Who owns code written by a contractor?

Founders frequently assume that paying a freelance developer or a contract shop to build a product automatically means the company owns the resulting code, the way an employer generally owns work created by its own employees. Canadian copyright law does not treat contractors the same way it treats employees, and that gap is one of the more common, and more expensive to fix, problems a buyer’s diligence team finds in a software business.

Employees and contractors are treated differently by default

Copyright created by an employee in the ordinary course of their employment generally vests in the employer automatically, without needing a separate written assignment. Copyright created by an independent contractor does not follow the same automatic rule — the default position is that the contractor, as the actual author, owns the copyright unless a written agreement says otherwise, regardless of who paid for the work or whose idea it was.

Work-for-hire language from a US-style contract doesn’t fix it

Businesses that borrowed contract templates from US sources sometimes include work-for-hire language expecting it to automatically vest ownership in the company the way it might under a different country’s copyright regime. That kind of clause does not carry the same automatic effect under Canadian law, and relying on it without an actual assignment clause can leave a company relying on code it never legally owns, discovered only once a buyer’s lawyer reviews the contractor agreements during diligence.

A written assignment is what actually moves ownership

The document that actually transfers copyright ownership from a contractor to the company is a written assignment, ideally signed at the time the work was created rather than reconstructed years later once a sale is underway. Where that assignment is missing for code still embedded in the product, a buyer will generally ask for it to be obtained before closing, and a contractor who is no longer easy to reach, or who senses leverage in a pending sale, can turn a routine cleanup item into a real negotiation.