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Who owns the code? IP in government software contracts

How intellectual property clauses work in public sector software and digital contracts, the difference between ownership and licences, and how to protect your existing tools and products.

The intellectual property clause decides who owns what you build. For a software firm, it can decide whether a project builds your business or gives away its foundations.

The two kinds of IP

  • Background IP: what you owned before the contract, such as your frameworks, libraries, templates, tools and products.
  • Foreground IP: what's created during the contract for the buyer.

Most disputes come from contracts that don't clearly separate the two.

Common approaches

Approach What it means for you
Buyer owns foreground, supplier keeps background Common. You keep your tools, the buyer owns the bespoke work.
Supplier owns, buyer gets a licence Good for you. You can reuse the work for other clients.
Buyer owns everything, including improvements to your tools Risky. Check whether you'd lose rights to your own products.
Open-source release required Increasingly common for public digital work. See open source in government.

Approaches vary by country and buyer. Canada's federal policy, for example, generally favours the contractor owning IP created under a contract, with exceptions, while many other buyers take ownership of bespoke work.

How to protect your background IP

  • List it in your bid if the tender asks or allows, naming the tools and components you'll bring.
  • Keep it separate in your code repositories, with clear licences.
  • License, don't assign. Offer the buyer a perpetual licence to use your background IP as part of the solution.
  • Ask a clarification question if the clause seems to capture your existing products.

SaaS and products

If you sell a software product or SaaS, the buyer usually gets a licence or subscription, not ownership. Make sure the contract says so, and check clauses about source code escrow and what happens if you stop trading. See SaaS terms for public sector buyers.

Moral rights and third-party code

Some contracts ask you to waive moral rights and confirm you have the right to use every third-party component. Keep a list of open-source libraries and their licences.

Common questions

Does the government own the software I build for them?

It depends on the contract. Many buyers own bespoke work, some take only a licence, and some require you to open-source it. Read the IP clause before you bid.

Can I reuse code I wrote for a government client?

Only if the contract allows it, for example if you own the IP or the buyer has released it under an open-source licence.

What is background IP?

It's intellectual property that existed before the contract, such as your own tools and products. Good contracts let you keep it while licensing it to the buyer.

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