# IP and Software Ownership in Acquisition Due Diligence[^about] Copyright ownership, registration, and open-source license conditions in acquisition diligence. The guide identifies the federal rules and the Federal Circuit limits relevant to software assets. This practice note addresses the ownership and enforceability of a target’s software copyright in a private acquisition. It supplements [Legal due diligence in a private acquisition](/practice-guides/legal-due-diligence). ## Unpublished code has no three-month grace period {#unpublished-code-remedies} **Short answer.** For an unpublished work, registration after infringement began bars statutory damages and attorney's fees for that infringement, subject to the opening exceptions in section 412 [^usc-17-412]. The three-month grace period in section 412(2) applies only to infringement after first publication. Internally developed code that has never been distributed to the public ordinarily remains unpublished [^usc-17-101-publication-remedies]. A post-closing registration cannot restore the two remedies for infringement that already commenced. Qualifying preregistration before infringement is an exception, but section 412 requires registration by the earlier of three months after first publication or one month after the owner learns of the infringement. "(1) any infringement of copyright in an unpublished work commenced before the effective date of its registration; or (2) any infringement of copyright commenced after first publication of the work and before the effective date of its registration, unless such registration is made within three months after the first publication of the work."[^usc-17-412] ## Authorship and work made for hire determine initial ownership {#initial-ownership} **Short answer.** Code written for the target belongs initially to its author, so the target owns it from creation only if the code is a work made for hire [^usc-17-201a][^usc-17-201b]. For a work made for hire, section 201(b) treats the employer or commissioning party as the author and owner unless a signed writing provides otherwise [^usc-17-201b]. Section 101 has two branches: employee work within the scope of employment, and commissioned work within one of nine categories under a signed work-made-for-hire agreement [^usc-17-101-wfh][^usc-17-101-commissioned]. None of the nine categories names software, so ordinary application or infrastructure code qualifies only if it fits a listed category such as a compilation or a contribution to a collective work [^usc-17-101-commissioned]. Reid treats the branches as mutually exclusive and uses agency law to classify the hired creator [^ccnv-v-reid-490us730]. Payment alone does not give a company ownership of, or an exclusive license in, code a contractor authored outside the work-made-for-hire definition [^usc-17-204-initial-ownership][^usc-17-101-transfer-initial-ownership]. "Copyright in a work protected under this title vests initially in the author or authors of the work."[^usc-17-201a] "(1) a work prepared by an employee within the scope of his or her employment; or"[^usc-17-101-wfh] "The structure of § 101 indicates that a work for hire can arise through one of two mutually exclusive means, one for employees and one for independent contractors, and ordinary canons of statutory interpretation indicate that the classification of a particular hired party should be made with reference to agency law."[^ccnv-v-reid-490us730] ## A transfer generally needs the owner’s signed writing {#contractor-assignment} **Short answer.** Section 204(a) makes a transfer of copyright ownership invalid without a written instrument, note, or memorandum signed by the owner or authorized agent, except for a transfer by operation of law [^usc-17-204]. Section 101 includes an assignment or exclusive license in a transfer, but excludes a nonexclusive license [^usc-17-101-transfer]. Payment and an unsigned engagement therefore do not establish a copyright transfer. A nonexclusive license conveys no copyright ownership interest to the company. Whether the company holds an implied nonexclusive license is a separate question governed by case law, not by sections 101 or 204(a). "A transfer of copyright ownership, other than by operation of law, is not valid unless an instrument of conveyance, or a note or memorandum of the transfer, is in writing and signed by the owner of the rights conveyed or such owner's duly authorized agent."[^usc-17-204] ## Protection starts on fixation, while section 411 gates suit {#protection-and-suit} **Short answer.