Assignment vs licence — ownership vs permission
The two are routinely confused, and the difference is everything. An assignment makes the assignee the owner: it can use, modify, sell, license, and sue on the IP without ever asking the original creator again. A licence leaves ownership where it was and grants permission on whatever terms the owner sets — and a permission can be limited, conditional, or (depending on its terms) revocable, and is exposed to the licensor's insolvency. When investors, acquirers, or enterprise customers ask whether you "own your IP", a stack of licences is not the answer they are looking for; they want assignments.
South African law makes the formality unforgiving. Under section 22(3) of the Copyright Act 98 of 1978, an assignment of copyright is not valid unless it is in writing and signed by or on behalf of the assignor. Payment of the full development fee transfers nothing. A line on an invoice transfers nothing. "We always understood the company owned it" transfers nothing. If the document does not exist, the ownership did not move — and for a software business, that means the company may not own its own product.
The control test: who owns code nobody assigned
Computer programs are their own category of protected work under section 2(1)(i) of the Copyright Act — expressly not "literary works", unlike the UK position. That matters because the Act gives computer programs their own authorship rule: the author — and therefore the first owner — is the person who exercised control over the making of the program (section 1(1)), not necessarily the programmer who typed the code, and not the party who paid for it.
Haupt v Brewers Marketing Intelligence 2006 (4) SA 458 (SCA)
The Supreme Court of Appeal applied the control test and held that a commissioning customer who instructed, directed and controlled a programmer's work owned the copyright in the resulting program — with no written assignment at all. The hands-on client was the "author" because the client controlled the making.
The flip side is just as sharp: an arms-length development house that runs the build its own way — its own team, its own methods, its own decisions — is usually the author and first owner, even though the client paid for every line. A client who hands over a brief and waits for delivery generally owns nothing.
The trap is that nobody knows which side of the line a project falls on until a court decides — the test turns on the facts of each engagement. Note too that section 21(1)(c), the commissioned-works rule, is no help for software: its closed list covers photographs, portraits, gravures, films and sound recordings, not computer programs. Neither the client nor the developer should be willing to bet the product on the default position. The written assignment exists so that neither has to.
The three assignments every SA tech company needs
Founder IP assignment on incorporation
Everything a founder builds before the company exists — code, brand, designs, the pitch deck — belongs to the founder personally until it is assigned. Incorporating the company does not move it. A founder IP assignment signed on (or backdated by agreement to) day one transfers the pre-incorporation work into the company, so the company actually owns the product investors think they are buying into.
Contractor assignments in every services agreement
Every development, design, or consulting agreement should contain an assignment of all IP in the deliverables — typically effective on payment, so the contractor keeps leverage until paid and the client takes clean ownership the moment it pays. Without it, ownership turns on the fact-specific control test, which neither side should be willing to litigate.
The employee position — automatic, but draft anyway
Section 21(1)(d) of the Copyright Act vests copyright in the employer automatically where a work is made by an employee in the course of employment under a contract of service. But the boundary is contested terrain: after-hours work, side projects, personal equipment, and hybrid roles all generate scope disputes. An express IP clause in every employment contract settles the boundary before it is tested.
The first two are where due diligence fails. Use our free founder IP assignment template to close the incorporation gap, and our free independent contractor agreement template — which builds the section 22(3) assignment in — for every freelancer and dev shop you engage.
The seven clauses of a watertight assignment
Description of the assigned works
Identify what is being assigned with enough precision that a stranger could point to it: the repositories, the product, the brand assets, the documentation. Vague catch-alls are construed against the assignee; schedules and repository references are construed for them.
All IP rights — not just copyright
Assign copyright, but also patent rights and applications, trade marks, designs, database and confidential-information rights, and rights of action for past infringements. Code rarely travels alone — the surrounding know-how and brand must move with it.
Effective date and payment-vesting
State exactly when ownership moves. Founder assignments transfer immediately; contractor assignments usually vest on payment for each deliverable, protecting the contractor against non-payment and the client against half-owned code.
Moral-rights waiver (section 20)
Moral rights — attribution and the right to object to derogatory treatment — cannot be assigned, only waived in writing. Without a waiver, an author could later object to how the company modifies or rebrands the work.
Warranties of originality and no encumbrance
The assignor warrants that the work is original, that it has the right to assign, that no third party has been granted conflicting rights, and that no open-source licence or prior agreement encumbers what is being transferred.
