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Who owns custom software in India once it’s built?

By New Vishal Vision · Updated

Short answer

Unless your contract says otherwise, the person or company that wrote the code usually owns it, not the business that paid for it. To own your software, get the copyright assigned to you in writing, keep the code in a repository you control, and keep hosting and domain accounts in your company’s name.

Why paying for software doesn’t automatically make it yours

Software code is protected in India as a “literary work” under the Copyright Act, 1957. Section 17 says the author of a work is its first owner. There is an exception for work made by an employee under a contract of service, which belongs to the employer. An outside agency or freelancer is not your employee, so that exception usually does not apply.

In practice this means a business can pay for every line of its software and still not own it, unless the copyright is transferred.

What the law requires for a transfer

Section 19 of the Act sets out how copyright is assigned. Four points matter most to a business owner:

  • It must be in writing, signed by the person assigning it. A verbal promise or an email saying “it’s yours” is not enough.
  • If the assignment doesn’t state a period, it is treated as five years from the date of assignment. Ask for “for the full term of copyright”.
  • If it doesn’t state a territory, it is presumed to cover India only. Ask for “worldwide” if you sell or operate abroad.
  • If the rights assigned are not used within one year, the assignment can be treated as lapsed unless the document says otherwise. A good assignment says so.

Three things to check before you sign

  1. The code lives in a repository your company owns (for example on GitHub or GitLab), with the vendor added as a collaborator, not the other way round.
  2. Hosting, domain, app store and payment accounts are opened in your company’s name, with your email as the owner.
  3. The contract assigns copyright to you in writing, for the full term, worldwide, once each phase is paid for.

What about open-source and third-party parts?

Almost all modern software uses open-source libraries and paid services such as maps, payments or messaging. You won’t own those, and you don’t need to. What you need is a list of them, the licence each one uses, and confirmation that nothing in the list stops you using or selling your product the way you plan to.

How we handle ownership

Once a phase is paid for, its source code, data and accounts are assigned to you in writing. If you stop after the prototype phase, the scope document and the prototype are still yours. If you ever want to take the software in-house, we hand it over properly, with the documentation your next team needs.

Sources

This guide is general information, not legal advice.

FAQ

Questions, answered

Does the developer own the code if I paid for it?

Often, yes. Under Section 17 of the Copyright Act, 1957 the author is the first owner, and an outside agency is not your employee. Ownership passes to you only through a written assignment under Section 19.

Is an email confirmation enough to transfer ownership?

No. Section 19(1) requires the assignment to be in writing and signed by the assignor or their authorised agent. Put it in the contract or a separate signed deed of assignment.

What happens if the assignment doesn’t mention a time period?

Section 19(5) treats it as five years from the date of assignment. Ask for the assignment to run for the full term of copyright.

Planning a software project?

We start with a small, separately priced prototype phase. It’s yours once paid, whether or not you continue.