** Registration is not needed for protection, but a United States work generally must be preregistered or registered before an infringement suit can be filed [^usc-17-408][^usc-17-411]. Original code receives copyright protection when fixed [^usc-17-102]. Fourth Estate holds that an application alone is insufficient; the Copyright Office must register the claim [^fourth-estate-586us296]. A refused applicant may sue after a proper submission and service of the complaint on the Register, but registrability remains open for the court, and the Register may appear [^usc-17-411-refusal]. For an unpublished work, the United States work test turns on all authors’ nationality, domicile, or habitual residence; the statutory headquarters alternative expressly covers unpublished audiovisual works [^usc-17-101-us-work]. "Such registration is not a condition of copyright protection."[^usc-17-408] "no civil action for infringement of the copyright in any United States work shall be instituted until preregistration or registration of the copyright claim has been made in accordance with this title."[^usc-17-411] "We hold, in accord with the United States Court of Appeals for the Eleventh Circuit, that registration occurs, and a copyright claimant may commence an infringement suit, when the Copyright Office registers a copyright."[^fourth-estate-586us296] ## Computer programs qualify only when prepared for commercial distribution {#preregistration} **Short answer.** Software qualifies for preregistration only if it is unpublished and being prepared for commercial distribution to the public [^cfr-37-202-16-eligibility][^cfr-37-202-16-distribution]. Computer programs are a designated preregistration class [^cfr-37-202-16]. Section 408(f) concerns unpublished works being prepared for commercial distribution [^usc-17-408-preregistration]. Internal software with no plan for distribution does not satisfy that condition. "(v) Computer programs (including videogames); or"[^cfr-37-202-16] ## Publication turns on distribution of copies {#publication} **Short answer.** Software is published when copies are distributed to the public or offered to a group for further distribution, public performance, or public display; public performance or display alone does not publish it [^usc-17-101-publication]. Internal use without distribution does not publish code. The Copyright Office guidance says streaming may not distribute a copy when a user receives none [^compendium-1008-3]. Hosted access without a delivered copy therefore calls for a publication analysis rather than an assumption based on commercial availability. "A public performance or display of a work does not of itself constitute publication."[^usc-17-101-publication] ## The claim depends on an exclusive right and the license grant {#license-rights} **Short answer.** A component license breach can become infringement when the conduct exceeds a condition of the grant and violates an exclusive right, subject to statutory limitations [^jacobsen-conditions-covenants][^usc-17-501a][^usc-17-106]. Copyright law reserves reproduction, adaptation, and distribution rights to the owner [^usc-17-106]. A separate covenant can leave the license grant intact. Statutory limitations may also permit conduct without a license. The Federal Circuit’s Jacobsen decision addresses the distinction for the Artistic License, not every open-source license [^jacobsen-conditions-covenants]. "(1) to reproduce the copyrighted work in copies or phonorecords;"[^usc-17-106] "Thus, if the terms of the Artistic License allegedly violated are both covenants and conditions, they may serve to limit the scope of the license and are governed by copyright law. If they are merely covenants, by contrast, they are governed by contract law."[^jacobsen-conditions-covenants] ## Jacobsen and Bitmanagement require attention to the term and the remedy {#license-conditions} **Short answer.** Under the Federal Circuit’s rule, a breached license term supports a copyright-infringement claim only if it is a condition of the license rather than a covenant, and the court presumes it is a covenant unless a condition is clearly intended [^bitmanagement-scope-test][^bitmanagement-covenant-presumption]. The court held that the Artistic License terms in Jacobsen were copyright conditions and that the Flexera term in Bitmanagement was a condition on an implied license [^jacobsen-disposition][^bitmanagement-flexera-condition]. Jacobsen remanded without deciding infringement or entitlement to an injunction. Bitmanagement involved an implied license with a government user [^bitmanagement-implied-license]. Bitmanagement found the presumption rebutted on its facts [^bitmanagement-flexera-condition]. These Federal Circuit decisions do not establish a national rule for every open-source license or presume injunctive relief. For infringement of a published component before registration, section 412 removes statutory damages and attorney's fees unless registration occurred within three months after first publication, subject to its opening exceptions [^usc-17-412-oss]. "are presumed to be covenants, rather than conditions, unless it is clear that a condition precedent was intended."