Who Owns Your Startup's Source Code?

Source code ownership in Nepal is determined by the Copyright Act 2059 and employment contracts, not the Patent, Design and Trademark Act 1965. While copyright protects the code itself, securing exclusive rights to your software’s name and logo requires separate trademark registration with the Department of Industry.

Key Takeaways

• Nepal follows a "work for hire" doctrine where employers own code created during employment, provided a written agreement exists.
• The Copyright Act 2059 (2002) governs software code, while the PDTA 1965 covers brand identifiers like names and logos.
• Freelancers retain copyright ownership unless a specific assignment deed transfers rights to the startup; verbal agreements are insufficient.
• Trademarks protect the commercial identity of software products and require filing under NICE Class 9 or Class 42 with the DoI.
• Nepal is a first-to-file jurisdiction, meaning the first valid trademark application secures rights regardless of prior code creation.
• Disputes over code ownership are civil matters, whereas trademark infringement is handled administratively by the Department of Industry.

How does Nepali law define source code ownership?

Ownership vests initially in the author under the Copyright Act 2059, but transfers to employers for works made in the course of employment. For independent contractors, ownership remains with the developer unless explicitly assigned in writing. This distinction is critical because Nepal lacks a unified IP code; copyright and industrial property operate under separate statutes with different enforcement mechanisms.

Understanding source code ownership Nepal requires distinguishing between the creative work and the commercial asset. The Copyright Act 2059 (2002) treats computer programs as literary works. Section 6 establishes that the creator is the first owner of copyright. However, Section 7 creates a statutory exception for "works created in the course of employment." If a developer writes code as part of their job duties, the employer owns the economic rights automatically. This applies even without a written contract, though proving the scope of employment becomes difficult without one.

For startups hiring freelancers or outsourcing development, the default rule flips. The external developer retains full copyright unless they sign an assignment deed. A simple service agreement stating "work for hire" may not suffice under Nepali law if it lacks specific language transferring economic rights. Many founders assume paying an invoice transfers ownership; it does not. You need a dedicated intellectual property assignment clause or a separate deed of assignment to secure clean title to your codebase.

Why must tech startups register trademarks separately?

Trademark registration protects the brand identity distinct from the underlying code, governed by the Patent, Design and Trademark Act 1965. Copyright cannot prevent competitors from using similar app names or logos, making DoI registration essential for market exclusivity. Without it, you risk losing your brand name to a later filer despite owning the original software.

Owning the code gives you the right to copy and distribute the software, but it doesn't grant exclusive rights to the product name. In Nepal's first-to-file system, trademark rights belong to whoever files the first valid application with the Department of Industry, not necessarily the first user or code creator. If another entity registers your app's name before you do, they can legally block you from using it in commerce, regardless of who wrote the original source code.

This separation often confuses technical founders. You might spend months perfecting your algorithm while neglecting to clear the brand name. By launch, someone else could have already filed. Our team can help you conduct a preliminary clearance search before you commit to a name, reducing the risk of costly rebranding later. While we don't offer automated monitoring, we provide advisory support to align your filing strategy with your product roadmap through our trademark search services.

Which NICE classes apply to software products?

Software businesses typically file under NICE Class 9 for downloadable applications and Class 42 for SaaS platforms. Nepal requires one application per class, so a single product spanning both categories needs two separate filings. Misclassification leads to refusal or inadequate protection, leaving gaps competitors can exploit.

Selecting the correct classification determines the scope of your monopoly. Class 9 covers "computer software," "mobile applications," and "downloadable programs." Class 42 covers "software as a service (SaaS)," "platform as a service (PaaS)," and "cloud computing." If your startup offers both a downloadable app and a web-based subscription platform, you likely need both classes. Use our NICE class finder to verify which descriptions match your current and planned offerings.

What documents prove code and brand ownership?

Proving ownership requires employment contracts with IP clauses for staff and assignment deeds for contractors. For trademark registration, the DoI requires a notarized Power of Attorney, company registration certificate, and board resolution. Maintaining version control logs and dated creation records supports copyright claims during disputes or enforcement actions.

Documentation serves two distinct purposes: establishing copyright title and satisfying administrative filing requirements. For internal governance, ensure every developer signs an agreement containing explicit "work for hire" language and moral rights waivers. For external vendors, execute a Deed of Assignment upon delivery and payment. Keep these documents organized alongside your git repository history; timestamps in version control systems can serve as corroborating evidence of creation dates in litigation.

When filing for trademark protection, the paperwork shifts to corporate authorization. Foreign applicants must file through a local agent and provide a home registration certificate if claiming priority. Domestic applicants need a tax clearance letter and industry certificate. Missing documents cause delays in examination. Review our checklist of documents required for trademark registration to prepare your dossier before approaching the DoI.

How long does protection last and what are common mistakes?

Copyright lasts for the author's life plus 50 years, while trademarks remain valid for 7 years renewable indefinitely. Common mistakes include skipping written assignments for freelancers, filing in only one NICE class when multiple apply, and assuming code ownership grants brand rights. Neglecting renewal deadlines also causes automatic cancellation of trademark registrations.

The temporal mismatch between copyright and trademark creates ongoing compliance obligations. Your code is protected essentially forever, but your brand rights expire every seven years unless renewed. Renewal must occur within 35 days of expiry, with a six-month grace period available upon payment of additional fees. After that window closes, the registration cancels automatically, and you lose your priority date. Setting calendar reminders well in advance prevents accidental abandonment.

Beyond timing errors, substantive mistakes undermine protection. Filing only in Class 9 when you actually operate a SaaS platform leaves your core revenue stream unprotected. Similarly, descriptive names like "Kathmandu Taxi App" face higher refusal rates than distinctive marks. Conduct thorough clearance searches using the DoI database or professional tools before investing in marketing materials. Our team can advise on registrability risks during the naming phase to avoid wasted spend.

In short

Secure source code ownership through robust employment contracts and assignment deeds under the Copyright Act, then protect your commercial identity via separate trademark registration with the Department of Industry. Align your filing strategy with your actual business model across relevant NICE classes, maintain renewal schedules, and document everything from day one.

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Clarifying source code ownership Nepal starts with solid contracts, but lasting market protection requires proactive trademark registration. Use our trademark database search to check availability today, or contact our team for tailored advice on securing both your code and brand assets.