Who owns your code? A plain guide for business owners

If an agency or freelancer builds software for you in India, the default answer may surprise you. Unless there is a written assignment, the copyright in that code usually belongs to whoever wrote it, not to the business that paid for it. Paying the invoice doesn’t change that. A properly worded contract does.

This guide explains why, what the contract should say, and the practical things beyond copyright that decide whether you really control your software.

This is general information as of October 2026, not legal advice. For your own contract, speak to a lawyer who works on IP and technology agreements.

Why “we paid for it” isn’t enough

Under section 17 of the Copyright Act, 1957, the author of a work is its first owner. There are exceptions. If an employee writes code in the course of their job, the employer owns it, unless they have agreed otherwise. And for a short list of commissioned work, namely photographs, paintings, portraits, engravings and films, the person who commissioned and paid for it is the first owner.

Computer programs are not on that commissioned-work list. So when you hire an agency, its employees write the code, the agency owns it as their employer, and you, the client, own nothing by default. Indian law has no automatic “work made for hire” rule of the kind American contracts often mention. Ownership has to be transferred to you by an assignment.

What a valid assignment needs

Section 19 of the Act sets out how copyright is assigned. In plain terms:

• It must be in writing and signed by the assignor, meaning the agency or freelancer. A WhatsApp message saying “it’s all yours” is not enough.
• It must identify the work and say which rights are being assigned.
• It should state the duration. If it doesn’t, the assignment is treated as lasting five years from the date of assignment.
• It should state the territory. If it doesn’t, it is presumed to cover India only.
• It should state the payment for the assignment.
• If the rights aren’t exercised within one year, they can be deemed to have lapsed, unless the assignment says otherwise.

The five-year default is not theoretical. In Pine Labs v. Gemalto Terminals (2011), the Delhi High Court held that an assignment of commissioned software that didn’t state a term had run out after five years, and the rights went back to the developer. The client had paid for the software and still lost the copyright.

So the clause you want says, in substance, that the developer assigns to you all rights in the code, designs and documentation created for your project, worldwide, for the full term of copyright, effective as each milestone is paid, and that the developer will sign anything further needed to confirm it.

What usually stays with the agency, and why that’s fine

No agency writes every line from scratch. Your software will include open-source libraries and frameworks, and often the agency’s own reusable components. Expect the contract to handle these separately:

• Open-source components stay under their own licences. Ask for a list, and check that none of them restrict how you plan to use or sell the product.
• Pre-existing code the agency owns should be licensed to you permanently, royalty-free and transferably, so you can keep using and changing it after you part ways.
• Paid third-party items, such as a premium plugin, theme or font, should be bought in your name.

What should worry you is a contract where the agency keeps ownership of everything and gives you a licence that ends when you stop paying them.

Copyright is half of it. Control is the other half

You can own the copyright and still be stuck. Real control means you could hand the project to another team tomorrow without asking anyone’s permission. Check each of these:

Source code escrow, briefly

If you are licensing software rather than owning it, for example a vendor’s product customised for you, ask about source code escrow. A neutral third party holds a current copy of the code and releases it to you if the vendor shuts down or stops supporting the product. It makes sense for business-critical software you don’t own. If your contract already gives you the code and the repository, escrow adds little.

Data is a separate question

Your customers’ data isn’t code, but it belongs in the same conversation. Under the Digital Personal Data Protection Act, 2023, your business is the data fiduciary for the personal data your product collects, and the agency or hosting provider acts as your data processor. The contract should say the agency handles that data only on your instructions, keeps it secure, and returns or deletes it when the work ends. Most of the Act’s obligations apply from May 2027 under the DPDP Rules, 2025.

What we’d do

1. Put the assignment clause in the main contract, not in a handover document at the end: worldwide, for the full term, effective as each milestone is paid.
2. Create the repository, domain, cloud and store accounts in your name before work starts, and invite the agency in.
3. Ask for the open-source licence list and a written licence for any pre-existing code.
4. At handover, test it. Have someone outside the agency clone the repository and deploy it using only the documentation.

That is how we work at Yakooha: you own the code, the repository and every account from day one, so there is nothing to negotiate at handover.

If you’re weighing this for your own project, send us a WhatsApp. A person replies within one working day.