Further assurances
An obligation on the assignor to sign whatever additional documents are needed to perfect the assignment in other jurisdictions — many foreign registries and acquirers require local-form confirmatory assignments years later, when the assignor may be long gone or unwilling.
Licence-back where the assignor needs continued use
Where a development house assigns bespoke deliverables but needs to keep using its generic tools and libraries, a clearly-scoped licence-back (or a background-IP carve-out) keeps the deal workable without diluting the client's ownership of the bespoke work.
Cross-border assignments
Assigning South African IP to a non-resident is not just a drafting exercise — it engages South Africa's exchange control regime. The export of IP from South Africa is regulated, and SARB approval requirements can apply before the assignment may lawfully be implemented. This catches the structures SA tech companies most often want: the "flip" of a startup's IP up to a foreign holding company ahead of an international raise, the sale of IP into an offshore acquirer, and group restructures that move ownership outside the Republic.
The overlay is technical, the rules have shifted over the years, and an assignment implemented without the required approval puts the transfer itself at risk — which is precisely the kind of defect a buyer's due diligence team is paid to find. If your assignment crosses the border, take specialist advice before anyone signs. We advise on the exchange-control overlay as part of every transaction assignment we draft.
Frequently asked
What makes an IP assignment legally valid in South Africa?
For copyright, section 22(3) of the Copyright Act 98 of 1978 requires the assignment to be in writing and signed by or on behalf of the assignor. A verbal agreement, an email exchange, an invoice line item, or full payment of the development fee transfers nothing. The written assignment should also clearly identify the works, the rights assigned, and the territory — ambiguity is construed against the assignee.
Who owns the code I paid a contractor to write?
Not automatically you. The author of a computer program — and therefore the first owner — is the person who exercised control over the making of the program (section 1(1)). In Haupt t/a Soft Copy v Brewers Marketing Intelligence 2006 (4) SA 458 (SCA), a hands-on commissioning customer who directed the development owned the copyright with no assignment at all; an arms-length development house that runs its own build usually owns the code even though the client paid for it. Because the line is drawn on the facts of each project, the only safe answer is a written assignment signed by the contractor.
Does work my employees create automatically belong to the company?
Generally yes. Section 21(1)(d) of the Copyright Act vests copyright in the employer where the work is made by an employee in the course of employment under a contract of service. The disputes happen at the boundary — code written after hours, side projects, personal equipment, and work outside the employee's defined duties. An express IP clause in the employment contract settles where the boundary sits.
Can I assign IP that does not exist yet?
Yes. South African law recognises prospective assignments of future copyright — an assignment of copyright in works still to be made is effective, and the copyright vests in the assignee when the work comes into existence. The practical requirement is description: the agreement must describe the future works clearly enough to identify them (for example, all deliverables produced under a defined services agreement). This is how contractor agreements assign each sprint's output before a line of it is written.
What is a moral-rights waiver and why does my assignment need one?
Section 20 of the Copyright Act gives an author moral rights — the right to be identified with the work and to object to derogatory treatment of it. Moral rights cannot be assigned; they stay with the author even after a full copyright assignment. They can, however, be waived in writing, and a well-drafted assignment includes a waiver so the author cannot later object to the company modifying, rebranding, or extending the work without attribution.
Does assigning IP to an offshore company need approval?
It can. An assignment of South African intellectual property to a non-resident engages South Africa's exchange control regime, and SARB approval requirements can apply before the transfer may lawfully be implemented. This catches the classic "flip" — assigning the SA company's IP up to a foreign holding company — as well as offshore sale transactions. The overlay is technical and the consequences of getting it wrong are serious, so take specialist advice before signing; we advise on the exchange-control overlay as part of transaction assignments.
Is an IP assignment the same as "work for hire"?
No. "Work made for hire" is a United States doctrine under which commissioned works can vest automatically in the commissioning party. South African law has no equivalent — a US-style work-for-hire clause pasted into an SA agreement does not vest anything. SA law reaches commissioning through the control test for computer programs, and section 21(1)(c)'s commissioned-works rule covers a closed list (photographs, portraits, gravures, films, sound recordings) that does not include computer programs. The reliable route to ownership is an express written assignment under section 22(3).
What does an IP assignment agreement cost?
Founder-to-company and contractor assignments from R6,500 — a fixed fee covering the assignment, moral-rights waiver, warranties, and further-assurances machinery. Deal-driven assignments (acquisitions, asset sales, group restructures, offshore flips) from R12,500, scoped to the transaction and including the exchange-control analysis where the assignee is a non-resident.