Software companies
Who owns code and documents written by contractors?
By SourceX Editorial · Reviewed by Noah Loul ·
Short answer
Code and documents written by an independent contractor usually belong to the contractor unless a signed written agreement assigns them to the company; paying for the work does not transfer copyright. Employee work created within the job generally belongs to the company. Before licensing code, specs or runbooks, confirm a written assignment covers every non-employee contributor.
Key takeaways
- Paying a contractor in full does not transfer copyright; a signed written assignment does.
- A work-for-hire label in a contractor agreement often fails for software, so a present assignment is what usually carries ownership.
- Documents such as design docs, runbooks, API references and test plans need the same chain of title as code.
- An implied license may let the company run what it paid for but is a weak basis for licensing to an AI developer.
- Where a gap cannot be closed with a confirmatory assignment, carve the material out of the licensed scope.
Who owns contractor work by default?#
By default, an independent contractor owns the copyright in code and documents they write, unless a signed written agreement assigns it to the company. Paying the invoice in full does not transfer ownership.
Employees are different. Work an employee creates within the scope of the job is generally a work made for hire, owned by the employer from the start. Contractors fall outside that rule, and labeling their work as made for hire often does not help for software, because commissioned works can be made for hire only in narrow categories set by statute. A present assignment of rights is what usually carries ownership.
The statute sets both rules out. 17 U.S.C. 101 defines a work made for hire as either a work prepared by an employee within the scope of employment, or a specially ordered or commissioned work in one of nine listed categories, such as a contribution to a collective work, a translation, a compilation, an instructional text or a test, where the parties expressly agree in a signed written instrument. Custom application code does not fit neatly into any of those categories. Under 17 U.S.C. 201(b), the employer or commissioning party for a valid work made for hire is treated as the author and owns the copyright unless a signed written instrument says otherwise.
Without an assignment, the company typically has an implied license to use what it paid for. That may cover running the product, but it is a weak basis for licensing the same material to an AI developer, a use the contractor may never have contemplated.
Ownership by type of contributor#
Ownership by type of contributor follows a predictable pattern, and the table gives the usual starting position for each. Counsel should confirm it against the actual agreements, because a single clause can change the answer.
| Who wrote it | Default owner | What usually changes it | Licensing risk |
|---|---|---|---|
| Employee within job duties | The company | Nothing needed; confirm the work was within the job | Low; check side projects and code brought from earlier jobs |
| Contractor with a signed assignment | The company, through the assignment | Assignment wording that covers the work in question | Low if signed and broad enough |
| Contractor without an assignment | The contractor | A signed confirmatory assignment | High; the company may hold only an implied license |
| Agency or dev shop staff | The agency or its people, per the agreement | An MSA assignment plus the agency's own agreements with its staff | Medium; the chain runs through the agency |
| Offshore contractors | Depends on local law and the contract | An assignment drafted for local law, with moral rights addressed | Medium to high |
| Open source and copied snippets | The original authors, under their licenses | A license compliance review | Varies by license |
Why documents need the same check as code#
Documents need the same ownership check as code because a training license for engineering history usually covers more than the repository. Design documents, Confluence pages, runbooks, API references, test plans and Jira issue descriptions are often part of the package.
Contractors write many of these. A freelance technical writer produced the API docs, an offshore QA team wrote the test plans, an outsourced support vendor drafted the macros and knowledge base articles. Each needs the same chain of title as the code, and outsourced support often runs through a vendor contract that says little about who owns written content.
Documents are also harder to trace. Git records an author for every commit, but wiki pages are edited by many hands, and imported documents may show the person who imported them as the author.
How to find gaps before licensing#
Finding ownership gaps before licensing starts with a contributor list built from the systems themselves, not from memory. The steps below work for most software companies, and the output is a single sheet counsel can review.
Expect the list to be longer than anyone remembers. Short engagements, interns paid through a vendor, a consultant who fixed one integration and an acquired product's original authors all appear in git history, and each needs an agreement on file or a decision.
- Pull author names and emails from git history, and editor fields from Confluence, Notion and Jira.
- Match each contributor to HR records or accounts payable vendor records.
