyright in that code. Your company likely holds an implied license to use it.
The fix is a short confirmatory assignment. The developer signs a document transferring all rights in the work to your company, including work already delivered. A copyright transfer has to be in writing and signed by the owner (17 U.S.C. § 204(a)), so a handshake or an email thread won't do it.
Worried that asking reopens things with someone you've already paid? It's usually an easier conversation now, on good terms, than during a raise, when they know you need the signature. If your first release came from a freelancer and you can't find the paper, tell me what you're working on.
Five checks to run on your paper this week
Most of this takes an afternoon in your shared drive and your contractor folder.
- List everyone who built something.Developers, designers, agencies, and anyone who built data pipelines or trained models for you. Include cofounders who worked before the company was formed.
- Read the verb.Look for present-tense words like hereby assigns. "Agrees to assign" is only a promise to assign later.
- Don't stop at the label.If the agreement calls code a work made for hire, make sure an assignment sits behind it.
- Follow the agency chain.An agency can only pass on what it owns. Check that its own people and subcontractors assigned their rights to the agency.
- Close gaps now, and stop new ones.Get confirmatory assignments signed for every gap. Have each new contractor sign the agreement, with confidentiality and data access terms, before they get access to your repo or your data.
Do it before the diligence list arrives, and the question in the title has a one-word answer: yes.
Working on something like this? Tell Charlotte about it.
Tell Charlotte about your dealGeneral information about US law, not legal advice for your company's situation.
The rest of the ownership question
This answer comes from my longer essay on ownership. The same reasoning reaches the work contractors and partners do after the code ships.