You’ve found a talented freelancer. You’ve agreed on a rate and a deadline. You’ve got a project brief ready. But do you have a properly written agreement outlining the use and ownership of your valuable IP.
This is a common and expensive mistakes many Australian founders make. While you may pay a contractor to build you a website, a mobile app, a logo or a brand identity and because you have paid them, you assume you own the work. Unfortunately, under Australian law, that assumption is not always correct.
Without specific IP clauses in these contractor agreement, the person you hired may legally own the work they created for you. And by the time you discover this, usually when you try to sell your business, raise investment, or take action against a copycat, fixing it is complicated, costly, and sometimes impossible.
This article walks you through essential IP clause you should include in any agreement you have with a third party contractyou, why it matters, and what it should actually say.
Why Founders Get This Wrong
The confusion stems from a common misconception: that paying for work means owning it. In employment relationships, this is largely true whereby work created by an employee in the course of their employment generally belongs to the employer.
But contractors are not employees. Under the Copyright Act 1968 (Cth), copyright in a commissioned work is generally owned by the creator, not the person who commissioned it unless of course there is a written agreement to the contrary.
The same principle applies to other forms of IP: inventions, software, trade secrets, and more.
What this looks like in practice:
| Scenario | Default outcome (no IP clause) | Risk |
| Hired a freelancer to build your website | Freelancer owns the code unless assigned in writing | ⚠ High |
| Commissioned a logo design | Designer retains copyright; you have a licence at best | ⚠ High |
| Brought on a dev contractor to build your SaaS | They may own the core IP you’re selling | ⚠ High |
| Got a contractor to write your brand copy | Writer owns copyright; not you | ⚠ High |
| All of the above WITH written IP assignment clause | You own everything created for your business | ✅ Protected |
Every scenario above , except the last, reflects the legal default under Australian law when there is no written agreement between the contractor and business owner. The contractor created it; the contractor owns it.
The IP Clauses You Need in Every Contractor Agreement
Below are some important clauses to include in any agreement with a contractor, consultant, or freelancer who will be creating anything of value for your business.
Clause 1 — IP Ownership Assignment
This is one of the most important clauses in the agreement with the contractor. It transfers ownership of everything the contractor creates for you to your business.
Why it matters: Without this clause, the contractor owns the copyright and potentially other IP in the work they’ve created for you. You may have a licence to use it, but you don’t own it and that distinction becomes critical when you try to enforce rights, sell your business, or stop a competitor from copying your work.
What it should say:
All intellectual property rights (including copyright, trade mark rights, design rights, and patent rights) in any work, materials, inventions, or deliverables created by the Contractor in the course of performing services under this Agreement (“New IP”) are hereby assigned to [Company Name], effective from the date of creation.
Sample clause — seek legal advice to adapt this for your specific circumstances
Key watch-out: The assignment must be in writing and signed. An oral agreement is not sufficient to assign IP rights in Australia.
Clause 2 — Pre-Existing IP (Existing IP) Clause
Contractors often bring their own tools, code libraries, frameworks, templates, or methodologies to a project. These are their pre-existing intellectual property, called “existing IP” and you should not expect to own them.
Why it matters: Without this clause, there can be disputes about where the contractor’s pre-existing work ends and your commissioned work begins. If your product is built on a contractor’s proprietary framework and the relationship sours, they may be able to prevent you from using it.
What it should say:
The Contractor retains all rights in any intellectual property owned or developed by the Contractor prior to or independently of this Agreement (“Existing IP”). The Contractor grants [Company Name] a non-exclusive, royalty-free, perpetual licence to use any Existing IP incorporated into the deliverables to the extent necessary to use and exploit the deliverables.
Sample clause — seek legal advice to adapt this for your specific circumstances
Key watch-out: Make sure the contractor discloses all pre-existing IP they intend to incorporate into your project before work begins. Schedule this as an annexure to the agreement.
Clause 3 — Moral Rights Waiver
Under Australian law, creators have moral rights — the right to be attributed as author and the right to object to derogatory treatment of their work. These rights cannot be assigned, but they can be waived by the creator.
Why it matters: Without a moral rights waiver, a contractor could potentially object if you modify, rebrand, or adapt their work.
What it should say:
The Contractor unconditionally and irrevocably waives all moral rights (as defined in the Copyright Act 1968 (Cth)) in respect of any work created under this Agreement, including the right of attribution and the right of integrity, in favour of [Company Name] and its successors, assigns and licensees.
Sample clause — seek legal advice to adapt this for your specific circumstances
Clause 4 — Confidentiality / Non-Disclosure Clause
When you bring a contractor into your business, you inevitably share sensitive information: your business strategy, customer data, proprietary processes, unreleased product plans, trade secrets. A confidentiality clause protects all of it.
Why it matters: A contractor without a confidentiality obligation is free to share what they learn about your business with competitors, future clients, or the public. In competitive markets, this can be devastating.
What it should say:
The Contractor agrees to keep confidential all information received from [Company Name] that is identified as confidential or that ought reasonably to be understood to be confidential, and shall not disclose such information to any third party without prior written consent. This obligation survives the termination of this Agreement.
Sample clause — seek legal advice to adapt this for your specific circumstances
Key watch-out: Specify what counts as confidential information. Overly vague clauses can be difficult to enforce.
Clause 5 – Warranties of Originality and Non-Infringement
This clause requires the contractor to confirm that the work they deliver is original, that they have the right to create and assign it to you, and that it doesn’t infringe anyone else’s intellectual property.