- Collect the signed agreement for every non-employee and every agency.
- Check the wording: a present assignment, such as hereby assigns, is stronger than a promise to assign later.
- Read agency agreements for whether the agency obtained assignments from its own developers and writers.
- Flag founders' work from before incorporation and any material copied from outside sources.
How to fix a gap#
Fixing an ownership gap usually means getting a signed confirmatory assignment or, failing that, removing the affected material from the licensed scope. Counsel should choose the route for each gap.
The fix belongs before a license is signed, because the license will ask the company to warrant that it holds the rights it grants. A carve-out is less elegant than an assignment, but it leaves an accurate scope.
| Gap | Preferred fix | Fallback |
|---|---|---|
| Contractor never signed an assignment | Confirmatory assignment, often for modest consideration | Carve out the files and documents they wrote |
| Agreement only promises to assign | A short confirmatory assignment completing the transfer | Treat as a gap and carve out |
| Agency staff lack assignments to the agency | The agency obtains assignments and confirms in writing | Carve out agency-built modules |
| Founder work before incorporation | A founder assignment to the company | Usually fixable, since founders are reachable |
| Former contributor cannot be reached | None available | Carve out or rewrite the affected material |
Illustrative: a yard management software company traces its contributors#
Illustrative: a fictional yard management software company that tracks trailers and dock doors for distribution centers is preparing to license its engineering history. Early versions were built by a development agency, freelancers wrote the API documentation and runbooks, and an offshore team wrote the test plans.
The contributor list shows that the agency agreement assigns deliverables to the company on payment, and the agency confirms in writing that its developers signed assignments. One freelancer signs a confirmatory assignment. Another cannot be reached, so the runbooks they wrote are carved out. The offshore team's contract assigns rights under its local law, which counsel reviews and accepts.
The licensed scope is narrower by a handful of documents but fully traceable, and the company now requires present-tense assignments in every new contractor agreement.
How SourceX checks authorship#
SourceX checks authorship in the Rights step of the SourceX five-step transaction, before any code or documents are prepared. The supplier provides the contributor list and agreements, and material without a clear chain of title is carved out rather than argued over.
The SourceX Evidence Packet records the licensing rights behind each package, including the assignments relied on and anything excluded, together with provenance, permitted use, the privacy record and release authorization.
Frequently asked questions
What if a former contractor refuses to sign a confirmatory assignment?
Then the safest course is usually to leave their work out of the licensed scope, or to rewrite it. Pressing a reluctant contractor can invite a dispute, and relying on an implied license for outside licensing is risky. Record the decision so the scope and any warranty match what the company actually owns.
Do contractors keep any rights after assigning their work?
They may. Agreements often let contractors keep pre-existing tools and libraries, licensing them to the company instead of assigning them, and some include residuals clauses for general know-how. Read these carve-backs closely, since they can leave parts of a codebase outside what the company may license onward.
Does AI-generated code change the ownership question?
It adds one. Copyright generally protects human authorship, so heavily machine-generated material may carry limited protection, and the coding assistant vendor's terms also matter. Ask contributors and agencies how they used coding assistants, and make sure license warranties describe ownership accurately rather than broadly.
What if someone treated as a contractor was really an employee?
Ownership may then turn on whether the person counted as an employee for copyright purposes, which depends on factors such as control over the work, benefits and how the relationship ran in practice. That analysis is uncertain, so a confirmatory assignment is usually the cleaner fix where the person can be reached.
What will an AI developer ask us to warrant about ownership?
Usually that the company owns or controls the rights it licenses, that the material does not infringe third-party rights to its knowledge, and that required consents exist. Narrow warranties to what the contributor review actually showed, and align any indemnity with the carve-outs made during that review.
Sources
- 17 U.S.C. 101 defines a work made for hire as a work prepared by an employee within the scope of employment, or a specially ordered or commissioned work in listed categories if the parties expressly agree in a signed written instrument. Source
- 17 U.S.C. 201(b) provides that for a work made for hire, the employer or other person for whom the work was prepared is considered the author and, unless the parties have expressly agreed otherwise in a signed written instrument, owns all of the rights comprised in the copyright. Source
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