Who Owns the Code: Intellectual Property in Software Development

Who Owns the Code: Intellectual Property in Software Development

The short answer: code belongs to whoever legally documented ownership — not whoever wrote it or paid for it. This is where most startups make expensive mistakes. When we were building Pactum, I watched dozens of companies reach the due diligence stage of a funding round only to discover that their core product technically belonged to a developer who had quit months earlier, or to an offshore contractor. Deals collapsed.

Key takeaways:

• Paying for work ≠ automatic transfer of IP rights
• The "work made for hire" doctrine only protects your company when employment relationships are properly documented
• Freelancers and contractors require a separate IP assignment agreement
• Audit your contracts before — not after — your first investment round

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Three Scenarios — Three Different Legal Regimes

Software IP rights in Uzbekistan are governed by copyright and related rights law, including provisions on works created in the course of employment. But abstract law means nothing without understanding your specific situation.

I'd recommend printing this table and cross-checking it against every active contract in your company.

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Works Made for Hire: When Your Company Is Protected

The employer work-for-hire concept is your primary IP protection tool when developers work under an employment contract. The logic is straightforward: if an employee creates a work within the scope of their assigned duties and job responsibilities, exclusive rights transfer to the employer.

But the devil is in the details:

What your documents need to include:

• An employment contract explicitly stating that software development is part of the employee's job duties
• A job description or technical specification identifying specific projects
• Ideally, a formal acceptance/handover record for key deliverables (especially critical modules)

If a developer wrote code "on their own initiative," outside their assigned duties — the rights remain theirs, even if they did it on company time using a corporate laptop. This is a gray zone best eliminated upfront.

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Freelancers and Contractors: The Most Common Source of Problems

This is the most widespread scenario in Uzbekistan's tech sector: a company hires a developer via Telegram, pays them via bank transfer or a services agreement, receives the code — and assumes the code now belongs to them. It doesn't.

By default, the author of a work is the individual who created it. Transferring money does not mean transferring rights. You need a separate agreement — either a standalone IP assignment deed or an explicit clause within the services contract.

Minimum required clauses in any freelancer contract:

• An explicit statement that exclusive rights to the developed software transfer to the client in full
• The moment of transfer (e.g., upon signing the acceptance act, upon payment — be specific)
• A warranty that the contractor did not use third-party code without a license (open source is a separate conversation)
• A prohibition on reusing the code for other clients

If a contract has already been signed without these clauses — you can still execute a supplementary agreement. Better late than never.

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Open Source and Borrowed Code: The Hidden Risk

Open source libraries and components deserve their own section. Developers use them constantly — that's entirely normal. But every license comes with its own conditions: MIT permits almost anything, GPL requires you to open-source all derivative code, and some licenses prohibit commercial use entirely.

Practical advice: maintain a registry of all libraries your product uses, along with their licenses. It takes an hour — and saves enormous headaches when selling the company or entering Western markets.

The same applies to AI-generated code: the legal status of code written with tools like GitHub Copilot, ChatGPT, or similar assistants is still being established across most jurisdictions. Be prepared to document what was created and how.

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What to Do This Week

• [ ] Review your developers' employment contracts: do they reference work-for-hire and job responsibilities?
• [ ] Ask HR for a list of all contractors and freelancers from the past two years — and check their contracts
• [ ] Build a registry of open source dependencies with their licenses
• [ ] Add an IP assignment clause to your standard template for any external contractor
• [ ] If there are gaps — sign supplementary agreements before your next funding round

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FAQ

If I'm paying a developer, isn't the code automatically mine?

No. Paying for services and transferring exclusive IP rights are two separate legal events. Without the appropriate contractual clause, rights remain with the author.

A developer quit and is claiming the code is theirs. What do I do?

If the employment contract and job duties were properly documented, the work-for-hire doctrine means the company owns the code. If documentation is missing — the dispute will need to be resolved through negotiation or litigation. This is exactly why proper documentation matters before a conflict, not after.

Do I need to register copyright in software?

In Uzbekistan, copyright arises at the moment of creation and does not require mandatory registration. However, voluntary deposit of your code can help in a dispute — as evidence of the date and fact of creation. Verify current procedures with a local specialist, as requirements may change.

What if the contractor is based in another country?

In that case, your contract must explicitly specify the governing law and jurisdiction for dispute resolution. Without it, any conflict will immediately raise the question of which country's laws apply — an expensive ambiguity to resolve.

Can a developer "take back" their code if they haven't been paid?

This depends on the contract and the timing of the rights transfer. A well-drafted contract separates payment obligations from IP transfer conditions — so that non-payment doesn't automatically give the author the right to "revoke" the code from your product.

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*This article is for general informational purposes only and does not constitute individual legal advice. Specific outcomes depend on the details of your situation and the legislation in force at the time you seek guidance.*

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If you'd like to audit your team's contracts or develop templates with properly structured IP clauses — book a consultation. At Pactum, we specialize in the legal side of tech businesses and understand how product development actually works from the inside.