Can You Prove You Own the Software Your Armenian Team Built? An Investor-Readiness IP Ownership Audit

Armenian law splits software ownership on one question: was the developer an employee acting within their job duties, or was the developer anybody else. Employees transfer economic rights to the company by operation of law. Founders before incorporation, freelancers, agency developers and staff engaged through an Employer of Record do not, and the gap only becomes visible when an investor’s counsel asks for the paper trail. This article sets out the default rules for each contributor category, the documents that evidence the chain of title, and what to do about the links that are missing.

Why diligence reaches this before it reaches your financials

In a software company the code is the asset. An investor buying equity, or an acquirer buying the company, is buying a claim on that code, and a share purchase agreement will carry an IP warranty saying the company owns it outright and free of third-party claims. Signing that warranty when a former contractor still holds the copyright in a core module creates a liability the founders usually give personally.

The practical consequence is sequencing. Ownership defects are typically handled as conditions precedent, which means the round does not close until the missing assignments are signed. If the contractor who wrote the payment engine in 2022 has since moved abroad, stopped answering email, or worked out that the company needs their signature, the remedy is no longer a document. It is a negotiation, on a deadline, with someone holding leverage.

Enterprise customers apply a lighter version of the same test. Procurement and security questionnaires for regulated buyers routinely ask the vendor to confirm ownership of the codebase and the absence of third-party claims, and an honest answer to that question requires the audit anyway.

Who owns the code: Armenia’s default rules

Computer programs are protected as literary works under Copyright Law HO-142-N, and protection arises automatically on creation (Articles 3 and 4). There is no registration step, no filing date and no certificate. That is convenient for the author and inconvenient for the auditor, because nothing in a public register tells you who owns a given commit.

Employees

Where an employee creates software in performance of their employment duties or a service assignment, the economic rights belong to the employer by default, unless the contract between author and employer says otherwise (Copyright Law Article 33(1), supported by Civil Code Article 1128(2)). A written IP assignment clause is not a precondition. Companies that discover a silent employment contract during diligence have usually not lost anything.

Two qualifications carry real weight. The employee remains the statutory author and keeps moral rights, which are inalienable and cannot be signed away (Copyright Law Articles 6 and 12); a warranty promising the company holds every right in the work is inaccurate on its face. And the default is anchored to the scope of duties. Code written by a QA engineer on a weekend, outside any assignment, sits outside the rule, so the job description and any written assignment of work are the evidence that decides borderline cases.

One trap for readers arriving from a patent background: Patent Law Article 16 sets an employer default for employee inventions. That is patent law and does not govern copyright in source code, so an employment contract drafted around it does not answer the question this audit asks.

Contractors and freelancers

For a genuine independent contractor the employer-style default does not apply. The contractor is the author and the initial holder of the economic rights, and the company acquires them only through an express written assignment covering that work (Civil Code Articles 1105, 1125 and 1133 to 1135; Copyright Law Articles 38 to 40). Commissioning the work, specifying it, paying for it and receiving the repository do not transfer copyright.

Three drafting points decide whether a signed contractor agreement actually delivers ownership:

• Rights not named are retained. Armenian practice presumes that economic rights the agreement does not identify as alienated stay with the author, so a clause transferring “all intellectual property” without specifying the rights is weaker than an enumerated list.
• A licence leaves ownership behind. It gives the company permission to use the work while the contractor keeps the copyright. Where a licence agreement states no term, Civil Code Article 1135(5) and Copyright Law Article 40(5) supply a five-year fallback, a ticking clock on a codebase the company believes it owns. That fallback is written for licences; whether it reaches an unequivocal outright assignment is not settled on the sources reviewed here.
• Territory must be stated. Where the agreement is silent, the transfer covers the Republic of Armenia only (Civil Code Article 1135(3); Copyright Law Article 40(3)). A company distributing a SaaS product from a Delaware or Estonian parent needs the word “worldwide” on the page.

