Who Owns the Software, Designs or Content My Contractors Created?

The short answer, expanded

Most owners assume that paying for work means owning it. For copyright, that assumption is wrong more often than it is right. The Copyright Act vests ownership in the author, and the author is the person who created the work unless the statute says otherwise. It says otherwise for employees acting within their jobs, and for a narrow set of commissioned works where both sides signed the right words. Everything else needs a written assignment.

The result is that a company can have paid a developer in full for its software, a designer for its logo and an agency for its website and own the copyright in none of them. It will usually have the right to keep using what it paid for, under an implied license, but not the right to stop others, to modify and resell the work freely, or to prove clean ownership to a buyer or investor. The gap tends to surface at the worst time: in due diligence, in a dispute with the contractor, or when a competitor copies the work and the company discovers it has no standing to sue.

Employees: the work-made-for-hire rule

Section 101 of the Copyright Act defines a work made for hire, first, as a work prepared by an employee within the scope of his or her employment. Section 201(b) then provides that for a work made for hire, the employer is considered the author and owns all of the rights in the copyright unless the parties have expressly agreed otherwise in a written instrument signed by them. No assignment is needed. The company's marketing manager who writes the website copy, its in-house developer who writes the code, and its staff photographer all produce work the company owns the moment it is made.

Two limits apply. The person must actually be an employee, and the work must be within the scope of employment. A bookkeeper who writes a novel at night owns the novel. A salaried engineer who builds a side project on the weekend, on personal equipment, outside her duties, may own that too, unless her employment agreement assigns it.

Who is an employee for this purpose?

The label on the contract does not decide it. In Community for Creative Non-Violence v. Reid (1989) the Supreme Court held that employee in section 101 carries its general common law of agency meaning, and listed the factors courts weigh: the hiring party's right to control the manner and means of the work, the skill required, the source of the tools, the location of the work, the duration of the relationship, whether the hiring party may assign additional projects, the hired party's discretion over when and how long to work, the method of payment, the hired party's role in hiring assistants, whether the work is part of the hiring party's regular business, whether the hiring party is in business, the provision of employee benefits, and the tax treatment of the hired party. No single factor controls.

A freelance developer paid by the project, working from home on her own equipment, with no benefits and a Form 1099, is an independent contractor on this test however the agreement is titled. The misclassification question has other consequences for a Texas business, covered in contractor misclassification claims against a Texas business, but for copyright the point is simple: her work is not made for hire under the employee branch.

Contractors: the nine categories and the signed writing

The second branch of the section 101 definition covers work specially ordered or commissioned from a non-employee, and it is narrow. The work must fall within one of nine categories: a contribution to a collective work, a part of a motion picture or other audiovisual work, a translation, a supplementary work, a compilation, an instructional text, a test, answer material for a test, or an atlas. And the parties must expressly agree in a written instrument signed by them that the work shall be considered a work made for hire.

Software, logos, website copy, photographs, marketing videos and architectural drawings are generally not on the list. A contract that declares a freelancer's code a work made for hire therefore does not make it one, and the clause alone leaves the copyright with the freelancer. The U.S. Copyright Office's Circular 9 explains the same point for registration purposes.

The fix: an assignment in writing

Because the work-made-for-hire route is closed for most commissioned work, the reliable route is a transfer of ownership. Section 201(d) allows copyright to be transferred in whole or in part, and section 204(a) sets the condition: a transfer of copyright ownership, other than by operation of law, is not valid unless an instrument of conveyance, or a note or memorandum of the transfer, is in writing and signed by the owner of the rights conveyed or the owner's authorized agent.

Well-drafted contractor agreements do both: they state that the work is made for hire to the extent the law allows, and that to the extent it is not, the contractor assigns all right, title and interest in the work to the company. An assignment can be signed after the work is finished; many disputes end with the contractor signing one in exchange for a final payment. An email from the contractor saying the company owns the work can satisfy section 204(a) if it is clear enough, since a note or memorandum suffices, but a formal assignment removes the argument.

