Start-up founders who misunderstand the Australian copyright system are at risk of ending up in long legal battles over who owns their software or app, according to technology lawyer Alan Arnott.
Arnott, principal at Arnott’s Technology Lawyers, told StartupSmart the rise of app and software development outsourcing has seen more and more start-up founders in legal strife as they try to gain access and ownership of the core digital assets their online and tech assets are built around.
Source code is the fundamental sequence of computer instructions that create an app or software.
Under the Australian copyright act, code is recognised as a literary work, which means the creator rather than commissioner owns the copyright unless it is rights to it unless assigned.
“Most people think that when they’re paying a developer to develop software for them, they own everything related to the project because they’ve paid for it,” Arnott says. “But as the designer and creator of the code, if the developer hasn’t signed the code over to you, they’ll continue to own it.”
Arnott adds the best analogy is to imagine the software or app is a building. The owners of the building will own the bricks and mortar, but if you’ve hired an architect to design it, the architect will own the copyright unless otherwise agreed.
“The position under the Copyright Act is other than in certain circumstances, someone who creates a literary work, which includes software, owns the copyright in that work unless there is an agreement to the contrary,” Arnott says. “If you want to own the copyright you need an agreement that says you’re paying them to build the software, and that you’ll own the copyright in the source code.”
The issue can become more complex when there is confidential information in the product. “Just because the developer might own the copyright in the code, does not mean the developer can misappropriate your confidential information that might have been provided in developing a product” he says.
Without ownership of the source code, the app can’t be updated or modified. Arnott adds that there may be an implied licence for the client to use the software, but that might not be enough to enable the client to modify the source code.
“You’re effectively hamstrung because you’re relying on a developer who can refuse to share the code at all, or charge to make the changes,” Arnott says.
“It’s essential that people looking to engage a freelance developer have an adequate software ownership agreement signed prior to commencing development.”
He adds some developers will share the source code for an additional fee, but business owners who have commissioned software development without agreements should move quickly, and probably engage legal help, to solve any source code ownership issues.
This article first appeared on StartupSmart.