For founders, investors and anyone involved in the tech sector, understanding who owns your software and how to prove it is critical. Whether you’re seeking investment, planning an exit or simply aiming to protect your IP, clarity on ownership can make or break a deal.
Below is a summary of the key legal considerations around software ownership under English law:
1. Ownership isn’t always obvious.
Under English law, except when dealing with employees, the default position is that the author of the software owns the copyright unless there’s a clear, written agreement assigning those rights. For employees, the employer typically owns the IP if the work is done during the employee’s employment. But for contractors and freelancers, ownership usually stays with the creator unless explicitly assigned.
2. Contracts are king.
Verbal agreements and email chains aren’t enough. To avoid costly disputes and ensure investor readiness, businesses must have robust, written contracts with all developers. These should include clear IP assignment clauses and warranties about originality.
3. Investor due diligence is rigorous.
Investors and buyers will scrutinise your chain of title for software IP. Unclear ownership can derail deals or significantly reduce your company’s valuation. Early preparation, including keeping good records and ensuring all IP is properly assigned, pays dividends when it matters most.
4. Open source and AI bring new challenges.
Using open-source code or AI-generated software? Make sure you understand any applicable licence terms, avoid copyleft and be cautious when using AI as the legal landscape is evolving. In all cases, keep clear documentation.
5. Valuation is about more than code.
Software business valuations hinge on recurring revenue, customer retention, scalability, and defensibility, not just the technology itself. Preparation, credible growth stories and strong documentation are key to maximising value.
6. Some Practical Tips for Tech Businesses.
- Get your contracts in order from day one.
- Maintain an IP register and version history.
- Understand your use of open source and AI tools.
- Prepare early for investment or sale – it’s much easier to get it right at the start than to fix problems later.
For founders, investors and anyone involved in the tech sector, understanding who owns your software and how to prove it is critical. Whether you’re seeking investment, planning an exit or simply aiming to protect your IP, clarity on ownership can make or break a deal.
Further information
If you have any questions regarding this blog, please contact Christopher Perrin in our Corporate, Commercial & Finance team.
About the author
Christopher Perrin is a highly experienced solicitor who leads the Corporate, Commercial and Finance team’s general Commercial & Technology Contracts, Outsourcing & Data legal advisory services.
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