- Indian law does not recognize US-style "work-for-hire" automatically. Copyright in the code your India EOR developer writes vests in either the developer or the EOR by default, not in your US company.
- In an EOR setup, ownership transfers in two steps: developer to EOR through the employment contract, then EOR to your US company through the master services agreement. Both contracts must use explicit assignment language to be enforceable.
- Section 19 of the Indian Copyright Act 1957 requires a written, signed, present-tense assignment that identifies the work, the rights, the duration, and the territory. Future-tense language like "agrees to assign" is weaker and has been challenged in commercial disputes.
- Moral rights under Section 57 cannot be assigned. They stay with the developer for life. A practical EOR contract addresses this with a non-assertion or waiver clause so a developer cannot later block your modifications or attribution decisions.
- The most common gap in US-India EOR setups is not the lack of an IP clause. It is a missing back-to-back assignment between the EOR and the client, which leaves the EOR technically holding rights the US company assumed it owned.
The short answer is yes, but only if the IP assignment chain behind your EOR is built correctly. Indian copyright law treats ownership of code, design, and other creative work differently from US law, and your US company does not acquire rights simply because it pays for the work.
In an Employer of Record setup, your developer is legally employed by the EOR, not by your US company. That means the path from the developer's keyboard to your IP register has two contractual steps, not one. If either step is weak or missing, you do not own what you think you own.
Here is how that chain actually works, what Indian law requires, and where it usually breaks.
Does my US company automatically own the code my India EOR developer creates?
No. Ownership transfers through a chain of contracts, not by default.
Under Indian law, the author is the first owner of copyright in any creative work they produce, unless an exception or written assignment applies. Section 17(c) of the Indian Copyright Act 1957 creates a narrow exception for employees: when a work is made in the course of employment under a contract of service, the employer becomes the first owner, in the absence of any agreement to the contrary.
In an EOR setup, that exception works in favor of the EOR, not your US company. The EOR is the legal employer. So Section 17(c) vests ownership in the EOR. Your company acquires those rights only when the EOR's master services agreement (MSA) transfers them to you in writing.
Two contractual links must hold for ownership to land with your US entity:
- The EOR's employment contract with the developer, transferring rights to the EOR.
- The EOR's services agreement with your US company, transferring those rights onward to you.
If either link is poorly drafted or missing, your US company is operating on assumed ownership, not legal ownership. From our experience reviewing these setups, this is the gap that surfaces most often during fundraising or M&A diligence.
How is Indian IP law different from US work-for-hire?
US "work made for hire" is a statutory shortcut that automatically vests copyright in the employer or commissioning party for certain categories of work. Indian law does not have this automatic transfer in the same form.
Two practical differences matter for US companies:
- In the US, certain categories of commissioned work qualify as work-for-hire by contract alone. In India, commissioned work from a contractor never transfers automatically. It requires written assignment under Section 19 of the Copyright Act.
- US-drafted contracts often rely on phrases like "all work product shall be considered work made for hire." That language has no automatic legal effect under Indian law. Indian courts apply Indian statutes to work created by Indian residents on Indian soil.
A clean US-style work-for-hire clause in your MSA, without a properly drafted Indian-law assignment behind it, is one of the most common reasons IP fails diligence on Indian developers. Companies often underestimate how much weight US legal language carries in an Indian court, which is usually none on its own.
| Scenario | United States | India |
|---|---|---|
| Code by full-time employee | Vests in employer in the course of employment | Vests in employer under Section 17(c), subject to the employment contract |
| Code by independent contractor | Vests in contractor unless work-for-hire applies and is in writing | Vests in contractor; requires explicit written assignment under Section 19 |
| Future works not yet created | Generally assignable in advance with the right language | Assignable, but Section 19 requires clear identification and present-tense wording |
| Moral rights | Limited; can often be waived in writing | Stay with the author for life under Section 57; can be waived in practice but not assigned |
What does the IP assignment chain look like in an EOR setup?
A clean chain has two written links, both signed.
