“Work made for hire” does not mean you own it

Ask a company who owns the software a contractor built for them and you will usually be told it was work made for hire, in a tone suggesting the question is settled. It isn’t. Work made for hire is a doctrine of copyright law, and copyright is one of four things you need.

What the phrase covers, and what it misses¶

Copyright protects the expression: this particular arrangement of source code. It does not protect the invention embodied in it, which is patent law. It does not protect the method, the model, the tuned parameters or the operational know-how, which is trade secret law. And it says nothing about trademarks. A contract that transfers copyright and stops has transferred the least valuable of the four.

Worse, the doctrine has a scope problem, and the statute is unusually blunt about it. 17 U.S.C. § 101 defines a work made for hire as either work prepared by an employee within the scope of employment, or a specially ordered or commissioned work that falls inside a closed list of nine categories and is covered by a signed written agreement. The nine are a contribution to a collective work, 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, and an atlas. Software is not on that list, and neither is anything it could be squeezed into. So the clause that sounds most confident is the one least likely to apply to the contractor who actually wrote your code.

The chain has to reach the keyboard¶

An assignment from a vendor can only convey what the vendor holds. If your vendor’s own engineers, contractors or offshore subcontractors are not under present assignment to the vendor, the chain has a break in it, and you will find out about the break during diligence on an acquisition rather than at a convenient moment.

• Every individual contributing to your deliverables under written assignment to the vendor, before contribution, employees and subcontractors alike.
• A present assignment, not a promise to assign, plus an obligation to sign whatever documents perfect it later.
• Waiver of moral rights, which persist in some jurisdictions and can survive an assignment.
• Subcontractors named before signature, with approval rights on any added afterwards.

What the vendor keeps, and what that means¶

Most development firms carry pre-existing components: internal libraries, scaffolding, deployment tooling. It is legitimate for them to keep those, and it is unhelpful to demand assignment of a vendor’s entire toolchain. What matters is that you have a perpetual, irrevocable, transferable licence to everything embedded in your system, broad enough to cover selling the business, and that the components are actually enumerated rather than referred to as “Vendor’s proprietary materials”.

The reverse case is the one to interrogate. If a vendor proposes retaining ownership of what it builds for you and granting you a licence, it is proposing to sell the same thing to your competitors. Sometimes that trade is worth it in exchange for a lower price. If you take it, ask for a cooling-off period, eighteen months is common, before the work can be licensed to a defined list of competitors. Otherwise you have funded their advantage.

The parts people forget¶

• Open-source components listed with their licences. A copyleft licence in the wrong place can obligate you to publish source you consider proprietary.
• Third-party code and content identified, with a clear answer on who pays the licence fee and what terms flow through to you.
• Feedback clauses removed. Some contracts assign the vendor rights in anything you tell them, including during support calls, which can quietly cover your own business logic.
• Accounts, repositories, registrars and cloud tenancies in your name. Ownership of code is worth less than people think if the deployment pipeline lives in someone else’s organization.
• Documentation and architecture decision records as deliverables. Code you own but cannot operate is an asset in a narrow legal sense only.

Our position¶

We assign all intellectual property rights, not copyright alone, and everyone who touches your codebase is under written assignment before they start. Repositories and cloud accounts are created in your name at the beginning, which means there is no transfer event at the end and nothing for us to slow down. We do not take a feedback licence.

This is also why we do not offer source code escrow, and why its absence is not a gap. Escrow exists to solve one problem: the vendor holds the source and might go away. If you hold the repository from the first commit, there is nothing to escrow, no release conditions to argue about, and no six-week dispute-resolution process standing between you and your own software.