Who Owns Your Code? IP Ownership Between Employees & Contractors in Tech

In today’s digital economy, code is not just a tool — its intellectual property (IP); and it can be worth millions. From backend infrastructure to user-facing apps, developers working in tech are constantly generating valuable IP. But who really owns the software you write: you or your employer? What about code written at home or on the weekend? The answer isn’t always straightforward.

In this blog, we’ll break down the key legal distinctions between employee and contractor IP ownership in Canada’s tech landscape. We’ll highlight what default rules apply, and explain how contracts can shift those rules.

IP Ownership: Employees vs. Contractors

The Default Rules

By default, under Canadian IP law:

• Copyright in software belongs to the author, i.e., the coder.

• Patent rights in inventions belong to the inventor.

• Industrial designs are owned by the creator, unless there’s an agreement to the contrary.

However, these default rules shift in employment or contractual contexts, often through explicit (or implied) agreements. To understand these nuances, we need to look at how courts interpret employment vs. contractor roles. In other words, your title — employee or contractor — and your contract will likely determine ownership.

Why this matters:
If IP ownership isn’t clearly defined in your contract, you could lose the right to commercialize your own code — or face lawsuits if you reuse it elsewhere.

Employees: Company Usually Owns the Code

Under the Copyright Act, if you’re a full-time employee and you develop code in the “course of your employment,” the employer owns the copyright, even if the work was done independently or without direction. Courts will look at:

• Whether you were hired to code, solve technical problems, or create IP

• Whether the code was created during work hours or using company tools

• Whether an IP assignment agreement exists

Even if the employer owns the work, the moral rights* — the right to be credited or object to its use — remain with the author unless waived in writing. 

*Moral rights protect the creator’s personal connection to the work and can be waived, but not transferred.

Contractors: You Probably Own the Code

Independent contractors are treated differently. Unless there is a contract assigning ownership, contractors retain IP rights in the code they create — even if it was written specifically for the client.

That said, courts may consider:

• Whether the contractor was explicitly hired to create a specific product

• Whether payment constituted “good and valuable consideration,” i.e., something of measurable value that justifies a transfer of rights

• Whether the overall relationship implies an assignment of rights

To avoid ambiguity, clear contractual language is essential.

Hypothetical: If a contractor builds a custom CRM feature for a client, but the contract doesn’t include an IP assignment clause, the contractor may legally retain ownership of that code — even if the client paid for the work. In some cases, instead of transferring full ownership, a contractor may prefer to grant limited rights through a license. Learn when that approach makes sense in our guide to IP licensing.

Step-by-Step: How to Protect Your Code

Step 1: Review Your Agreement Carefully
Whether you're an employee or a contractor, your written agreement will likely determine code ownership. Watch for clauses like "IP assignment," "work for hire," or "moral rights waiver."

Step 2: Clarify Side Projects or Pre-existing IP
If you have your own library, scripts, or open-source contributions, identify them clearly in your contract under a disclosure schedule.

Step 3: Avoid Mixing Work Contexts
Don’t use company time, tools, or confidential knowledge to work on personal projects — especially if they relate to your job description.

Step 4: Keep Records
Document what code you create, when, and on what device or environment. This can be useful if a dispute arises.

Step 5: Consider a License Over Full Transfer
As a contractor, you can grant usage rights without handing over full ownership. Learn more in Intellectual Property Licensing: What It Is and When to Consider It – Part 1.

Key Contract Clauses Developers Should Watch For

Whether you’re a new hire or a freelance dev, always review contracts for:

• IP Assignment Clauses: Clearly state who owns the code you write

• IP Transfer Agreements: When full ownership of code needs to change hands (not just usage rights), a formal IP transfer agreement ensures legal clarity and avoids disputes.

• Work-for-Hire Language: Usually used to shift default IP ownership

• Ongoing Assistance: Obligations to help with patents or enforcement

• Moral Rights Waivers: You might be giving up the right to be credited

• Disclosure of Existing IP: Important if you have pre-existing software or projects

• Non-Compete Clauses: Ontario recently banned most of these, but exceptions still apply

These clauses don’t just determine ownership — they affect your long-term ability to use or build on your own work.  If you’re unsure how to interpret these terms, consulting a Toronto technology lawyer can help clarify your position.

When the Lines Blur: Side Projects & Remote Work

Remote work and flexible schedules make IP ownership even trickier. For example:

• What if you work on a side project using your own computer, but it's similar to your job?

• What if your weekend open-source project later overlaps with your employer’s product line?

Courts may still side with the employer if the work is related to your job or was conceived using company knowledge or tools — even if developed “after hours.” The key legal question is whether the project is "sufficiently connected" to your employment duties. This is why many employment contracts claim ownership over “all related inventions and works.”

Protecting Yourself: Best Practices for Devs and Companies

For Employees & Contractors:

• Review contracts thoroughly before signing

• Negotiate IP terms if ownership matters to you

• Keep records of pre-existing code and side projects

• Seek legal advice when in doubt

For Employers:

• Clearly define IP ownership in onboarding contracts

• Tailor contracts for employee vs. contractor relationships

• Avoid overly broad clauses that could deter talent

A well-drafted contract protects both parties and avoids costly misunderstandings. For companies launching new digital products, it’s worth investing in intellectual property contracts for startups that account for remote work, collaboration, and long-term growth.

Exiting a Job? Know What You Keep

When leaving a company:

• Review your contract and any non-compete clauses

• Clarify what IP you retain and what stays with the employer

• Conduct a “code audit” to avoid unintentionally infringing on former employer’s IP

• Use exit interviews to confirm mutual understanding of IP boundaries

Conclusion 

In the world of tech, ownership of code is not just a legal formality — it’s a business risk and a creative right. Whether you're an employee building proprietary platforms or a contractor contributing to multiple clients, knowing who owns your code can prevent costly disputes and protect your work.

Ultimately, contracts, not assumptions, determine code ownership. So before your next project or role, make sure your IP rights are clear, fair, and documented. If you’re unsure, speak with a Toronto technology lawyer to protect your future work.

Are you interested in working with Athena Legal & Innovation? Schedule a free consultation today to get started.