You commissioned the website, approved the designs, paid the invoice. Ask most business owners who owns the result and the answer comes back immediately: “we do, we paid for it”. In a great many cases, that is not right.
The starting position
Copyright comes into existence automatically when a work is created, and it belongs to the person who created it. There is no form to file and no fee to pay. Where an employee creates something in the course of their job, the position generally flips and the work belongs to the employer without anything further being needed, unless the contract says otherwise.
Contractors, freelancers, design agencies and development studios are not employees. The default therefore applies to them, which means they own what they create for you unless the contract assigns it to you in writing, signed by them. Paying the invoice does not transfer ownership. What it usually buys you is permission to use the work for the purpose everyone had in mind at the time, and not much more.
Why that matters in practice
A licence, particularly one nobody wrote down, is a narrower thing than ownership. Depending on the circumstances, it can leave you unable to modify the work, unable to hand it to a different supplier to develop further, and unable to stop the creator using the same material for somebody else, including a competitor. It can also leave you unable to license it out yourself, which matters if the work is part of something you sell.
Three situations bring this to the surface more than any others.
The first is a developer relationship that ends. The code runs your business, the working relationship has broken down, and the question of who owns the codebase suddenly becomes the most important commercial question you have.
The second is branding. If an agency designed your logo and never assigned it, your position when you come to register it as a trade mark, or to stop someone else using something similar, is weaker than it should be.
The third is due diligence. When you raise investment or sell the business, the buyer’s lawyers will ask you to demonstrate your chain of title to the intellectual property the business depends on. That is the point at which missing assignments become a price reduction, a sum held back from the proceeds, or a condition you have to satisfy before completion.
Fixing it
Going forward, this is straightforward and cheap. Every contractor, consultant and agency agreement should contain an assignment of the intellectual property in the deliverables, a waiver of moral rights, and proper confidentiality provisions. That is a paragraph or two in a document you were signing anyway.
Going backwards is harder, though usually still possible. A retrospective assignment is a short document, and where the relationship is a good one it is often signed without fuss. Where the relationship has ended badly, or where the other side realises you need it for a transaction, your negotiating position is considerably worse than it was when you first engaged them.
Practical admin point
Keep the signed assignments somewhere you can find them, because a buyer will want to see the documents rather than hear that they exist.
Finally, this cuts both ways. If you are the supplier being asked to sign, check what you are handing over. A well-drafted clause gives the client full ownership of what you built for them while leaving you your own tools, libraries and know-how, which you need for every other client you have.
We draft and review intellectual property assignments as fixed-fee pieces of work, and checking chain of title is a common part of preparing a business for investment or sale.
This blog is for information purposes only and does not constitute legal advice. We recommend seeking professional advice before taking any action on the information provided.
