Copyright, software and licences

For a tech company, value lives in the code, the content and the interface design. All of this is protected by copyright (in Switzerland the CopA — the Copyright Act). Unlike a trademark or a patent, copyright is not registered: it arises on its own. Precisely for this reason it generates more confusion over ownership — that is, over who really owns the code.

How protection works

Copyright protects works of the mind with an individual character: software, texts, graphics, music, photographs, original databases. Key points:

• protection is automatic: it arises with the creation of the work, without registration or the © symbol;
• it protects the form of expression, not the underlying idea or function: two programs can solve the same problem with different code without infringing each other;
• software is expressly protected as a work under Swiss law.

The duration is long: in general 70 years from the author’s death. For computer programs protection lasts 50 years from the author’s death.

The real crux: who owns the code

This is where the game is played, and the rule changes depending on who wrote the code.

• Employees — a special rule for software. Swiss law provides that the rights to programs created by an employee in the course of their employment and in the performance of their contractual duties belong to the employer. It is an exception targeted at software: for other works (texts, graphics, design) this automatic transfer does not apply in the same way, and it is advisable to regulate it in the contract.
• Freelancers and external agencies. Here there is no automatic transfer: whoever develops the code remains the holder of the rights absent a written assignment. Paying an external developer’s invoice does not mean owning the code. Without an assignment clause, you end up using software you do not own — a serious problem in a due diligence.

The practical consequence: every contract with external developers, agencies and collaborators must contain an assignment clause for the (economic) rights to the company, as broad as possible.

Moral rights remain with the author

Even when you assign the economic rights, the author retains certain moral rights — in particular the right to be recognised as the author and to object to modifications that harm their reputation. These do not prevent commercial exploitation, but it is good to be aware of their existence when regulating attributions and modifications.

Licences: how to grant use without transferring ownership

A licence is the contract by which the holder grants use of the work while retaining ownership. The most common forms:

• Exclusive vs non-exclusive licence: in the former the licensee is the only one who may use/exploit the work within the agreed scope; in the latter the holder may also grant it to others.
• Scope limits: territory, duration, channels, number of users or installations, whether or not there is a right to modify and sublicense.
• SaaS model: in software as a service the user does not receive a copy but a right of access to the service; the conditions lie in the terms of service, not in an assignment.

Getting exclusivity, scope and the right to modify right prevents a “generous” licence from draining the value of your asset.

Watch out for open source

Using open source components is normal and often advantageous, but each licence has its own rules. Some (permissive, such as MIT) ask for little more than attribution; others (copyleft, such as the GPL) can require the derived code you distribute to be released under the same licence. Integrating without checking the licence can force you to open code you wanted to keep proprietary, or create problems in a fundraising round. A map of dependencies and their licences is part of the IP hygiene of any software house.

The mistakes we see most often

• Believing that paying a freelancer is equivalent to owning the code.
• Not including assignment clauses in contracts with agencies and external collaborators.
• Ignoring the open source licences of the integrated components.
• Keeping the IP (repository, accounts, domain) in the name of the founder personally rather than the company.
• Confusing copyright with the trademark: they are different and complementary protections.

Orderly IP, a company worth more

In a due diligence, investors and buyers check that the software is owned by the company, with a clean chain of rights and open source licences under control. Orderly IP reduces legal risk and increases the transferable value of the company; confused IP can block a round or slash the valuation.

How SIH ONE supports you

The Tax & Legal division puts ownership of the code in order — assignment clauses with employees and freelancers, licence agreements, review of open source licences — integrating software protection with the trademark, corporate structure and taxation. Before your next round or release, let’s sort out the chain of rights on your code.