In Australia, the developer owns it unless your contract assigns it to you in writing. There is no work for hire rule for contractors here, so paying the invoice does not transfer copyright. And there is a second problem almost nobody checks: where code was generated by AI with no real human authorship, Australian courts have held there may be no copyright in it at all. Nothing to assign, and nothing stopping a competitor copying it. Both are contract problems. Both are cheap to fix before you sign.

The default nobody expects

Under the Copyright Act 1968, the author of a work is the first owner of copyright in it. There is one big exception: work made by an employee in the course of their employment belongs to the employer.

Notice what is missing. There is no exception for work you commissioned and paid for. So when an agency, a contractor or a freelance developer writes code for you, they are the author, they are the first owner, and the money changing hands does not move the copyright. An assignment of copyright has to be in writing and signed to be effective.

Which produces the situation we see regularly: a company has paid six figures for a system, uses it every day, believes it owns it, and holds a contract that never mentions intellectual property. It comes up most often on custom work, which is worth reading alongside when to stop configuring HubSpot and start writing code.

You usually still have an implied licence to use the thing. An implied licence is not ownership. It will not let you sell the business with the system as an asset, hand the code to a different developer, or stop the original developer reusing it for your competitor.

Why the American answer is the wrong one

Ask a search engine or an assistant this question and there is a good chance you get the US framing, because that is what most of the internet is written about. "Work for hire" is an American concept, and the loose version of it that circulates online, that whoever paid owns the output, is not Australian law.

This is a topic where the confident overseas answer is the opposite of the local one, and acting on it costs real money. If your contract was drafted from a US template, read the IP clause twice.

We are not lawyers and this is not legal advice. It is the pattern we keep finding in build contracts, which is worth knowing before you get to the part where it matters.

The second problem: AI output might belong to nobody

Australian courts have been unusually clear that copyright needs a human author.

In Telstra Corporation Ltd v Phone Directories Company Pty Ltd [2010] FCAFC 149 the Full Federal Court held that copyright cannot subsist in a work unless it was created through the "independent intellectual effort" of a human author. Telstra could not identify the authors of its own directories, because large parts had been generated by a computerised process. No human author, no copyright. The Full Court reached similar conclusions about software generated source code in Acohs Pty Ltd v Ucorp Pty Ltd [2012] FCAFC 16, and the High Court reasoning in IceTV Pty Ltd v Nine Network Australia Pty Ltd [2009] HCA 14 points the same way.

Now apply that to 2026, when a meaningful share of the code in any new build came out of a model.

If a developer prompted an AI, reviewed the output, restructured it, made judgement calls about architecture and fixed what was wrong, there is human intellectual effort and you are probably fine. If code was generated wholesale and committed with a glance, the honest answer is that it may not be protected by copyright at all.

That cuts both ways, and the second way is the one people miss. Unprotected code is not just awkward to assign. It is also code your competitor can lift with no copyright consequence.

What that actually means in practice

For most Australian mid-market buyers, three consequences matter.

Your assignment clause may be assigning nothing. A clause that transfers "all intellectual property in the work" cannot transfer copyright that never existed. This is not a reason to drop the clause. It is a reason to add the ones below.

Due diligence will find it. In a raise or a sale, buyers ask who owns the code. "Our agency built it and we assume we own it" is a finding. It gets fixed under time pressure at your cost, and sometimes with a payment to the original developer who has just worked out they hold the cards.

This is also the unglamorous half of the build versus buy decision, which we walk through in where AI budgets get wasted.

Your moat may be thinner than your pitch deck says. If the differentiated part of your product is generated code with no human authorship, you have a working product and not much of a legal barrier around it. Your moat is your data, your integrations and your operational knowledge, which is fine, as long as you know that is what you are relying on.

The law here is moving, and in one direction

Copyright and AI is under active review in Australia, which matters if you are signing a multi-year build.

In October 2025 the Attorney-General ruled out introducing a text and data mining exception to copyright infringement, stating the government has no plans to weaken copyright protections when it comes to AI. That settles a question a lot of AI vendors had been hoping would go the other way. The Attorney-General's Department is instead working through the Copyright and Artificial Intelligence Reference Group on whether a paid collective licensing framework should exist for AI training material, or whether voluntary licensing continues.

