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Why does software ownership matter? Six key legal takeaways for tech businesses
Christopher Perrin
Below is a summary of the key legal considerations around software ownership under English law:
Under English law, except when dealing with employees, the default position is that the author of the software owns the copyright unless there’s a clear, written agreement assigning those rights. For employees, the employer typically owns the IP if the work is done during the employee’s employment. But for contractors and freelancers, ownership usually stays with the creator unless explicitly assigned.
Verbal agreements and email chains aren’t enough. To avoid costly disputes and ensure investor readiness, businesses must have robust, written contracts with all developers. These should include clear IP assignment clauses and warranties about originality.
Investors and buyers will scrutinise your chain of title for software IP. Unclear ownership can derail deals or significantly reduce your company’s valuation. Early preparation, including keeping good records and ensuring all IP is properly assigned, pays dividends when it matters most.
Using open-source code or AI-generated software? Make sure you understand any applicable licence terms, avoid copyleft and be cautious when using AI as the legal landscape is evolving. In all cases, keep clear documentation.
Software business valuations hinge on recurring revenue, customer retention, scalability, and defensibility, not just the technology itself. Preparation, credible growth stories and strong documentation are key to maximising value.
For founders, investors and anyone involved in the tech sector, understanding who owns your software and how to prove it is critical. Whether you’re seeking investment, planning an exit or simply aiming to protect your IP, clarity on ownership can make or break a deal.
If you have any questions regarding this blog, please contact Christopher Perrin in our Corporate, Commercial & Finance team.
Christopher Perrin is a highly experienced solicitor who leads the Corporate, Commercial and Finance team’s general Commercial & Technology Contracts, Outsourcing & Data legal advisory services.
For founders, investors and anyone involved in the tech sector, understanding who owns your software and how to prove it is critical. Whether you’re seeking investment, planning an exit or simply aiming to protect your IP, clarity on ownership can make or break a deal
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We welcome views and opinions about the issues raised in this blog. Should you require specific advice in relation to personal circumstances, please use the form on the contact page.
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Christopher Perrin
Caroline Sheldon
James Fulforth
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