IP Ownership in Project-Based Roles

1. Meaning

IP ownership in project-based roles concerns determining who owns intellectual property created by an employee, consultant, freelancer, contractor, or project-based worker during the course of a particular assignment.

Project-based work commonly involves the creation of:

• software and source code;
• UI/UX designs and prototypes;
• graphic designs, animations and motion graphics;
• photographs and videos;
• technical drawings;
• architectural plans;
• inventions and technological developments;
• reports, research and databases;
• marketing material;
• literary and artistic works; and
• business processes or other commercially valuable creations.

The central legal question is:

Does the person who physically created the work own the intellectual-property rights, or do those rights belong to the company/client that commissioned or employed that person?

The answer depends upon the type of IP, applicable statute, employment/contractual relationship, terms of the agreement, circumstances of creation, and applicable law.

2. IP ownership is different from authorship

One of the most important distinctions is between creation/authorship and ownership.

For example, a designer may personally create a logo, animation or interface design. That designer may be the original author of the work, but contractual terms or statutory rules may determine that the employer or client becomes the copyright owner.

Similarly, an employee may invent something, but the question of patent ownership may depend upon:

• the employment contract;
• assignment provisions;
• whether the invention was made in the course of employment;
• confidentiality obligations;
• applicable patent law; and
• whether the employer actually obtained an assignment.

Therefore:

Creator ≠ necessarily ultimate IP owner.

3. Project-based employment creates particular problems

Traditional permanent employment usually has established HR policies dealing with IP.

Project-based engagements are more complicated because there may be several parties:

Client → Company/Agency → Project Team → Employee/Freelancer/Consultant

For example:

A company receives a contract to develop an app for Client A. A UI designer creates the interface, a developer writes the source code, and a freelancer creates animations.

Several potential claims can arise:

1. Does the designer own the UI?
2. Does the developer own the source code?
3. Does the agency own the work?
4. Does the client automatically own it?
5. Was ownership assigned through the project contract?
6. Can the creators reuse their work in portfolios?
7. Can the company reuse the work for another client?
8. Does the freelancer retain underlying tools or templates?
9. What happens to work created before the project?
10. Who owns improvements made after the project ends?

These questions should ideally be answered before the project begins.

4. Indian statutory framework

A. Copyright Act, 1957

Copyright protection is particularly important for project-based creative work.

Section 17 of the Copyright Act deals with the first owner of copyright.

The general principle is that the author is the first owner, but the statute contains important exceptions.

For example, in certain circumstances involving an employee and work created in the course of employment, the employer may be treated as the first owner, subject to the statutory provisions.

This is highly relevant to:

• designers;
• programmers;
• content creators;
• animators;
• photographers;
• writers;
• developers; and
• other creative employees.

However, the precise contractual arrangement remains extremely important.

5. Employee versus independent contractor

A major distinction is whether the person is an employee or an independent contractor.

Employee

Where an employee creates work in the course of employment, statutory rules and the employment agreement may result in the employer owning the copyright.

Independent contractor

The position can be different for an independent contractor.

Simply paying someone to create a work does not necessarily mean that every IP right automatically transfers to the commissioning party.

An effective agreement should therefore expressly address:

• ownership;
• assignment;
• licence;
• duration;
• territory;
• permitted uses;
• modification rights;
• sublicensing;
• portfolio rights; and
• rights in underlying materials.

This is particularly important for freelancers and consultants.

6. Assignment of copyright

Section 18 of the Copyright Act deals with assignment of copyright.

A project agreement can therefore expressly transfer specified copyright interests from the creator to another party.

Section 19 establishes important requirements concerning assignments.

An assignment should clearly identify matters such as:

• the work;
• rights being assigned;
• duration;
• territorial extent;
• consideration/royalty;
• and other applicable terms.

A vague clause such as:

"All intellectual property belongs to the company."

may generate disputes if it does not sufficiently identify what is being transferred and under what circumstances.

7. Moral rights

Copyright ownership does not completely eliminate the creator's relationship with the work.

Section 57 of the Copyright Act recognizes special rights of the author, commonly referred to as moral rights.

These include rights concerning:

• attribution/authorship; and
• protection against certain distortions or modifications prejudicial to the author's honour or reputation.

Consequently, an organisation should not assume that acquiring economic copyright rights necessarily eliminates every right of the individual creator.