In July 2026 the Prime Minister signalled copyright reforms aimed at ensuring Australian creators' work cannot be used without permission to train AI systems. And the Joint Select Committee on Artificial Intelligence, appointed on 20 August 2026, is explicitly reviewing whether copyright and intellectual property law is adequate. It reports on 30 November 2026.

None of that changes the two points above. The contractor default and the human authorship requirement are both current law and neither is under threat. What it does mean is that if your build involves training on material you do not own, the ground is likely to get firmer rather than looser, and a contract that assumes an exception will arrive is a bet against the stated position of the government.

Five clauses to read before you sign

  1. Present assignment of copyright, in writing. It should assign copyright in the work to you, signed, and cover future work rather than only what exists at signing. If the word copyright does not appear, that is your first problem.
  2. Human authorship and AI disclosure. Require the developer to tell you where AI generated material sits in the codebase and to warrant that the work involved their own intellectual effort. This is the clause almost no 2026 contract has, and it is the one that makes the assignment mean something.
  3. Third party and open source components. You cannot be assigned what the developer licensed from someone else. Ask for a list, with licences. Copyleft licences in a product you plan to sell are a genuine problem, not a formality.
  4. Moral rights consent. Moral rights stay with the human author in Australia and cannot be assigned. You want a written consent so that using, changing or rebranding the work is not an infringement of them.
  5. Escrow or source access on exit. Ownership is worth little if you cannot get the current source. Tie it to a repository you control, not a promise to hand it over later.

What we do on client builds

We build in a way that makes this boring, which is the point.

  • The client's repository, from commit one. Not ours with a copy handed over at the end. If a build ever needs to move to another partner, the history moves with it.
  • AI generated code goes through a human. Reviewed, restructured, and understood by the person who commits it. We do that because unreviewed generated code is a defect risk, and the authorship position is a useful second reason.
  • We name the third party components. Every dependency and its licence, written down where the client can find it, so an assignment clause is not quietly overstating what we can give.
  • We put the ownership question in the kickoff, not the contract review. It takes five minutes at the start and turns into a negotiation at the end.

The short version for whoever signs the contract

Paying for a build does not make you the owner in Australia. Get a written, signed assignment of copyright, and make sure it covers work not yet created. Then ask the question nobody asks: how much of this was generated, and by whom. If the answer is "mostly the model, lightly reviewed", your assignment clause is thinner than it reads, and the fix is a warranty about human authorship rather than a stronger transfer of something that may not exist.

If you already have systems built and no IP clause, that is worth sorting now, while the relationship is good and the developer has no particular reason to be difficult about it.

Frequently asked questions

We used our own employees. Do we own it? Generally yes. Work made by an employee in the course of their employment belongs to the employer under the Copyright Act. The trap is the person you call an employee who is legally a contractor, which is a question about the working relationship rather than the label on the invoice.

Can we just add an IP clause to a contract we already signed? You can sign a separate deed of assignment covering existing work, and developers usually agree while the relationship is healthy. It is much harder once there is a dispute, a sale in progress, or the developer has moved on.

Does anyone own AI generated code, then? Possibly nobody, in copyright terms, where there is no human intellectual effort behind it. You can still control it in practice through confidentiality, access, and contract. You just cannot rely on copyright to stop a copier.

What about patents on an AI created invention? Australian courts have held that an AI system cannot be named as an inventor under the Patents Act, so an invention needs a human inventor. If patents matter to your build, get advice early rather than at filing.

Sources

  • Copyright Act 1968 (Cth), sections 35 and 196. First ownership, the employment exception, and the requirement that an assignment be in writing.
  • Telstra Corporation Ltd v Phone Directories Company Pty Ltd [2010] FCAFC 149. Copyright requires the independent intellectual effort of a human author.
  • Acohs Pty Ltd v Ucorp Pty Ltd [2012] FCAFC 16. The same reasoning applied to software generated source code.
  • IceTV Pty Ltd v Nine Network Australia Pty Ltd [2009] HCA 14. The High Court on originality and authorship.
  • Attorney-General's Department, Copyright and Artificial Intelligence Reference Group. Ongoing consultation on licensing models for AI training material.
  • Joint Select Committee on Artificial Intelligence, appointed 20 August 2026, reporting 30 November 2026.

Most ownership problems we find were created by a contract nobody read closely and a repository nobody asked about. If you are not sure who owns what you are running, give us a shout and tell us what's broken.