Who owns the code? Agency vs client IP rights
Last updated: 22 May 2026
Commissioning a new website? The most contentious contract clause often lands on your legal team's desk. Intellectual property (IP).
There is a natural tension here. Clients want to own what they buy to avoid vendor lock-in. They don't want a single developer holding them hostage. Agencies, however, cannot sell the internal tools they use to build software efficiently. That would be like selling the factory with the car.
The solution? Understand the difference between Project IP and Background IP.
Knowing where to draw the line protects your assets and keeps costs down.
What is project IP?
Think of Project IP as the skin and specific configuration of your website. This is the unique work created specifically for your business. In a standard fair contract, the client owns this 100% upon payment.
Project IP typically includes:
- Visual design: All layouts, user interfaces, and custom graphics created for the project.
- Content: All copywriting, photography, and video assets.
- Front-end code: The specific HTML and CSS configuration that dictates how your site looks.
- Business logic: Custom scripts written specifically to handle your unique business rules.
If you decide to leave the agency later, you take all of this with you. You own the look, the feel, and the content.
What is background IP?
Background IP is the pre-existing code, libraries, and tools the agency built before meeting you.
Agencies keep this IP. Instead of selling it to you, they grant you a perpetual, royalty-free, non-exclusive licence. This licence lets you use, change, and host the site forever. It just stops you from reselling the agency's tools to others.
The reality of third-party IP
In the age of Software as a Service (SaaS) and open source, agencies often cannot transfer all IP rights. Simply put, they don't own them.
- Open source (e.g. WordPress): If we build your site on WordPress, we cannot transfer the IP and licensing for the core platform. We do not own it to transfer it.
- SaaS platforms (e.g. HubSpot): When building on a platform like HubSpot, we ensure you contract directly with the provider. We do not own their platform.
- Off-the-shelf themes: If we use a pre-made theme, that remains the theme developer's IP. We can buy a licence for you to use it, but we cannot sign over someone else's IP.
Access and control: who holds the keys?
Ownership isn't just about legal contracts. It is about practical control. As the site owner, you should always hold the keys to the castle. That is, full administrator access. You should never have to ask an agency for permission to change a setting on your own website.
However, great power comes with great responsibility. While you need full access, we recommend a least privilege model for your wider team. A good agency will configure your site so you can assign lower-level rights (such as Editor or Author roles) to staff members.
This gives you control, while your team updates content safely. It stops them from breaking the site or deleting core plugins by mistake.
Why this distinction protects the client
Procurement teams often push to own all the code. However, this can actually hurt the project.
If an agency transferred their Background IP, they would lose their own tools. They would have to rebuild their code from scratch for every client.
Letting the agency keep Background IP (while licensing it to you) has three benefits:
- Lower costs: You don't pay for the hundreds of hours used to build the framework. You only pay for the customisation on top.
- Speed to market: By using existing libraries, the agency does not have to reinvent the wheel. They can focus immediately on your specific business problems.
- Long-term stability: The agency uses these tools across many clients. This means they are constantly testing and fixing them. You benefit from a more robust, battle-tested foundation.
Finding the balance
The goal is clarity, not total control. Own the Project IP? Hold a permanent licence for the Background IP? Then your business is safe from vendor lock-in. You have the right to take your site to a new developer who can maintain and build upon the code.
Are you unsure if your current vendor agreement protects your IP rights? We believe in total transparency. Contact us today, and we will walk you through a sample contract so you can see exactly how we protect your ownership.
