Who Owns the Code When You Hire an App Developer in Canada?

By Cody Wise, founder of Wise Media, Calgary. Last updated 6 November 2026. This is general information about Canadian copyright, not legal advice. Have a lawyer review any development agreement that matters to your business.

Summary

• Default rule: the author owns the copyright. For commissioned software, the author is the developer, not the person who paid.
• The employment exception covers employees under a contract of service. An agency or freelancer works under a contract for services, so it does not apply.
• An assignment is only valid in writing and signed. Canadian courts have called this a substantive legal requirement, not a formality.
• Moral rights cannot be assigned at all. They can only be waived, and a copyright assignment does not waive them by itself.
• Without a written assignment you probably have an implied licence to use what you paid for. You almost certainly do not have exclusivity, resale rights, or anything that survives due diligence.

Table Of Contents

• The Default Rule, And Why It Surprises People
• Employee Versus Contractor: The Line That Decides It
• Why It Has To Be In Writing And Signed
• Moral Rights, The Part Everyone Misses
• What You Actually Get Without An Assignment
• Open Source Components In Your Build
• The Clauses To Look For In A Contract
• Common Mistakes
• FAQ

The Default Rule, And Why It Surprises People

Section 13(1) of the Copyright Act is one sentence: “Subject to this Act, the author of a work shall be the first owner of the copyright therein.” The Act is current to 19 October 2026 and was last amended on 7 November 2024.

Software is covered. Section 2 defines a “computer program” as “a set of instructions or statements, expressed, fixed, embodied or stored in any manner, that is to be used directly or indirectly in a computer in order to bring about a specific result”, and defines “literary work” to include “tables, computer programs, and compilations of literary works”. Your app is a literary work and the person who wrote it is its author.

Nothing in that sentence mentions payment. Commissioning a work and paying for it does not make you the author, and Canada has no equivalent of the American work made for hire doctrine for contractors. Section 13(2), which used to carry a special rule for certain commissioned works, was repealed in 2012 and is gone. There is now no commissioning exception at all.

So the surprise is structural rather than unfair: the Act was written around authors, and a client is not an author. It is also the first thing we settle in writing on any app development engagement, before a line of code exists.

The 50 Word Version

Under Canadian law the developer owns the code they write for you unless they sign a written assignment transferring it. Employment is the only automatic exception and it does not cover agencies or freelancers. Paying the invoice gives you a licence to use the work, not ownership of it.

Employee Versus Contractor: The Line That Decides It

Section 13(3) is the one exception, and its wording is narrow. It applies “Where the author of a work was in the employment of some other person under a contract of service or apprenticeship and the work was made in the course of his employment by that person”, in which case the employer “shall, in the absence of any agreement to the contrary, be the first owner of the copyright.”

Read the words “contract of service”. That is employment. An agency or freelancer works under a contract for services, which is a different relationship, and section 13(3) does not reach it.

The leading Canadian test for which side of the line someone sits on comes from the Supreme Court in 671122 Ontario Ltd. v. Sagaz Industries Canada Inc., 2001 SCC 59, at paragraph 47: “The central question is whether the person who has been engaged to perform the services is performing them as a person in business on his own account.” The factors include the level of control, whether the worker provides their own equipment, whether they hire their own helpers, their degree of financial risk, their responsibility for investment and management, and their opportunity for profit. Worth noting for accuracy: Sagaz is a vicarious liability case, not a copyright case. It is the authoritative Canadian statement of the employee and contractor distinction, and courts apply it when deciding whether section 13(3) engages.

For practical purposes: an agency with its own office, its own tools, its own other clients and its own profit at risk is unambiguously an independent contractor. Section 13(3) will not help you.

The Trap Inside Your Own Company

There is a mirror version of this problem that catches founders. If you hired a developer as a contractor rather than an employee, even one who works full time for you, you may not own what they built either. Many early-stage companies discover this during diligence, which is the worst possible moment.

CIPO’s own small business guidance makes the point in plainer language. Its Plan your IP strategy resource states that “The owner of a copyright is usually the author, unless there is an employee-employer relationship or a contract stating otherwise, such as a contract of sale”, and advises that businesses “ensure copyright ownership for your business is clear for contractors and employees”. Its sections on sale, spin-offs and technology transfer tell you to “Verify that all employees and contractors have signed a written agreement”, which frames unsigned contractor paperwork as a transaction-blocking problem, because that is what it is.

Why It Has To Be In Writing And Signed

Section 13(4) sets the formality. An owner may assign the copyright wholly or partially, with limitations as to territory, medium, market sector or term, “but no assignment or grant is valid unless it is in writing signed by the owner of the right in respect of which the assignment or grant is made, or by the owner’s duly authorized agent.”

Writing and signature. Both. Canadian courts have treated this strictly.