[^bitmanagement-covenant-presumption] "Thus, the Flexera term was clearly a condition rather than merely a covenant."[^bitmanagement-flexera-condition] [^about]: By Steven Obiajulu, J.D. Published by [openagreements.org](https://openagreements.org). Last reviewed 2026-09-28. License: CC BY 4.0. Steven Obiajulu, J.D. edits this topic article for U.S. federal copyright law; open-source license conditions per the Federal Circuit coverage. It synthesizes legal sources and is not legal advice. This article is for informational purposes only and does not create an attorney-client relationship. Source excerpts and linked materials belong to their owners. CC BY 4.0. Cite as Steven Obiajulu, *IP and Software Ownership in Acquisition Due Diligence*, OpenAgreements (last updated September 28, 2026), https://openagreements.org/practice-guides/legal-due-diligence/us/ip-and-software-ownership. [^usc-17-412]: **17 U.S.C. § 412 — Registration as prerequisite to certain remedies for infringement** — "In any action under this title, other than an action brought for a violation of the rights of the author under section 106A(a), an action for infringement of the copyright of a work that has been preregistered under section 408(f) before the commencement of the infringement and that has an effective date of registration not later than the earlier of 3 months after the first publication of the work or 1 month after the copyright owner has learned of the infringement, or an action instituted under section 411(c), no award of statutory damages or of attorney's fees, as provided by sections 504 and 505, shall be made for— (1) any infringement of copyright in an unpublished work commenced before the effective date of its registration; or (2) any infringement of copyright commenced after first publication of the work and before the effective date of its registration, unless such registration is made within three months after the first publication of the work." *17 U.S.C. § 412(1)-(2).* [^usc-17-101-publication-remedies]: **17 U.S.C. § 101 — Definitions (publication)** — "‘Publication’ is the distribution of copies or phonorecords of a work to the public by sale or other transfer of ownership, or by rental, lease, or lending. The offering to distribute copies or phonorecords to a group of persons for purposes of further distribution, public performance, or public display, constitutes publication. A public performance or display of a work does not of itself constitute publication." *17 U.S.C. § 101 (definition of publication).* [^usc-17-201a]: **17 U.S.C. § 201(a) — Initial ownership** — "Copyright in a work protected under this title vests initially in the author or authors of the work." *17 U.S.C. § 201(a).* [^usc-17-201b]: **17 U.S.C. § 201(b) — Works made for hire** — "In the case of a work made for hire, the employer or other person for whom the work was prepared is considered the author for purposes of this title, and, unless the parties have expressly agreed otherwise in a written instrument signed by them, owns all of the rights comprised in the copyright." *17 U.S.C. § 201(b).* [^usc-17-101-wfh]: **17 U.S.C. § 101 — Definitions (work made for hire)** — "A ‘work made for hire’ is— (1) a work prepared by an employee within the scope of his or her employment; or (2) a work specially ordered or commissioned for use as a contribution to a collective work, as a part of a motion picture or other audiovisual work, as a translation, as a supplementary work, as a compilation, as an instructional text, as a test, as answer material for a test, or as an atlas, if the parties expressly agree in a written instrument signed by them that the work shall be considered a work made for hire." *17 U.S.C. § 101 (definition of work made for hire).* [^usc-17-101-commissioned]: **17 U.S.C. § 101 — Definitions (work made for hire)** — "(2) a work specially ordered or commissioned for use as a contribution to a collective work, as a part of a motion picture or other audiovisual work, as a translation, as a supplementary work, as a compilation, as an instructional text, as a test, as answer material for a test, or as an atlas, if the parties expressly agree in a written instrument signed by them that the work shall be considered a work made for hire. For the purpose of the foregoing sentence, a ‘supplementary work’ is a work prepared for publication as a secondary adjunct to a work by another author for the purpose of introducing, concluding, illustrating, explaining, revising, commenting upon, or assisting in the use of the other work, such as forewords, afterwords, pictorial illustrations, maps, charts, tables, editorial notes, musical arrangements, answer material for tests, bibliographies, appendixes, and indexes, and an ‘instructional text’ is a literary, pictorial, or graphic work prepared for publication and with the purpose of use in systematic instructional activities." *17 U.S.C. § 101 (definition of work made for hire).