Link 1: Developer to EOR
The employment contract assigns all IP created in the course of employment to the EOR. This typically uses present-tense language ("the Employee hereby assigns") and covers copyright, patents, trade secrets, designs, and trademarks. It also covers future IP, derivative works, and improvements made during employment.
Link 2: EOR to US company
The master services agreement between the EOR and your company transfers all IP the EOR holds in your developer's output to your US entity, immediately upon creation, as a back-to-back assignment. This clause is what makes your ownership enforceable in both India and the US.
Both contracts need to identify the rights with specificity. A throwaway line like "IP belongs to Client" is not enough. Indian courts have set aside vague assignments in commercial disputes, and so have arbitration panels handling cross-border tech contracts.
One pattern we have consistently noticed: companies focus heavily on the first link and assume the second one is implicit in the EOR relationship. It is not. Without the back-to-back assignment, the EOR technically owns the rights to code your engineers wrote on your projects.
What does a valid IP assignment require under Indian law?
Section 19 of the Copyright Act 1957 sets out the basic requirements. To be valid, an assignment must:
- Be in writing and signed by the assignor (or someone authorized to sign on their behalf).
- Identify the work being assigned.
- Specify the rights assigned, such as reproduction, adaptation, distribution, public performance, and communication to the public.
- Specify the duration of the assignment. If silent, the law assumes five years.
- Specify the territory. If silent, the law assumes India only.
- Specify royalty or other consideration, where applicable.
For ongoing employment, present-tense language matters. "The Employee hereby assigns" creates a present transfer. "The Employee agrees to assign" creates a promise to assign in the future, which a court may require to be specifically enforced before ownership actually moves. Both have been litigated. Present-tense wording is cleaner.
A defensible clause also covers:
- All forms of IP, not just copyright. That means patents, designs, trade secrets, and know-how.
- Future works created during the employment term.
- Improvements, modifications, and derivative works.
- Worldwide rights, not just India.
- Perpetual duration, not a default five-year window.
If any of these gaps exist, you may own less than you think.
What about patents, trade secrets, and moral rights?
Copyright is only one piece. Three other categories matter for software.
Patents. The Patents Act 1970 does not have an automatic "employer ownership" default similar to Section 17(c). Ownership of inventions typically depends on the employment contract and the doctrine of "course of employment." If the EOR's contract is silent or vague on patents, ownership may stay with the inventor. A proper clause explicitly assigns the right to apply for patents on any invention made during employment, anywhere in the world.
Trade secrets and confidential information. India does not have a dedicated trade secrets statute. Protection comes from contract, equitable doctrines, and the Information Technology Act. Confidentiality clauses, non-disclosure terms, and a clear definition of "Confidential Information" need to live in the employment contract and the MSA, not just in policy documents.
Moral rights. Section 57 of the Copyright Act gives the author the right to claim authorship and the right to prevent distortion of the work. These rights stay with the author for life and cannot be transferred. In practice, they can be waived through a clear, written non-assertion. Without this waiver, a developer could later object to how their code is modified, even after assigning all economic rights.
Most well-drafted EOR contracts cover all four categories in one package. Many basic contracts do not.
Where do US companies usually get IP ownership wrong?
Six gaps account for most of the issues we see during contract reviews.
- Assuming US contract language carries over. A "work-for-hire" clause without an Indian-law assignment behind it is one of the most common diligence findings.
- Missing the back-to-back assignment. The developer's contract assigns IP to the EOR, but the MSA between the EOR and the US company does not pass it through cleanly.
- Using future-tense language. "Agrees to assign" creates a promise, not a transfer. Indian courts have treated this as insufficient in some commercial IP disputes.
- No moral rights waiver. Section 57 rights stay with the developer for life. If your code is heavily modified later, the developer could assert these rights and demand attribution or block alteration.
- Misclassified contractors mislabeled as EOR hires. If the "developer" is paid as a contractor through a Contractor of Record route but treated as an employee, the Section 17(c) employer default does not apply. IP ownership stays with the contractor unless a separate, valid assignment is signed.
