Who owns the source code when you have software built?

Who owns the source code when you have software built?

Under Dutch law the source code belongs to its maker, unless you agree otherwise in writing. Computer programs fall under the Dutch Copyright Act (Auteurswet, article 10) and the copyright lies with the maker (article 1). If you have software built by an agency or freelancer, that right stays with them, even if you pay the whole bill. You only become the owner through a written transfer. Other countries have their own rules, so this can work differently outside the Netherlands.

How do you transfer copyright in software?

You transfer copyright in software with a written agreement and a deed. Article 2 of the Dutch Copyright Act says that a transfer or exclusive licence must be entered into in writing and that delivery takes place by a deed drawn up for that purpose. A verbal agreement or a line in an email such as "the software is yours" is not enough to rely on.

Does the same apply to an employee who writes software?

No, when an employee writes software the employer is the maker, unless the parties agree otherwise. Article 7 of the Dutch Copyright Act names the employer as the maker of work created in employment. The EU Software Directive 2009/24/EC reaches the same result in article 2(3), which applies across the EU: the employer holds the economic rights in software an employee creates, unless the contract says otherwise. This applies to staff, not to an agency or freelancer you hire. That is exactly where the misconception lies.

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What is the difference between ownership and a right of use?

With ownership you decide what happens to the software yourself, with a right of use you may use it within the agreed terms. For most businesses a right of use is enough, as long as the software keeps working and you do not get stuck. Ownership becomes important if the software is your product, if you want to resell it or if an investor asks about it.

How does Datawonder handle source code?

At Datawonder the intellectual property rights stay with Datawonder by default and you get a right of use. That is set out in articles 18 and 19 of my general terms and conditions. You do not get the source code by default unless we agree that in writing, for example with a separate source code or escrow arrangement. I put this here so you know it up front. If you want the source code or the rights, raise it in the first conversation. Then it goes in the quote.

What is a software escrow arrangement?

In a software escrow arrangement, an independent third party holds the source code and you only get it under agreed conditions, for example if the builder goes bankrupt or stops maintaining the software. That way the builder does not have to give away their code and you are not stuck if things go wrong. It mainly makes sense if your business truly runs on the software.

What should you agree in writing before the build starts?

Put six things in writing before the build starts: who gets the rights, whether and when you get the source code, who manages the hosting and domain accounts, which open-source components and third-party services are included, how you get your data back in a common format and what happens if the collaboration ends. This conversation takes half an hour and prevents a dispute years later. This article is not legal advice, so on a large project put it to a lawyer.

The short version

Under Dutch law the source code belongs to its maker, unless you agree otherwise in writing. So with an agency or freelancer you do not become the owner by default. Discuss ownership, source code and ending the work before the first quote, not when things go wrong.

Want to know how to arrange this for your project?