Who Owns Your Software? Part 1

Modern commercial software development is usually a collaborative process, employing the skill and imagination of user experience engineers, software architects, developers and other professionals.  The use of development libraries and open source code can also add to the mix.  The company sponsoring and paying for the software development does so in the hope that the time, effort and cost will result in a solution that it has the right to license without anyone else's permission and to earn license revenue from it.  In other words, the sponsor expects to own the copyright in the resulting software solution.

On the other side of the equation, end users (licensees) expect that, in return for the license fee, they will be able to use the software without having to worry about claims of copyright infringement from third parties.

Therefore, the question of who owns the software is of significance in the industry.  Two issues are often overlooked when people start out on a project to develop the next great software application, namely joint ownership of the copyright and moral rights.  We will look at joint ownership first.

Section 13(3) of Canada's Copyright Act presumes that an employer is the owner of the copyright in material produced by an employee in the course of employment.  This presumption does not apply to persons who are not employees, with the result that development work contracted out to third parties may entitle those third parties to an ownership interest in the software.  The Copyright Act does contemplate the concept of joint ownership but does not specify the effect of joint ownership.  The law in Canada is unclear, but the result seems to be that the co-owners hold the copyright in "joint tenancy", meaning that all of the joint owners need to agree as to how, or if, the rights associated with copyright (such as the right to exploit it for commercial purposes) may be exercised.  In the United States, the presumption seems to be that joint owners hold the copyright as tenants in common, meaning that each joint owner may exercise their rights independently of the others.

One situation that could arise is that one of the owners begins to license the software and earn revenue, only to find that the other joint owner later claims a share of that revenue and the right to approve any subsequent licenses.  The best course is to agree, in advance of developing the software, who will be the owner or owners and, if there is to be more than one owner, how the software is to be exploited.  Absent agreement, neither party may be able to derive revenue from it without the consent of the other.


The comments in this article are intended as general information only and are not to be relied on as legal advice or an opinion applicable to your particular situation.   For further information, please contact Bruce Farrend at Farrend Law.