IP assignment in Spain: who owns the software created by founders, employees and developers

A startup's intellectual property, and in particular its software, does not belong to the company merely because the company exploits it. The Spanish Intellectual Property Act (Ley de Propiedad Intelectual, consolidated text approved by Royal Legislative Decree 1/1996 of 12 April) vests a work in the natural person who creates it and shifts the rights to the business only in specific cases, with different rules for employees, founders and external developers. IP assignment should therefore be settled before a funding round, or before a foreign company starts developing technology in Spain.

Why do investors check who owns the IP?

Legal due diligence, the review that precedes an investment, checks that the company owns the code and inventions it exploits or holds a sufficient licence. Under article 1 of the Intellectual Property Act, intellectual property belongs to the author by the mere fact of creation, and article 5 defines the author as the natural person who creates the work; a legal person benefits from that protection only where the Act expressly provides for it. Computer programs are protected works under article 10.1. Unless a statutory or contractual title transfers the rights, they remain with whoever wrote the code.

Who owns software developed by an employee in Spain?

For a computer program created by a salaried employee in the course of the duties entrusted to them or following the employer's instructions, article 97.4 vests in the employer, exclusively and unless otherwise agreed, the exploitation rights in both the source code and the object code.

The rule has two limits. It covers exploitation rights only, because moral rights, including the right to be recognised as author and to the integrity of the work, cannot be waived or transferred under article 14. And it requires the program to be created within the employee's duties or on the employer's instructions, so anything developed outside them is not covered. The employment contract should describe those duties precisely and, for other works, provide for a written assignment.

What about other works created by employees?

Interface designs, texts and graphic material follow the general rule in article 51: the transfer to the employer is governed by what the written employment contract provides and, absent a written agreement, article 51.2 presumes an exclusive assignment to the extent needed for the employer's usual business at the time the work is delivered.

The presumption is frozen at that date. If the company later expands its business, for example by licensing to third parties a tool designed for internal use, article 51.3 prevents it from using the work for purposes other than those that follow from the assignment.

Founders and external developers: the assignment must be express and in writing

Article 97.4 requires a salaried employee, that is, someone who provides paid services on behalf of another and within the organisation and under the direction of the employer, as defined in article 1.1 of the Spanish Workers' Statute (Estatuto de los Trabajadores, consolidated text approved by Royal Legislative Decree 2/2015 of 23 October). The rule therefore does not extend to a freelance programmer or a contracted development firm and, in principle, not to a founder who does not work for the company as an employee, nor to code written before the company was incorporated.

In all these cases the contractual assignment rules in articles 43 to 48 of the Intellectual Property Act apply. The assignment is limited to the rights assigned, to the forms of exploitation expressly provided for and to the term and territory agreed, under article 43.1. If no term is stated, the transfer is limited to five years; if no territory is stated, to the country where the assignment takes place; and if the forms of exploitation are not specified, to what is indispensable for the purpose of the contract, under article 43.2. An assignment of all works the author may create in the future is void, under article 43.3.

Every assignment must be made in writing and, if the assignee fails to do so after formal notice, the author may terminate the contract, under article 45. Exclusivity must be granted expressly, under article 48. A contract with an external developer therefore needs an assignment clause identifying the program, the rights, the forms of exploitation, the term and the territory.

If several founders write code together, the resulting program is jointly owned in the proportions they determine, under article 97.3, and disclosing or modifying the work requires the consent of all co-authors, under article 7.2. A founder who leaves without having assigned their share keeps that veto, which is why the assignment and the treatment of a departing member belong in the shareholders' agreement.

Employee inventions and patents

Article 4.4 of the Spanish Patents Act (Ley 24/2015, de 24 de julio, de Patentes) excludes computer programs from patentable inventions, but only to the extent that the application relates to them as such, as article 4.5 specifies. Technical inventions follow their own ownership rules:

• inventions by an employee or service provider that result from research activity that is, explicitly or implicitly, the subject matter of their contract belong to the employer, under article 15.1;
• all others belong to their author, under article 16, although where an employee's invention has been predominantly influenced by knowledge or resources of the business, the employer may take ownership or reserve a right of use in return for fair financial compensation, under article 17.

The employee must notify inventions covered by articles 15 and 17 in writing within one month of completing them, and the employer has three months from receipt to state whether it takes over an article 17 invention; otherwise its right lapses, under article 18. Inventions for which a patent is applied for within one year after the employment or service relationship ends are presumed, unless proven otherwise, to have been made while it was in force, under article 19. The general patent regime is covered in our publication on trademarks and patents in Spain.

How is IP contributed to the company?

A founder who owns rights in software or a patent may assign them to the company or contribute them to its share capital. Only assets or rights with economic value can be contributed, and never work or services, under article 58 of the Spanish Companies Act (Ley de Sociedades de Capital, consolidated text approved by Royal Legislative Decree 1/2010 of 2 July).

The deed of incorporation or of the capital increase must describe the non-cash contribution, its value in euros and the numbers of the shares allotted, under article 63. A limited company (sociedad limitada, SL) does not need the independent expert report that article 67 requires for public limited companies; instead, the founders, whoever were members when the increase was resolved and whoever acquires shares paid up with the contribution are jointly and severally liable for its existence and the value attributed to it, under article 73. That liability is time-barred five years after the contribution, under article 75.

If a patent or patent application is contributed, the transfer must be in writing to be valid, under article 82.2 of the Patents Act, and it is effective against third parties in good faith only once recorded in the Patent Register, under article 79.2.

Frequently asked questions

Can an employment contract reserve the software rights to the employee? Yes: the allocation to the employer under article 97.4 applies unless otherwise agreed.

How long do exploitation rights in a computer program last? If the author is a natural person, for their lifetime and seventy years after their death, under articles 26 and 98.1. If the author is a legal person, for seventy years from 1 January of the year following its lawful disclosure, or its creation if it was never disclosed, under article 98.2.

How RCM Legal helps you secure your startup's IP

Two situations commonly leave software outside the company's assets: code written by the founders before incorporation and code developed by freelancers or agencies without an assignment clause. If due diligence uncovers them, ownership has to be regularised through later assignments, and the timetable of the round then depends on each author agreeing to sign.

At RCM Legal we advise startups and foreign companies developing technology in Spain: we review the ownership of their software and inventions, draft the assignment clauses and structure the contribution of that IP to the company. Our trademarks and patents lawyers and our Business 360 team for company set-up, based in Murcia, work remotely with clients from any country. Tell us about your project.