In Tremblay v. Orio Canada Inc., 2013 FC 109, upheld on appeal as 2013 FCA 225, a programmer engaged to modify software was found to have retained copyright because the document relied on as an assignment was unsigned. The reported decision records that section 13(4) sets out a copulative condition, meaning both elements are required, and that the bid relied upon had been unsigned. Commentary on the case from John McKeown at Goldman Sloan Nash & Haber reports the trial judge describing the signed-writing requirement as a substantial legal requirement rather than a mere rule of evidence. That characterisation is the firm’s rendering of the judgment rather than a verified quotation, so treat the phrasing as commentary and the outcome as the point.

In Harmony Consulting Ltd. v. G.A. Foss Transport Ltd., 2011 FC 340, upheld as 2012 FCA 226, a principal argued he had made a “mental assignment” of copyright to his company. The court held this irrelevant, because section 13(4) requires writing. An assignment signed retroactively, nine years later and a week before trial, was found inoperative. Part of the software in dispute belonged to a former employer because the author had been its employee and no written agreement addressed ownership.

Two practical lessons. An oral agreement, however clear, transfers nothing. And papering it later, after a dispute has started, may not save you.

Moral Rights, The Part Everyone Misses

Even a perfect assignment does not transfer everything, because one category of right cannot be transferred at all.

Section 14.1(1) gives the author “the right to the integrity of the work” and, where reasonable, the right to be associated with it by name or pseudonym or to remain anonymous. Section 14.1(2) is the operative sentence: “Moral rights may not be assigned but may be waived in whole or in part.” Section 14.1(3) closes the obvious gap: “An assignment of copyright in a work does not by that act alone constitute a waiver of any moral rights.”

CIPO states the same thing in its guide to copyright: “Moral rights cannot be assigned or transferred, but can be waived”, and “Even if an author decides to assign their copyright in a work, the author continues to hold the moral rights to the work, unless they formally waive their moral rights.” It also notes that “Once moral rights are waived, they cannot be reacquired.”

Why this matters for software specifically. Section 28.2(1) provides that the integrity right is infringed “only if the work is, to the prejudice of its author’s honour or reputation, distorted, mutilated or otherwise modified”, or used in association with a product, service, cause or institution. Refactoring somebody’s architecture, ripping out a module, or rebranding the product are all acts the integrity right covers, subject to that prejudice threshold, which is a genuine limit and not a trivial one.

Two drafting consequences:

• The waiver has to come from the individual developers, not only from the agency entity. Moral rights belong to the human author. An agency can assign copyright it owns; it cannot waive its staff’s moral rights on their behalf.
• Ask for the waiver to be given in favour of the owner or licensee. Section 14.1(4) provides that a waiver made in favour of an owner or licensee “may be invoked by any person authorized by the owner or licensee to use the work, unless there is an indication to the contrary in the waiver.” Drafted that way it flows through to you, and to whoever buys your company later.

What You Actually Get Without An Assignment

Not nothing. Canadian courts imply a licence in commissioned work, and that is what most clients are actually operating on without knowing it.

The leading authority is Netupsky v. Dominion Bridge Co., [1972] S.C.R. 368, where an engineer retained copyright in commissioned plans but the party who paid was treated as his licensee, with implied consent to make the changes and the copies that the purpose required. In the software context, Tremblay is directly on point: the assignment failed for want of a signature, and the court nonetheless found an implied licence that allowed the defendant to copy the modified program’s source code.

Notice the asymmetry in the Act. Section 13(4) requires writing for an assignment. A licence can be implied and need not be written at all. That is why the realistic default position for a client with no paperwork is licensee rather than owner.

The deeper problem is that an implied licence has no stated scope. Its boundaries get decided after the fact by a court looking at the circumstances. That is tolerable while everyone is friendly and useless the moment they are not, which is precisely when you need to know.

Open Source Components In Your Build

Essentially every modern application incorporates third-party code. That is normal and fine. What matters is knowing which licences are in there, because some of them impose obligations on what you ship.

Two families. Permissive licences such as MIT grant broad rights, with the main obligation being notice retention: the MIT licence states that “The above copyright notice and this permission notice shall be included in all copies or substantial portions of the Software.” Copyleft licences such as the GPL require derivative work to be licensed on the same terms when it is distributed.

The Government of Canada’s own Open First Whitepaper legal annex is the clearest official Canadian explanation. It notes that with copyleft, “modifications to the software must also come under the same licence”, that only some open source licences contain that stipulation, and that distribution is the trigger: “Where there is no such distribution”, licensees can generally use and modify without sharing their code. It flags the AGPL specifically, which is triggered by network access and therefore matters for anything delivered as a web application. It recommends a due diligence audit, internal records of what code is used and under which licence, and automated scanning for larger or acquired code bases, with the caveat that scanning “does not provide certainty that the source code is under only the reported licences”.

What to ask your developer for, concretely:

• A written list of third-party components and their licences, delivered with the code.
• Confirmation that no copyleft-licensed component is linked into code you intend to keep proprietary, and specifically no AGPL component in anything exposed over a network.
• The notice and attribution files, since permissive licences require them.
• A contractual warranty and indemnity on third-party IP, because the open source licences themselves disclaim all warranties.