* [^ccnv-v-reid-490us730]: **Community for Creative Non-Violence v. Reid, 490 U.S. 730 (1989)** — "The structure of § 101 indicates that a work for hire can arise through one of two mutually exclusive means, one for employees and one for independent contractors, and ordinary canons of statutory interpretation indicate that the classification of a particular hired party should be made with reference to agency law." *Cmty. for Creative Non-Violence v. Reid, 490 U.S. 730, 742-43 (1989).* [^usc-17-204-initial-ownership]: **17 U.S.C. § 204 — Execution of transfers of copyright ownership** — "A transfer of copyright ownership, other than by operation of law, is not valid unless an instrument of conveyance, or a note or memorandum of the transfer, is in writing and signed by the owner of the rights conveyed or such owner's duly authorized agent." *17 U.S.C. § 204(a).* [^usc-17-101-transfer-initial-ownership]: **17 U.S.C. § 101 — Definitions (transfer of copyright ownership)** — "A ‘transfer of copyright ownership’ is an assignment, mortgage, exclusive license, or any other conveyance, alienation, or hypothecation of a copyright or of any of the exclusive rights comprised in a copyright, whether or not it is limited in time or place of effect, but not including a nonexclusive license." *17 U.S.C. § 101 (definition of transfer of copyright ownership).* [^usc-17-204]: **17 U.S.C. § 204 — Execution of transfers of copyright ownership** — "A transfer of copyright ownership, other than by operation of law, is not valid unless an instrument of conveyance, or a note or memorandum of the transfer, is in writing and signed by the owner of the rights conveyed or such owner's duly authorized agent." *17 U.S.C. § 204(a).* [^usc-17-101-transfer]: **17 U.S.C. § 101 — Definitions (transfer of copyright ownership)** — "A ‘transfer of copyright ownership’ is an assignment, mortgage, exclusive license, or any other conveyance, alienation, or hypothecation of a copyright or of any of the exclusive rights comprised in a copyright, whether or not it is limited in time or place of effect, but not including a nonexclusive license." *17 U.S.C. § 101 (definition of transfer of copyright ownership).* [^usc-17-408]: **17 U.S.C. § 408 — Copyright registration in general** — "Such registration is not a condition of copyright protection." *17 U.S.C. § 408(a).* [^usc-17-411]: **17 U.S.C. § 411 — Registration and civil infringement actions** — "(a) Except for an action brought for a violation of the rights of the author under section 106A(a), and subject to the provisions of subsection (b),1 no civil action for infringement of the copyright in any United States work shall be instituted until preregistration or registration of the copyright claim has been made in accordance with this title." *17 U.S.C. § 411(a).* [^usc-17-102]: **17 U.S.C. § 102 — Subject matter of copyright: In general** — "Copyright protection subsists, in accordance with this title, in original works of authorship fixed in any tangible medium of expression, now known or later developed, from which they can be perceived, reproduced, or otherwise communicated, either directly or with the aid of a machine or device." *17 U.S.C. § 102(a).* [^fourth-estate-586us296]: **Fourth Estate Public Benefit Corp. v. Wall-Street.com, LLC, 586 U.S. 296 (2019)** — "We hold, in accord with the United States Court of Appeals for the Eleventh Circuit, that registration occurs, and a copyright claimant may commence an infringement suit, when the Copyright Office registers a copyright." *Fourth Estate Pub. Benefit Corp. v. Wall-Street.com, LLC, 586 U.S. 296, 139 S. Ct. 881, 886 (2019).* [^usc-17-411-refusal]: **17 U.S.C. § 411 — Registration and civil infringement actions** — "In any case, however, where the deposit, application, and fee required for registration have been delivered to the Copyright Office in proper form and registration has been refused, the applicant is entitled to institute a civil action for infringement if notice thereof, with a copy of the complaint, is served on the Register of Copyrights. The Register may, at his or her option, become a party to the action with respect to the issue of registrability of the copyright claim by entering an appearance within sixty days after such service, but the Register's failure to become a party shall not deprive the court of jurisdiction to determine that issue." *17 U.S.C. § 411(a).