8. Confidentiality and IP ownership are separate

Another common mistake is treating confidentiality as equivalent to ownership.

Consider a developer who creates source code for a company.

The contract may contain:

1. confidentiality obligations;
2. copyright assignment;
3. trade-secret protection;
4. restrictions on disclosure; and
5. post-project obligations.

These are legally different concepts.

Confidentiality prevents unauthorised disclosure.

IP ownership determines who possesses the relevant proprietary rights.

Both should therefore be addressed independently.

9. Pre-existing IP

Project-based contracts should distinguish between:

Background IP

IP that existed before the project.

Examples:

• existing code libraries;
• design systems;
• templates;
• fonts;
• animation presets;
• photographs;
• proprietary algorithms;
• software frameworks.

Project IP

IP specifically developed during the project.

Failure to distinguish these categories can create major disputes.

For example:

A developer uses an existing software library while developing new software for a client.

The client may receive rights over the newly developed software without necessarily acquiring ownership of the developer's pre-existing library.

A good agreement should therefore contain a background-IP clause.

10. Third-party IP

Project-based workers frequently use third-party materials.

Examples include:

• stock images;
• fonts;
• open-source software;
• music;
• plugins;
• templates;
• APIs;
• AI-generated materials;
• code libraries.

The project creator cannot necessarily transfer rights that they do not possess.

Therefore, a contract should require disclosure of third-party materials and compliance with their licences.

11. Portfolio rights

Portfolio rights are particularly important for designers and developers.

Suppose a freelancer creates:

• a website;
• animation;
• logo;
• mobile application;
• advertising campaign.

The client receives ownership but the creator wants to display the work in a portfolio.

These are separate rights.

A contract can expressly provide:

"The creator may display completed project materials in a professional portfolio after public release, subject to confidentiality restrictions."

Without an appropriate clause, portfolio use can potentially conflict with confidentiality or copyright restrictions.

12. Employee-created versus personally created IP

An employee may create work:

During working hours

The employer's rights are more likely to arise under applicable employment and copyright principles.

Using company resources

This strengthens the employer's contractual argument, although use of company equipment alone does not automatically answer every ownership question.

Completely outside employment

The analysis can be different, especially where the work is unrelated to the employee's duties.

Using pre-existing personal material

The creator may retain rights in the underlying material depending on the contract and circumstances.

This is why broad clauses claiming:

"Everything you create while employed belongs to the company."

can create disputes if drafted without appropriate boundaries.

13. Six important Indian case laws

1. Indian Performing Right Society Ltd. v. Eastern India Motion Pictures Association

(1977) 2 SCC 820

This is an important Supreme Court decision concerning copyright ownership in the context of cinematographic works and underlying works.

The Court considered the relationship between copyright in underlying artistic/musical/literary works and the copyright in a cinematograph film.

Relevance to project-based roles

The case demonstrates that when several creative contributors participate in a larger project, it is important to identify:

• the underlying work;
• the rights in that work;
• the rights in the final project; and
• the statutory rules governing ownership.

This principle is relevant to collaborative projects involving designers, writers, composers, developers and production teams.

14. Eastern Book Company v. D.B. Modak

(2008) 1 SCC 1

The Supreme Court considered the originality requirement for copyright protection.

The Court examined whether editorial contributions to judicial material could receive copyright protection.

Principle

Copyright protection requires an appropriate degree of original intellectual effort, rather than merely copying existing material.

Relevance to project-based workers

A project may contain both:

• pre-existing material; and
• newly created original material.

Ownership analysis therefore requires identifying what the worker actually created and whether it constitutes protectable expression.

For example, a designer's original graphic treatment may be distinguishable from generic design elements or pre-existing assets.

15. R.G. Anand v. Deluxe Films

(1978) 4 SCC 118

This Supreme Court case is a leading authority on the distinction between idea and expression.

The Court held that copyright protects expression and not ideas themselves.

Relevance

Project-based workers frequently develop ideas jointly.

For example:

Client provides an idea for an advertising campaign → designer develops visual execution.

The client may have contributed the concept, while the designer created the expression.

Therefore, an IP agreement should clearly identify:

• concepts;
• deliverables;
• underlying creative material;
• final outputs; and
• ownership rights.

16. Saregama India Ltd. v. Next Radio Ltd.

The Supreme Court has considered copyright licensing and the scope of rights in creative works in the context of exploitation of copyrighted material.

