C. Egwu Law Firm | Precision | Commercial Awareness.

Legal Ownership in Tech Projects: Who Owns the Code?

Introduction

In the rapidly changing technology sector, ideas move quickly, and coding often occurs before any legal agreements are established. A lot of founders believe that once they compensate a developer or write the code on their own, the ownership of the software is automatically guaranteed. Unfortunately, the law provides otherwise.

As a developer of a tech product, especially in an arrangement with multiple founders or where developers are outsourced, it is important to understand who has the legal rights to the code. This matter is not insignificant; ownership of the product, readiness for investors, and protection of intellectual property all depend on getting this right.

Code as Intellectual Property: The Legal Framework

Section (2) (1) (a) and Section 108 of the Copyright Act 2022 (the "Act") recognise software (i.e., code) as a form of literary work within the scope of copyright.

The general rule is that the author of a work is the first owner of the copyright, subject to certain exceptions. Specifically, Section 28 of the Act provides that the ownership of copyright in a work remains with the author, unless the work is created in the course of employment or commissioned under a contract that provides otherwise.

This means that legal ownership of software does not necessarily vest in the person or company that paid for it, but in the person who wrote it, unless there is a clear contractual assignment of rights. Where two or more co-founders collaborate on a tech product, if one founder contributes funding while another writes the code, the latter retains copyright in the absence of a clear assignment. Without any formal documentation assigning the copyright to the company, the ownership of the copyright would remain with the developer, and where disputes arise, the Courts will apply default legal principles, which would typically favour the developer.

This also applies to a situation where the development of the code is outsourced. A common misconception is that once a developer is paid, the client automatically owns the code. This is incorrect under Nigerian law. Without a clearly written contractual agreement to assign copyright, the developer retains ownership, and the individual who paid for the code will only hold a license to use the copyright. This is particularly risky for startups that engage external developers without proper contracts.

However, where the developer is employed by a company, the ownership of any work made in the course of employment shall vest in the employer.

Why This Matters

Failure to address IP ownership properly can result in:

Inability to license or commercialise the product legally
Litigation risk from disgruntled developers or former founders
Loss of leverage in negotiations with investors or acquirers
Exposure to claims of intellectual property infringement if reused code was not lawfully acquired

In investment due diligence, intellectual property ownership is a red flag item. Investors will often walk away from a deal if the company cannot provide documentary evidence that it owns its source code.

Practical Steps to Secure Code Ownership

To avoid uncertainty, founders and businesses should:

1. Execute Intellectual Property Assignment Agreements: Every developer, whether co-founder, contractor, or employee, should sign a written agreement assigning intellectual property to the company. This can be a stand-alone agreement or part of a broader contract.

2. Use Proper Consultant Agreements: For freelancers and outsourced teams, ensure the service agreement includes: - A clause identifying the work as "commissioned" - An express assignment of copyright and related intellectual property - Warranties on originality and non-infringement

3. Register Your Copyright: Although not required for protection, registration with the Nigerian Copyright Commission can provide evidentiary value in enforcement.

Conclusion

Ownership of code is a legal matter, not an assumption. In Nigeria, unless the code is created under employment or an intellectual property assignment contract, the person who writes it owns it—even if they were paid.

For startups, founders, investors, and tech companies, resolving ownership at the outset is not just a legal necessity; it's a strategic imperative.