Who owns the code? What Indian business owners must check before signing

Who owns the code by default in India?

Paying for it isn't the same as owning it

Under section 17 of the Copyright Act, 1957, the author of a work is its first owner (Indian Kanoon). Software counts as a literary work.

There is a "commissioned work" exception, where the person who pays owns the result. But it covers photographs, portraits, paintings, engravings and films. Software isn't on the list. So paying an agency to write your app doesn't, on its own, make you the owner of its source code.

Employees, agencies and freelancers

The other exception is employment. Work an employee creates in the course of their job belongs to the employer, unless they've agreed otherwise. That has two consequences:

• Your own employees: code written by your in-house team belongs to your company.
• An agency's employees: code written by the agency's staff belongs to the agency. The agency then has to assign it to you.

Freelancers are where the chain often breaks. If the agency hired freelancers, the agency only owns their work if they assigned it to the agency. If they didn't, the agency can't pass you rights it never had. Your contract should make the agency confirm, in writing, that it holds those assignments.

The "silent contract" trap: five years, India only

This is the part that surprises people. Section 19 of the Act says an assignment must be in writing, and it should state the rights, the duration and the territory (Lawgist). If it doesn't:

• Duration not stated? The assignment is deemed to last five years.
• Territory not stated? It's presumed to cover India only.
• Rights not used within a year? The assignment can be deemed to have lapsed, unless the agreement says otherwise.

This isn't theoretical. Pine Labs v. Gemalto was a dispute over software a development company wrote under a services agreement. The agreement assigned the copyright to the client, but didn't say for how long or where.

In 2011, on appeal, a Division Bench of the Delhi High Court accepted the developer's argument that the five-year default applied, so the rights in that version had gone back to the developer, and it restored an injunction against the client while the case continued (Indian Kanoon, Mondaq).

The fix is one sentence: the assignment is for the full term of copyright, worldwide.

Have a development contract on your desk? Send it to me for a free second opinion. I'll read the technical side, including ownership, accounts and handover, and tell you within 48 hours what's missing.

Owning the code is only half of it

Most ownership problems I see aren't legal arguments about copyright. They're about whose email address an account was opened with.

An agency can give you every line of code and still keep control of your product, because the accounts that run it are in their name. That's exactly what happens in the tender situations I described. Without the credentials, a new team can't deploy the code, renew the domain or publish an update.

Here's what should be in your company's name, opened with a company email address you control:

At A2Z Group, one of the four tests I set for every HR platform we evaluated was simple: could A2Z run it on its own infrastructure? That requirement ruled out options that would have left A2Z dependent on a vendor for a system covering 12,000+ employees. Here's how we chose the platform and the delivery partner.

10 clauses to put in your software development contract

Who owns the code is decided by your contract, not by who paid. Take this list to your lawyer and your agency before you sign. These are the clauses I check first when I review a contract.

1. A clear assignment of all IP in the deliverables. Lawyers generally prefer present wording ("hereby assigns") to a promise ("will assign").
2. Duration and territory stated explicitly: the full term of copyright, worldwide. This avoids the five-year, India-only defaults.
3. Assignment milestone by milestone. Rights in each delivered part pass to you as you pay for it, not only at final payment.
4. Background IP. Agencies reuse their own tools and libraries. You need a permanent, royalty-free licence to anything reused in your product.
5. Open-source disclosure. A list of open-source components and their licences, so nothing forces you to publish your own code later.
6. Freelancers and subcontractors. The agency confirms it holds written assignments from everyone who worked on your product.
7. Your repository from day one. Code lives in your repository, and you can see every commit.
8. Handover and exit. On termination for any reason, the agency hands over code, credentials, documentation and deployment steps within a fixed number of days, and cooperates with the new team.
9. Indemnity. The agency covers you if a third party claims the code infringes their rights.
10. Data protection. If the product handles customer data, include processing terms that meet the DPDP Act. Here's what the DPDP Act means for your vendor contracts.

For government buyers, the same principle applies one step earlier: write the handover, credential transfer and exit obligations into the tender document itself. Then the next tender doesn't start from zero.

Payment terms vs ownership: a fair middle ground

Agencies have a fair point here. They don't want to hand over everything and then go unpaid. That's why many contracts say ownership passes "on full payment".

The problem is what happens in between. If the relationship breaks down at 70% of the build, "on full payment" can mean you own nothing, even though you've paid for most of it.

A fairer arrangement:

• Ownership passes milestone by milestone, as each milestone is paid for.
• Code is in your repository throughout, so there's never a moment when you can't see what you've paid for.
• For large or long builds, consider source code escrow, where a neutral third party holds the latest code and releases it to you if the agency fails to deliver or shuts down.

A good agency won't object to any of this. If one pushes back hard on code living in your repository, ask why.

What if the agency won't hand over the code?

If you're already in this situation, here's the order I'd work in:

1. Read what you signed. Find the clauses on IP, deliverables, termination and handover. Who owns the code, and whether you have a strong position, depends on them.
2. Secure what's already yours. Check every account in the table above. Anything in your name, take control of now: change passwords, remove agency admin access where appropriate and enable two-factor authentication.
3. Put the request in writing. Email a formal request for the code, credentials and documentation, citing the relevant clauses and a deadline. Keep it calm and factual.
4. Pay what's genuinely owed. If there's a fair dispute over an invoice, settling it is often cheaper than rebuilding.
5. Bring in a lawyer. If the agency still refuses, a legal notice, or arbitration if your contract provides for it, is the next step. Get advice specific to your contract.
6. Plan for the worst case. Ask an independent technical lead to estimate what a rebuild would cost. Sometimes that number is your strongest negotiating tool.

At RightLife, I took over a product an external agency had built for about a year, then moved development in-house. A clean handover is what made that possible without starting again. Read how we shipped after four missed launch dates.

Not sure where you stand? Send me the contract and a short note on what's happening. As part of the free second opinion, I'll tell you what the contract gives you and what I'd do next.

A note on AI-written code

Agencies increasingly use AI tools to write code. Who owns AI-generated code isn't settled in Indian law yet. For now, ask your agency to disclose how it uses AI, and to confirm that the assignment and indemnity clauses cover all deliverables however they were produced.

Frequently asked questions

This article explains the general position under Indian law for business owners. It isn't legal advice. Have a lawyer review your contract.