Relevance to project-based roles

The broader lesson is that copyright involves a bundle of rights rather than merely physical ownership of a file or object.

For example:

Receiving the editable Photoshop file does not automatically answer every question concerning the copyright in the underlying artwork.

Likewise:

Receiving source code does not necessarily resolve every question concerning third-party libraries incorporated into that code.

17. Engineering Analysis Centre of Excellence Pvt. Ltd. v. Commissioner of Income Tax

(2021) 432 ITR 471 (SC)

The Supreme Court considered the taxation treatment of payments relating to software and distinguished different types of software transactions.

Although the case was primarily a tax case, it is relevant to understanding the legal distinction between:

• ownership of software;
• rights to use software; and
• licensing arrangements.

Relevance

Project contracts should distinguish between:

assignment of IP and licensing of IP.

A client may receive merely a licence to use software rather than complete ownership.

18. CIT v. Oracle Software India Ltd.

(2010) 320 ITR 546 (SC)

The Supreme Court considered the character of software and the process involved in software-related activities.

While not primarily an employee-IP ownership dispute, it demonstrates the importance of distinguishing between:

• the underlying intellectual property;
• physical copies;
• software products; and
• rights associated with their use.

Project relevance

A project agreement should specify whether the client receives:

• source-code ownership;
• object-code rights;
• a perpetual licence;
• a limited licence;
• modification rights; or
• sublicensing rights.

19. Amar Nath Sehgal v. Union of India

2005 (30) PTC 253 (Delhi)

This is one of India's leading cases concerning moral rights under Section 57 of the Copyright Act.

The dispute concerned the destruction and treatment of an important artistic work.

The Delhi High Court recognized the continuing importance of the author's special rights in relation to the integrity of the work.

Importance for project-based roles

This case is particularly significant for:

• artists;
• designers;
• architects;
• illustrators;
• photographers;
• filmmakers; and
• other creative professionals.

A company acquiring economic rights should carefully consider the creator's moral rights.

20. Mannu Bhandari v. Kala Vikas Pictures Pvt. Ltd.

1987 SCC OnLine Del 139

The Delhi High Court dealt with issues concerning adaptation and the author's rights in relation to a literary work.

The case is relevant to the distinction between acquiring rights in a work and making subsequent changes or adaptations.

Project-based relevance

When a company commissions creative work, the agreement should address whether the client may:

• edit;
• modify;
• adapt;
• translate;
• combine;
• reproduce; or
• create derivative versions

of the work.

This is especially important in design, advertising, film, publishing and digital-content projects.

21. Case-law principles at a glance

22. Copyright versus patent ownership

Project-based employment becomes more complicated where the worker creates an invention.

Copyright protects expression such as:

• code;
• graphics;
• written material;
• artistic work.

Patent law concerns inventions satisfying the statutory requirements for patentability.

Therefore, a contract dealing with software development should ideally address both:

Copyright → source code and other copyrightable material

Patent → potentially patentable technical inventions

An IP clause should not assume that a generic "copyright ownership" clause resolves patent ownership.

23. Trade secrets and confidential information

Project workers may obtain access to:

• customer databases;
• algorithms;
• pricing information;
• product roadmaps;
• source code;
• business strategies;
• technical specifications.

These may be valuable even if they are not registered IP.

Contracts should therefore separately address:

• confidentiality;
• permitted use;
• disclosure;
• return/deletion of information;
• security obligations; and
• post-project restrictions.

24. Open-source software

Software projects create an additional complication.

Suppose a developer creates proprietary software but incorporates an open-source component.

The developer cannot simply transfer ownership of the open-source component to the client.

The relevant open-source licence may impose obligations concerning:

• attribution;
• redistribution;
• source-code disclosure;
• modification;
• licence compatibility.

Therefore, project contracts should contain an open-source compliance provision.

25. AI-generated project materials

Modern project-based roles also raise questions concerning AI-assisted creation.

For example:

A designer uses an AI tool to generate an initial visual concept and subsequently creates a final design.

The agreement should clarify:

• whether AI tools may be used;
• who bears responsibility for third-party rights;
• whether confidential project information may be entered into AI systems;
• what human-created contribution is being delivered;
• ownership of resulting materials; and
• whether the client requires disclosure of AI use.

