Canadian startups grow by working with freelance developers, product designers, and technical contractors. These relationships allow companies to scale faster without taking on full time employees. The challenge is that Canadian companies often assume they automatically own whatever the contractor creates. That assumption is incorrect.
In Canada, intellectual property belongs to the person who creates the work unless a written agreement transfers ownership. This applies to code, designs, documentation, product architecture, user interface elements, and even internal processes. If your contract does not assign ownership, your company does not own the deliverables. You receive only a licence to use them.
This guide shows you how to structure contractor agreements that protect your intellectual property and prevent disputes.
1. Understand who owns copyright in Canada
Copyright law in Canada grants ownership to the creator, not the company that pays for the work. If your startup hires a developer to build a new feature, the developer owns the code by default. Your company cannot claim full ownership without a written assignment.
This rule surprises many founders. Without proper assignments, a contractor could reuse your code in a competing product or refuse to grant full rights if the relationship ends. Strong contracts prevent these issues.
2. Use a clear written contract before any work begins
Never start a project with a developer or designer before you have a signed agreement. Verbal agreements or informal email exchanges do not protect your intellectual property. A written contract should include specific language that transfers all rights to your company immediately upon creation.
Your agreement should confirm the following points.
• The contractor assigns all rights in all deliverables to your company.
• The assignment applies to completed and partial work.
• The contractor waives all moral rights in the deliverables.
• The contractor agrees that your company can modify, redistribute, or commercialize the work without restriction.
Clear ownership language ensures that your company remains the sole owner of every part of the project.
3. Address work created with open source components
Many developers use open source tools to accelerate product development. Open source software is useful, but it carries its own licensing rules. Some open source licences require you to publish your source code or restrict how you can commercialize your product.
You should confirm the following items with your contractors.
• Whether they plan to use any open source components.
• The specific licences that apply to those components.
• Whether those licences create obligations for your company.
• Whether they can avoid problematic licences if needed.
A technology lawyer can review these items quickly to ensure the licences align with your business model.
4. Manage subcontractors and offshore developers
Many freelancers rely on subcontractors. Some work with offshore development teams. If you do not address subcontractors in your agreement, you risk losing control of your intellectual property because ownership may remain with someone you never engaged.
Your contract should require written assignments from every subcontractor involved in the project. It should also prevent the contractor from using unnamed third parties without prior approval. This ensures that every line of code is covered by your ownership rights.
5. Protect your confidential information
Intellectual property protection includes the protection of confidential information. Contractors often access sensitive details about your architecture, road map, or future plans. Your contract should contain strict confidentiality clauses that survive the end of the relationship.
These clauses should restrict the use of your information to the project only. They should also require the contractor to return or delete all copies once the contract ends.
6. Keep clean records of your development process
If you ever raise investment, sell the company, or undergo due diligence, investors and acquirers will ask for evidence that you own your intellectual property. You should maintain the following records.
• Signed contractor agreements
• Written assignments for all subcontractors
• Version histories and code repositories
• Documentation of external licences
Strong records create confidence and prevent delays in future transactions.
7. Involve a technology lawyer early
A lawyer who understands software development and intellectual property can prepare contractor templates that protect your assets. They can also customize agreements for specific projects, review open source risks, and verify that all assignments meet Canadian legal requirements.
Clear intellectual property ownership is essential for valuation, investment, and product security. If you structure your contractor relationships properly, your company retains full control over its most valuable assets.
Contact Onley Law Professional Corporation to get legal help today: contact@onleylaw.ca