* [^usc-17-101-us-work]: **17 U.S.C. § 101 — Definitions (United States work)** — "(2) in the case of an unpublished work, all the authors of the work are nationals, domiciliaries, or habitual residents of the United States, or, in the case of an unpublished audiovisual work, all the authors are legal entities with headquarters in the United States; or (3) in the case of a pictorial, graphic, or sculptural work incorporated in a building or structure, the building or structure is located in the United States." *17 U.S.C. § 101 (definition of United States work).* [^cfr-37-202-16-eligibility]: **37 C.F.R. § 202.16 — Preregistration of copyrights** — "(3) A work eligible for preregistration is a work that is: (i) Unpublished; (ii) Being prepared for commercial distribution; and (iii) In a class of works that the Register of Copyrights has determined has had a history of infringement prior to authorized commercial release." *37 C.F.R. § 202.16(b)(1)(v), (b)(2)(i)–(ii)(E), (b)(3).* [^cfr-37-202-16-distribution]: **37 C.F.R. § 202.16 — Preregistration of copyrights** — "(2) A work is being prepared for commercial distribution if: (i) The claimant, in a statement certified by the authorized preregistering party, has a reasonable expectation that the work will be commercially distributed to the public; and (ii) Preparation of the work has commenced and at least some portion of the work has been fixed in a tangible medium of expression, as follows: (A) For a motion picture, filming of the motion picture must have commenced; (B) For a sound recording, recording of the sounds must have commenced; (C) For a musical composition, at least some of the musical composition must have been fixed either in the form of musical notation or in a copy or phonorecord embodying a performance of some or all of the work; (D) For a literary work being prepared for publication in book form, the actual writing of the text of the work must have commenced; (E) For a computer program, at least some of the computer code (either source code or object code) must have been fixed; and (F) For an advertising or marketing photograph, the photograph (or, in the case of a group of photographs intended for simultaneous publication, at least one of the photographs) must have been taken." *37 C.F.R. § 202.16(b)(1)(v), (b)(2)(i)–(ii)(E), (b)(3).* [^cfr-37-202-16]: **37 C.F.R. § 202.16 — Preregistration of copyrights** — "(1) A work is in a class of works that the Register of Copyrights has determined has had a history of infringement prior to authorized commercial release if it falls within one of the following classes of works: (i) Motion pictures; (ii) Sound recordings; (iii) Musical compositions; (iv) Literary works being prepared for publication in book form; (v) Computer programs (including videogames); or (vi) Advertising or marketing photographs." *37 C.F.R. § 202.16(b)(1)(v), (b)(2)(i)–(ii)(E), (b)(3).* [^usc-17-408-preregistration]: **17 U.S.C. § 408(f) — Preregistration of works being prepared for commercial distribution** — "(1) Rulemaking.—Not later than 180 days after the date of enactment of this subsection, the Register of Copyrights shall issue regulations to establish procedures for preregistration of a work that is being prepared for commercial distribution and has not been published." *17 U.S.C. § 408(f)(1)-(2).* [^usc-17-101-publication]: **17 U.S.C. § 101 — Definitions (publication)** — "‘Publication’ is the distribution of copies or phonorecords of a work to the public by sale or other transfer of ownership, or by rental, lease, or lending. The offering to distribute copies or phonorecords to a group of persons for purposes of further distribution, public performance, or public display, constitutes publication. A public performance or display of a work does not of itself constitute publication." *17 U.S.C. § 101 (definition of publication).* [^compendium-1008-3]: **Compendium of U.S. Copyright Office Practices, Third Edition, § 1008.3(F)** — "Streaming is a performance, which may not constitute a distribution of copies if the user does not receive a copy." *U.S. Copyright Office, Compendium of U.S. Copyright Office Practices § 1008.3(F) (3d ed. 2021).* [^jacobsen-conditions-covenants]: **Jacobsen v. Katzer, 535 F.3d 1373 (Fed. Cir. 2008)** — "Thus, if the terms of the Artistic License allegedly violated are both covenants and conditions, they may serve to limit the scope of the license and are governed by copyright law. If they are merely covenants, by contrast, they are governed by contract law." *Jacobsen v. Katzer, 535 F.3d 1373, 1380-81 (Fed. Cir. 2008).