If nothing was signed: the implied license

A company that paid for work and received it without any writing is usually not an infringer when it uses that work. Courts recognize a nonexclusive implied license when a person creates a work at another's request and hands it over intending that it be copied and used. A nonexclusive license is exempt from the writing requirement, so the conduct of the parties can create it.

The license has limits that matter in a dispute. Its scope is the purpose the parties had in mind, so a site built to be hosted and displayed may be used that way, but the contractor can argue it was never licensed for resale, for white-labeling to other clients or for a product the company later sells. Whether it was paid for in full affects whether the license is irrevocable. And a licensee cannot sue a third party who copies the work; only the owner or an exclusive licensee can. The company that finds its website lifted by a competitor, as described in copyright claims when a competitor copies your website, may discover that the freelancer is the only one who can bring the claim.

Logos, brands and the difference between copyright and trademark

A logo is two things. The artwork is a pictorial work owned by whoever drew it, under the rules above. The logo as used to identify the business is a trademark, and trademark rights belong to the business that uses the mark in commerce, not to the designer. A company that never obtained an assignment of its logo artwork still owns the trademark, and can stop competitors from using a confusingly similar mark. What it cannot do without the assignment is register the artwork as a copyright or stop the designer from reusing the drawing elsewhere. Obtaining the copyright assignment for the logo closes that gap.

Inventions and patents

Patent ownership follows a different statute and a different default. The inventor owns the invention and the right to apply for a patent. Under 35 U.S.C. § 261, applications and patents are assignable by an instrument in writing, and an assignment that is not recorded in the Patent and Trademark Office within three months is void against a later purchaser for value without notice. An employer therefore owns an employee's invention only through a written assignment, typically in an employment or invention assignment agreement, with two common law exceptions: an employee hired specifically to invent owes the invention to the employer, and an employer whose time or equipment was used may have a nonexclusive shop right to practice the invention.

Several states have statutes that limit how far an invention assignment agreement can reach into inventions an employee makes on personal time without company resources.

Trade secrets and confidential information

Trade secret law does not ask who authored the information. Under the Texas Uniform Trade Secrets Act the claim belongs to the owner, meaning the person with rightful legal or equitable title to, or a license in, the trade secret. A customer database compiled by a contractor at the company's direction, kept on the company's systems under access controls, is the company's trade secret. The contractor who later uses it for someone else has misappropriated it if he received it under a duty to keep it secret, and the contractor agreement's confidentiality clause supplies that duty and a contract claim besides. What qualifies is explained in what counts as a trade secret in Texas.

Example

Suppose a Dallas logistics company hires a freelance developer in 2022 to build a customer portal. The agreement is a two-page scope of work with a price and a line stating the deliverables are a work made for hire. The developer is paid in full. In 2026 the company is being acquired and the buyer's counsel asks for the chain of title to the software. Because software is not one of the nine categories, the work-made-for-hire clause is ineffective and there is no assignment. The company holds an implied license to run the portal, but the developer owns the code. The developer, now aware of the acquisition, asks for a substantial payment to sign an assignment. The company's position is weak in negotiation but not hopeless: the full payment and the purpose of the engagement support an irrevocable license broad enough for continued use, and the developer cannot stop the company from using it. The buyer, however, wants ownership, and the price of the late assignment is the cost of the missing clause.

What to check now, before there is a dispute

• Pull every agreement with developers, designers, writers, photographers and agencies and look for an assignment clause signed by the contractor, not just a work-made-for-hire label.
• Confirm that employee agreements assign inventions and confirm the scope of employment for anyone creating valuable work.
• For the works that matter most, obtain written assignments now, while relationships are good, and record patent assignments.
• Register copyrights in the company's name once the chain of title is clean.
• For brands, make sure the business, not the agency, is the applicant on trademark filings.

Tina Wysk represents Dallas businesses in ownership disputes over software, content and brands in state and federal court; the practice is described at intellectual property disputes.