Last Updated on 13/08/2025 by Damin Murdock
In Australia, copyright law distinguishes between software created by employees and software developed by contractors. The consequences of misunderstanding these rules can be costly, particularly if you believe you own rights to code that legally belongs to someone else.
This article provides a clear, practical guide for businesses navigating software copyright ownership in Australia.
Software as Intellectual Property
Under the Copyright Act 1968 (Cth) (the Act), software is legally protected as a form of literary work. This means that as soon as software is written, it is automatically protected by copyright. However, ownership of that copyright depends on who created the work and under what legal relationship.
Copyright in Employee-Created Software
If an employee develops software as part of their roles and responsibilities, the employer automatically owns the copyright.
To qualify:
- The employee must be working under and employment contract
- The software must be created in the course of their employment duties.
This principle was reinforced in Career Step, LLC v TalentMed Pty Ltd (No 2) [2018] FCA 132, where the Federal Court confirmed employer ownership of employee-created software when developed within the scope of employment.
Tip: The protection only applies if the software was created as part of the employee’s job description. If a staff member creates something outside their scope on personal time or for unrelated purposes, then it is possible that they retain the copyright. In these circumstances, the next step is to review the terms of the employee’s contract of employment, and whether the employee has used an employer’s confidential information to develop the copyright material.
Copyright in Contractor-Created Software
When it comes to independent contractors, the law flips. A contractor retains full copyright over the software they create even if they were paid to create it for your business.
To transfer ownership:
- The business must execute a written assignment agreement or deed
- The agreement must comply with s 196 of the Act with respect to assignment of copyright
- It must be signed, dated, and clearly describe the rights being transferred.
This legal requirement was highlighted in Telstra Corporation Ltd v Phone Directories Company Pty Ltd [2010] FCA 44, where a lack of proper IP assignment led to litigation over software rights.
Best Practice: Always ensure contractors sign an IP assignment agreement or deed before starting any development work, or include an assignment of intellectual property clause within your service agreements.
Is the Creator an Employee or a Contractor?
A common source of dispute arises when there is uncertainty about whether the software developer is legally classified as an employee or a contractor. Courts consider several factors, including:
- Control: Who decides how and when the work is done?
- Remuneration: Are they paid a salary or per project?
- Resources: Who provides the tools and equipment?
- Work structure: Do they set their own hours?
- Taxation: Are PAYG tax and superannuation withheld?
- Delegation: Can the developer outsource their work?
As established in Centrestage Management Pty Ltd v Riedle [2008] FCA 938, no single factor is decisive. Courts assess the totality of the working relationship.
Risk Management & Practical Tips
To safeguard your business:
1. Get the Paperwork Right
- Maintain written contracts with all employees and contractors.
- Include clear copyright clauses and assignment terms.
- Ensure all documents are signed and dated.
2. Define Roles and Responsibilities
- Clearly outline whether software development is part of the employee’s duties.
- For contractors, specify deliverables and assign copyright explicitly.
3. Track Software Development
- Keep records of who created the software, when, and under what arrangement.
- Maintain changelogs, version histories, and documentation of developer contributions.
4. Audit Existing Agreements
- Review legacy contracts to identify missing or unclear copyright terms.
- Amend or supplement existing agreements where necessary.
Final Thoughts
Copyright ownership of software in Australia is governed by a well-defined legal framework but businesses must be proactive in ensuring compliance. While employee-created software is usually owned by the employer, contractor-created code belongs to the contractor unless a valid assignment is in place.
Taking the time to put proper contracts and documentation in place can prevent costly legal disputes and ensure your business retains full control of its intellectual property assets.
If your company is working with software developers and need assistance drafting effective copyright and IP agreements, feel free to contact Damin Murdock at Leo Lawyers via our website, on (02) 8201 0051 or at office@leolawyers.com.au. Further, if you liked this article, please subscribe to our social media accounts.
DISCLAIMER: This is not legal advice and is general information only. You should not rely upon the information contained in this article and if you require specific legal advice, please contact us.
Damin Murdock (J.D | LL.M | BACS - Finance) is a seasoned commercial lawyer with over 17 years of experience, recognised as a trusted legal advisor and courtroom advocate who has built a formidable reputation for delivering strategic legal solutions across corporate, commercial, construction, and technology law. He has held senior leadership positions, including director of a national Australian law firm, principal lawyer of MurdockCheng Legal Practice, and Chief Legal Officer of Lawpath, Australia's largest legal technology platform. Throughout his career, Damin has personally advised more than 2,000 startups and SMEs, earning over 300 five-star reviews from satisfied clients who value his clear communication, commercial pragmatism, and in-depth legal knowledge. As an established legal thought leader, he has hosted over 100 webinars and legal videos that have attracted tens of thousands of views, reinforcing his trusted authority in both legal and business communities."