* [^usc-17-501a]: **17 U.S.C. § 501 — Infringement of copyright** — "Anyone who violates any of the exclusive rights of the copyright owner as provided by sections 106 through 122 or of the author as provided in section 106A(a), or who imports copies or phonorecords into the United States in violation of section 602, is an infringer of the copyright or right of the author, as the case may be." *17 U.S.C. § 501(a).* [^usc-17-106]: **17 U.S.C. § 106 — Exclusive rights in copyrighted works** — "Subject to sections 107 through 122, the owner of copyright under this title has the exclusive rights to do and to authorize any of the following: (1) to reproduce the copyrighted work in copies or phonorecords; (2) to prepare derivative works based upon the copyrighted work; (3) to distribute copies or phonorecords of the copyrighted work to the public by sale or other transfer of ownership, or by rental, lease, or lending;" *17 U.S.C. § 106(1)-(3), (6).* [^bitmanagement-scope-test]: **Bitmanagement Software GmbH v. United States, 989 F.3d 938 (Fed. Cir. 2021)** — "Whether a licensee acts outside the scope of a contract by failing to comply with a term of the parties’ agreement turns on whether that term is a condition that limits the scope of the license or is merely a covenant." *Bitmanagement Software GmbH v. United States, 989 F.3d 938 (Fed. Cir. 2021).* [^bitmanagement-covenant-presumption]: **Bitmanagement Software GmbH v. United States, 989 F.3d 938 (Fed. Cir. 2021)** — "are presumed to be covenants, rather than conditions, unless it is clear that a condition precedent was intended. See, e.g., Mularz v. Greater Park City Co., 623 F.2d 139, 142 (10th Cir. 1980) (‘Where the intention or meaning of a con- tract is in question as to whether it should be construed as a covenant, or, in the alternative, a condition precedent, the tendency of the courts is to construe it as a covenant or a promise rather than a condition unless it is plain that a condition precedent was intended.’); Graham v. James, 144 F.3d 229, 237 (2d Cir. 1998)." *Bitmanagement Software GmbH v. United States, 989 F.3d 938 (Fed. Cir. 2021).* [^jacobsen-disposition]: **Jacobsen v. Katzer, 535 F.3d 1373 (Fed. Cir. 2008)** — "Having determined that the terms of the Artistic License are enforceable copyright conditions, we remand to enable the District Court to determine whether Jacobsen has demonstrated (1) a likelihood of success on the merits and either a presumption of irreparable harm or a demonstration of irreparable harm; or (2) a fair chance of success on the merits and a clear disparity in the relative hardships and tipping in his favor." *Jacobsen v. Katzer, 535 F.3d 1373 (Fed. Cir. 2008) (slip op. at 14-15).* [^bitmanagement-flexera-condition]: **Bitmanagement Software GmbH v. United States, 989 F.3d 938 (Fed. Cir. 2021)** — "Thus, the Flexera term was clearly a condition rather than merely a covenant." *Bitmanagement Software GmbH v. United States, 989 F.3d 938 (Fed. Cir. 2021).* [^bitmanagement-implied-license]: **Bitmanagement Software GmbH v. United States, 989 F.3d 938 (Fed. Cir. 2021)** — "While we reject the government’s assertion that a meeting of the minds is irrelevant, we hold that the Claims Court did not clearly err in finding a meeting of the minds on the record before it." *Bitmanagement Software GmbH v. United States, 989 F.3d 938 (Fed. Cir. 2021).* [^usc-17-412-oss]: **17 U.S.C. § 412 — Registration as prerequisite to certain remedies for infringement** — "In any action under this title, other than an action brought for a violation of the rights of the author under section 106A(a), an action for infringement of the copyright of a work that has been preregistered under section 408(f) before the commencement of the infringement and that has an effective date of registration not later than the earlier of 3 months after the first publication of the work or 1 month after the copyright owner has learned of the infringement, or an action instituted under section 411(c), no award of statutory damages or of attorney's fees, as provided by sections 504 and 505, shall be made for— (1) any infringement of copyright in an unpublished work commenced before the effective date of its registration; or (2) any infringement of copyright commenced after first publication of the work and before the effective date of its registration, unless such registration is made within three months after the first publication of the work." *17 U.S.C. § 412(1)-(2).* For repeat use, install the skill: `npx skills add open-agreements/open-agreements` (lawyer-reviewed agreement templates + 50-state practice guides).