Who Owns Your Code and Data When Someone Builds Your System?

Software is unusual because you can pay for it in full and still not hold everything you might expect. The reason is that "owning the system" is really four separate things, and each can end up with a different party. Sorting them out costs nothing at the start of a project. After a falling-out, it can cost a great deal.

1. The Code

By default, the person who writes code usually holds the copyright in it, unless an agreement says otherwise. Paying for the work does not automatically transfer that. There are two common arrangements, and they are not the same:

• Ownership (assignment). The copyright passes to you. You can modify, sell or hand it to another developer.
• A licence or usage rights. You may use the finished software for its intended purpose, but the developer keeps the code. This is common, and perfectly workable, as long as you know it is what you are getting.

Neither is wrong. What matters is that it is written down, and that you understand what it means if the relationship ends. If you may want a different developer to maintain the system one day, you need access to the source code, which a usage licence alone doesn't guarantee.

2. The Data

Your customers, jobs, records and files are yours. But "yours" is only useful if you can get them out. Ask whether you can export everything, in a normal format such as CSV, at any time, without a fee, and what happens to the data if you stop paying for hosting.

3. The Accounts

Hosting, databases, email-sending services, app store listings and analytics all sit in an account owned by someone. If a developer set them up in their own name, they hold the keys to your system even if you hold the invoice. The safer arrangement is for the accounts to be in your business's name, with the developer given access, not the other way round.

4. The Domain

Your web address is registered to a named owner. Check that it is you. A surprising number of businesses discover, years later, that their domain belongs to the agency that set up their first site. Look it up in the registrar account, not in an email thread.

Questions to Ask Before You Start

• After I pay, what exactly do I own, and what am I licensed to use?
• Will I have access to the source code, and in what form?
• Which accounts will be in my name, and who holds the admin logins?
• Can I export all my data at any time, and in what format?
• What third-party tools or open-source components are used, and under what terms?
• If you stop working with me, how does someone else take over?
• What happens to the system if I stop paying the monthly fee?

Red Flags

• Vague answers, or "we'll sort that out later"
• Reluctance to put any of this in writing
• Accounts, domain or code repository held only in the developer's name
• No way to get your data out except by asking them to do it

Where We Stand

Our terms state that once a project is paid in full, you receive full usage rights to the delivered software for its intended purpose. If you also need the source code, or a full assignment of rights, raise it when the project is scoped so it is written into the agreement. It is far easier to agree on day one than on day four hundred.

Whoever you choose, the same advice applies: get the answers in writing, in plain language, before any money changes hands.