- Open source and pre-existing IP not handled. If your developer brings in pre-existing code, such as their own libraries or open source contributions, the contract should identify what is excluded from assignment. Without this, disputes arise later over what was theirs to begin with.
In many cases, global employers realize this only when an investor's lawyer asks for the IP assignment chain during diligence. By then, the cost to re-paper is meaningful.
How does Wisemonk make sure your IP chain is airtight?
Wisemonk is an India-native EOR built for cross-border IP, payroll, and compliance scenarios. IP assignment is built into our standard onboarding, not treated as an optional add-on.
What we put in place by default:
- India-law employment contracts with present-tense IP assignment that covers copyright, patents, designs, trade secrets, and trademarks, with future works and derivative works included.
- Back-to-back IP transfer between Wisemonk and your US company in the master services agreement, so rights flow through to your entity immediately upon creation.
- Moral rights non-assertion built into the employment contract under Section 57, so heavily modified or re-attributed work cannot trigger later objections.
- DPDP Data Processing Agreement for any work involving personal data, in line with the Digital Personal Data Protection Act 2023 and the rules notified in November 2025, with full enforcement scheduled from May 2027.
- Confidentiality and trade secret protection under the Indian Contract Act and the Information Technology Act, with clear definitions in both the employment contract and the MSA.
We also help with the edge cases that catch most setups off guard: AI-generated code, open source contribution policies, pre-existing IP carve-outs, and patent applications for inventions made during employment. The result is an IP chain that holds up under fundraising and acquisition diligence, on both sides of the border.
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Frequently asked questions
Does the US work-for-hire doctrine apply to my India developer?
No, not automatically. US work-for-hire is a US statute and has no direct effect under Indian law. A US contract relying on work-for-hire language without an Indian-law assignment behind it is one of the most common reasons IP fails diligence on Indian developers. To make ownership stick, you need a written assignment under Section 19 of the Indian Copyright Act, signed by the developer or the EOR as the legal employer.
Who owns the IP if my India EOR contract is silent on assignment?
The EOR does, by default, under Section 17(c) of the Copyright Act, because the EOR is the legal employer. Your US company does not own it automatically. To move ownership to your US entity, the master services agreement between the EOR and your company must contain a written assignment of all IP the EOR holds in your developer's work. If that clause is missing, your developer's code legally belongs to the EOR.
Can my India developer claim royalties on the code they wrote?
Only if the employment contract preserves that right or fails to assign it cleanly. A properly drafted assignment under Section 19 specifies whether any royalty or consideration applies, and most EOR contracts treat the salary as full consideration for the assignment, with no ongoing royalty. The risk arises mainly when the assignment is vague or uses future-tense language. Moral rights under Section 57 are separate and do not create a royalty claim, but they can affect how the work is attributed or modified.
What is the difference between IP rules for employees and contractors in India?
For employees, Section 17(c) of the Copyright Act creates a default rule that the employer owns copyright in work made during employment, subject to the contract. For contractors, there is no such default. The contractor owns the IP unless an explicit, written assignment under Section 19 transfers it. This is the opposite of certain US defaults and is why misclassified contractors hired through an EOR or Contractor of Record route can create a serious IP gap.
Does the Digital Personal Data Protection Act affect IP ownership?
Not directly, but it affects what your developer can do with the data underlying that work. The DPDP Act 2023, with rules notified in November 2025 and enforcement scheduled from May 2027, imposes data protection obligations on processors of personal data. Most EOR contracts now bundle a DPDP Data Processing Agreement alongside the IP assignment, so both questions, who owns the work and who is allowed to handle the data, are answered in the same package.
Can a moral rights claim under Section 57 actually block my company's use of the code?
It generally cannot block routine commercial use, but it can complicate situations where code is heavily modified, re-attributed, or used in ways the original author objects to publicly. Section 57 protects the right of paternity (attribution) and the right of integrity (objection to distortion or mutilation). A clear non-assertion clause in the employment contract reduces this risk to near zero for software work, which is why most well-drafted EOR contracts include one.