The Clauses To Look For In A Contract

Read the agreement for these seven things before you sign. If an agency resists all of them, that tells you something; if it resists some of them for stated reasons, that may be entirely reasonable.

1. An express assignment of copyright in the deliverables, signed by the party that owns them. “Client owns the deliverables” without the word assignment and a signature is weaker than it looks.
2. A waiver of moral rights from the individual authors, drafted in favour of the owner and its licensees so it flows through.
3. A definition of what the deliverables actually are. Most agencies retain their own pre-existing tools, libraries and frameworks, which is legitimate. What you need is a clear line between their reusable toolkit and your bespoke build.
4. A licence back to you for anything retained. If their framework is inside your product, you need a perpetual, irrevocable, transferable licence to keep using it, or your product stops being yours the day the relationship ends.
5. When ownership transfers. Many contracts transfer on final payment, which is fair. Check it is on payment rather than on some undefined acceptance.
6. A third-party components list and an IP warranty. Covered above.
7. Source code access and, where the dependency is serious, escrow. The federal government’s own standard clause, SACC 4003 16, requires a contractor on request to “put in place for Canada whatever escrow arrangements, if any, it usually puts in place for its customers” and to provide a copy of the agreement with its escrow agent. That page is archived and the clause is dated 2008, so treat it as a drafting model rather than a current federal term.

One point of fairness. A developer retaining their own general-purpose libraries is not trying to trap you. It is how agencies stay efficient, and an agency that assigns away its entire toolkit on every project cannot work that way for long. The negotiation is about the boundary and the licence back, not about demanding everything.

If you are still deciding whether to build custom at all, the economics are in custom software or off the shelf, and the budget side in what a custom web app costs in Canada.

Common Mistakes

• Assuming payment transfers ownership. It does not, and there is no commissioning exception in the Act any more.
• Relying on a clause that says the client owns the work, with no signature from the developer. Section 13(4) needs both writing and a signature.
• Treating a full-time contractor as an employee for IP purposes. The employment exception turns on the nature of the relationship, not on hours worked.
• Taking an assignment and no moral rights waiver. Section 14.1(3) says an assignment alone does not waive them.
• Getting the waiver from the company and not the individuals. Moral rights belong to the human author.
• Never asking what open source is in the build. It is a one-line question and a real exposure if the answer is AGPL.
• Papering it after a dispute starts. A retroactive assignment signed on the eve of trial has already been found inoperative in a Canadian case.
• Discovering all of this during diligence. CIPO frames unsigned contractor agreements as a transaction problem precisely because that is when it surfaces.

FAQ

If I Paid For The App, Do I Own It?

Not automatically. Under section 13(1) of the Copyright Act the author is the first owner, and payment does not change that. Without a written, signed assignment you most likely hold an implied licence to use the software for the purpose it was built for.

Does A Clause Saying “All Work Product Belongs To The Client” Work?

It can, if it is in a document signed by the copyright owner and the wording is clear enough to operate as an assignment. The failure mode in the Canadian cases is not bad wording, it is the absence of a signature. Get the agreement signed by the party that owns the rights.

What Are Moral Rights And Why Do They Matter For Software?

They are the author’s rights of integrity and attribution. Section 14.1(2) says they cannot be assigned, only waived, and section 14.1(3) says a copyright assignment does not waive them by itself. For software they matter because modifying, refactoring or rebranding the work are the kinds of acts the integrity right covers.

Should I Register My Copyright With CIPO?

Copyright exists the moment the work is created and fixed, so registration is not required. CIPO notes a registration certificate is evidence that the copyright subsists and that the registrant is the owner, though that evidence can be challenged in court. For most businesses the written assignment matters far more than registration.

Can My Developer Reuse My Code For Another Client?

If they still own the copyright, generally yes, subject to any confidentiality obligations. This is the practical reason exclusivity matters more than most clients realise, and it is not addressed by an implied licence.

What Is Source Code Escrow And Do I Need It?

A third party holds a copy of the source and releases it to you on defined triggers, typically the developer ceasing to trade. It is worth considering when you depend on software you do not hold the source for and the developer is a small firm. For most projects, simply receiving the source and the repository is enough.

Is This Different For An Employee Who Writes Code For Us?

Yes. Section 13(3) makes the employer first owner of work made by an employee in the course of employment, absent an agreement to the contrary. The risk is misclassification: if the person is genuinely an independent contractor, the exception does not apply no matter what you call them internally.

Conclusion

Ask for three things before you sign a development contract: a signed assignment of copyright in the deliverables, a moral rights waiver from the individuals who write the code, and a written list of third-party components with an IP warranty behind it. None of that is adversarial, and a developer who has done this before will have the clauses already.

We hand over the repository, the assignment and the components list as standard, because a client who cannot prove they own their product has not been delivered a product. If you want a straight read on what your current contract actually gives you, send us the scope through our intake form.