Why it matters: If a contractor delivers work that infringes a third party’s IP for example, code that incorporates open-source software without proper licensing, or a logo that’s too similar to an existing registered trade mark, your business could face legal proceedings. This clause gives you a right of recourse against the contractor.
What it should say:
The Contractor warrants that: (a) the deliverables are original works created by the Contractor; (b) the Contractor has the full right and authority to assign the rights granted herein; (c) the deliverables do not infringe the intellectual property rights, moral rights, or other rights of any third party; and (d) the deliverables do not incorporate any open-source software except as disclosed in writing to [Company Name] prior to delivery.
Sample clause — seek legal advice to adapt this for your specific circumstances
Clause 6 – Indemnity for IP Infringement
Flowing naturally from the warranties above, an indemnity clause means the contractor is financially responsible if their work causes you an IP problem.
Why it matters: If you face a copyright or trade mark infringement claim because of something a contractor delivered, you want the contractor, not your business, to bear the costs of defending or settling that claim.
What it should say:
The Contractor shall indemnify and hold harmless [Company Name] from and against any losses, damages, costs (including legal costs on a solicitor-client basis), and liabilities arising from any claim by a third party that the deliverables infringe the intellectual property rights of that third party, provided that [Company Name] promptly notifies the Contractor of any such claim and gives the Contractor reasonable control over the defence.
Sample clause — seek legal advice to adapt this for your specific circumstances
Additional Clauses Worth Considering
Depending on your industry and the nature of the engagement, you may also want to include:
- Non-compete clause: Prevents the contractor from working for a direct competitor for a defined period after the engagement ends. Note: these must be carefully drafted to be enforceable in Australia overly broad non-competes are routinely struck down by courts.
- Non-solicitation clause: Prevents the contractor from approaching your clients or employees during and after the engagement.
- Portfolio licence-back: If the contractor is a designer, developer, or creative, they may want to use the work in their portfolio. You can permit this on limited terms for example, non-commercial display only without compromising your IP ownership.
- Governing law and jurisdiction: Specify which Australian state’s laws govern the agreement and which courts have jurisdiction. This matters especially when your contractor is in a different state or overseas.
What if You’ve Already Signed Contracts Without These Clauses?
If you’ve already engaged contractors without IP clauses, don’t panic, but do act. The longer you leave the gap unaddressed, the harder it becomes to retrospectively secure ownership.
There are a few options depending on your situation:
- Get a retrospective assignment. Ask the contractor to sign a deed of assignment transferring the IP to you. Many contractors will agree, especially if the relationship is good.
- Negotiate as part of final payment or ongoing work. If you’re still working with the contractor, use that as leverage to formalise ownership before the relationship ends.
- Audit your IP before a capital raise or exit. Investors and acquirers will conduct IP due diligence. Gaps in ownership especially in core product IP can derail a deal or dramatically reduce your valuation.
- Get legal advice. Every situation is different. An IP lawyer can assess what you own, what you don’t, and what steps will most cost-effectively close the gap.
Your IP Clause Checklist for Contractor Agreements
Use this checklist every time you engage a contractor for creative, technical, or strategic work:
| ✓ | Clause | What it does |
| □ | IP ownership assignment | Transfers all IP created under the contract to you |
| □ | Pre-existing IP (existing IP) clause | Contractor keeps their pre-existing tools; you keep new work |
| □ | Moral rights waiver | Lets you modify creative work without consent |
| □ | Confidentiality / NDA clause | Protects sensitive business information shared with contractor |
| □ | Non-compete / non-solicitation clause | Limits contractor from working for direct competitors or poaching clients |
| □ | Warranties of originality | Contractor confirms the work doesn’t infringe third-party rights |
| □ | Indemnity clause | You’re covered if the contractor’s work infringes someone else’s IP |
| □ | Licence-back clause (if needed) | Contractor retains limited rights to use the work in their portfolio |
| □ | Governing law clause | Specifies which state’s laws apply to the agreement |
If your current contractor agreement template doesn’t include all of these, it’s worth investing in a properly drafted template. One well-drafted agreement can protect years of business value.
Frequently Asked Questions
“Does this apply to overseas contractors too?”
Yes – and it’s even more important. When a contractor is based overseas, different copyright laws may apply and enforcement becomes significantly more complex. A clear written assignment in Australian-governed terms is essential for international engagements.
“What about contractors engaged through platforms like Upwork or Fiverr?”
Platform terms of service may provide some IP protections, but they are often limited and platform-specific. You should still have your own IP clause in any separate agreement or scope of work document, and many platforms allow you to do this.
“Do I need a lawyer to draft these clauses?”
Template agreements are widely available, but they come with real risks: they may not suit your specific industry, they may not be enforceable as written under Australian law, and they may contain gaps that only become apparent when something goes wrong. For anything beyond very simple engagements, professional legal advice is strongly recommended.
“What if the contractor refuses to sign an IP assignment clause?”
This is a red flag. A contractor who is unwilling to assign IP to you may be planning to reuse or repurpose your work for other clients. If they have genuine concerns, a well-drafted licence-back clause (for portfolio use, for example) is usually a reasonable compromise. If they still refuse, consider whether this is the right contractor for your business.
Protect the IP in Your Business Before It’s Too Late
At brandU Legal, we help Australian founders and businesses get their IP foundations right, from contractor agreements and IP audits to trade mark registration and enforcement. Whether you’re starting from scratch or reviewing existing contracts, we’re here to help.
Contact our team for a free discovery consultation.