The legal status of AI-generated material can depend on the specific facts and applicable law, so contractual clarity is particularly important.

26. Important contractual clauses

A well-drafted project agreement should ideally contain the following provisions.

1. Definition of IP

Define what constitutes:

"Intellectual Property Rights"

including copyright, patents, designs, trademarks, trade secrets and other applicable rights.

2. Project IP

Identify exactly what constitutes project-created IP.

3. Ownership

State who owns the project IP.

4. Assignment

Provide an appropriate assignment mechanism where required.

5. Pre-existing IP

Identify the creator's background IP.

6. Licence

Where background IP is necessary for the project, provide the client/company with an appropriate licence.

7. Third-party materials

Require disclosure and appropriate licensing.

8. Moral rights

Address applicable statutory rights appropriately.

9. Portfolio use

Specify whether the creator can showcase the project.

10. Confidentiality

Protect non-public project information.

11. Return/deletion

Specify what happens to project files when the engagement ends.

12. Post-project use

Specify whether the creator can reuse:

• templates;
• generic techniques;
• code;
• design components;
• processes; or
• know-how.

27. Example

Suppose a company hires a freelance designer for a three-month campaign.

The freelancer creates:

• 20 social-media graphics;
• five animations;
• a brand illustration;
• an editable design system.

The freelancer also uses:

• their own pre-existing animation presets;
• licensed fonts; and
• stock photographs.

The agreement should distinguish:

Project deliverables
→ potentially assigned/licensed to the client.

Pre-existing animation presets
→ remain the freelancer's property.

Stock photographs
→ subject to third-party licences.

Fonts
→ governed by applicable font licences.

Final campaign graphics
→ ownership determined by the project agreement and applicable law.

Portfolio use
→ expressly permitted or restricted by contract.

This prevents the simplistic assumption that:

"The client paid for it, so the client automatically owns everything."

28. Common disputes

Dispute 1: Employee leaves the company

The employee claims:

"I created the designs, so I own them."

The employer responds:

"You created them as part of your employment."

The outcome depends on the statutory framework and contractual circumstances.

Dispute 2: Freelancer refuses to transfer source files

The client says:

"We paid for the project."

The freelancer says:

"You only purchased the final deliverables."

The answer depends heavily on the agreement.

Dispute 3: Designer uses client work in portfolio

The client argues:

"The work is confidential."

The designer argues:

"I created it."

The agreement should determine portfolio rights and confidentiality obligations.

Dispute 4: Company reuses a freelancer's template

The freelancer claims:

"The template existed before this project."

The company claims:

"We paid for the design."

This is precisely why background IP must be separated from project IP.

29. Practical checklist

Before starting a project, parties should ask:

Ownership

• Who owns the final deliverables?
• Is ownership automatic or transferred by assignment?
• When does ownership transfer?

Creator

• Is the person an employee, consultant or freelancer?
• Who is the legal author/creator?

Existing IP

• What did the creator already own?
• Are pre-existing materials being incorporated?

Third parties

• Are stock assets being used?
• Is open-source software involved?
• Are third-party licences transferable?

Rights

• Can the client modify the work?
• Can it sublicense the work?
• Can it commercially exploit it?
• Can it create derivative works?

Creator rights

• Can the creator display the work in a portfolio?
• What moral rights remain applicable?

Confidentiality

• What information must remain confidential?
• What happens when the project ends?

Exit

• Who retains source files?
• Must files be returned or deleted?
• Can the creator reuse generic know-how?

30. Conclusion

IP ownership in project-based roles cannot safely be determined merely by asking who physically created the work or who paid for it.

The analysis generally requires consideration of:

1. the nature of the IP;
2. employee versus contractor status;
3. statutory ownership rules;
4. contractual assignment provisions;
5. pre-existing IP;
6. third-party materials;
7. licences;
8. moral rights;
9. confidentiality; and
10. the precise scope of the project.

For Indian employment and project arrangements, Sections 17–19 and Section 57 of the Copyright Act, 1957 are particularly important for copyright-related work. A carefully drafted agreement should expressly distinguish project IP, background IP and third-party IP, while also specifying assignment, licensing, portfolio and confidentiality rights.

The case law—from R.G. Anand and Eastern Book Company to Amar Nath Sehgal and Engineering Analysis Centre—illustrates why ownership, authorship, originality, licensing and moral rights should not be treated as interchangeable concepts.