Staff engaged through an Employer of Record

An EOR arrangement puts a third entity between the developer and the company that directs the work. Under Labour Code Article 18(1) the employment relationship runs between the worker and the entity that is party to the employment contract, so the EOR is the presumptive statutory employer for the purpose of the default rule in Copyright Law Article 33(1) and Civil Code Article 1128(2). Applied straightforwardly, that means the economic rights vest first in the EOR, and the end client owns nothing by virtue of having set the sprint goals and paid the invoices.

What the end client needs is an effective present transfer from whoever currently holds the rights, which on this reading is the EOR. Three documents are commonly used together: an IP clause in the EOR-worker employment agreement, a direct or tripartite assignment involving the worker, and a present assignment in the EOR-to-client services agreement, drafted with operative words that transfer the rights on signature. A clause promising to assign at some future point leaves the rights where they are until someone performs it. That structure is recommended drafting practice; the statute requires only an effective transfer out of the current rights-holder, and the other two documents support it evidentially. This position rests on the statutory provisions alone. No case law confirming how an Armenian court would treat an EOR software-ownership chain was located for this article, which is itself a reason to document the chain conservatively.

Building the ownership map

The audit produces one artefact: a table in which every person who contributed code is matched to the instrument that moves their rights to the company. Work through it in this order.

1. Extract the contributor list from the repository itself. Run git shortlog -sne across every branch and every repository, including the ones nobody has touched since 2021. The HR roster will miss the freelancer who pushed forty commits in 2021 and was paid through an invoice, and personal email addresses in the commit log are the first sign of a contributor who was never on a contract.
2. Classify each contributor. Founder before incorporation, employee, contractor, agency, EOR-engaged worker, intern, or unknown. The classification determines which default rule applies.
3. Pull the instrument for each one. Employment contract with job description or written service assignment; contractor agreement with the assignment clause; the EOR document chain; founder contribution or assignment agreement. Record the signature date against the first commit date, because an instrument signed after the code was written is the case the remediation section addresses.
4. Check the clauses, one instrument at a time. A signed agreement in the folder proves only that someone signed something. For each contractor instrument, check whether the operative clause assigns the economic rights or only licenses them, whether the rights transferred are enumerated, whether the territory is worldwide, and whether the scope covers the specific work the person actually did.
5. Trace the corporate leg. Where an Armenian operating company develops for a foreign parent, the rights must also move from the Armenian entity to the parent. That intercompany assignment is the link most often assumed and least often signed. Confirm it exists alongside the corporate registration documents the investor will review.
6. Run a licence scan on third-party code. Copyleft licences such as GPL and AGPL impose obligations on distributed derivative works, and an AGPL dependency in a hosted product is a live diligence question even where every employment and contractor document is perfect.

Two related exposures usually surface during the same exercise: brand assets whose trademark registrations still stand in a founder’s personal name, and ownership of design files and documentation held in a designer’s personal cloud account. Both belong in the same table.

The gaps that stall deals, and what to do about them

Five defects account for most of what surfaces in an Armenian tech company’s first ownership audit.

The founder who wrote the prototype before the company existed. A company incorporated in March cannot hold rights in code written in January by operation of any employment rule, because there was no employer. The prototype often survives into production. The fix is a founder assignment covering the pre-incorporation work, signed while the founder is still aligned with the company.

Contractors engaged on a purchase order. A scope of work, an invoice and a payment confirmation establish that the contractor was paid. None of them assigns copyright. Where the contractor is still reachable, a standalone assignment agreement resolves it.

Licence language mistaken for assignment language. Agreements drafted from an international template often grant “an exclusive, perpetual, irrevocable licence”. Exclusive and perpetual are not ownership, and the five-year fallback for a licence with no stated term makes the distinction concrete.

Armenia-only territory. A well-drafted assignment silent on territory transfers the Armenian rights and leaves the rest with the author. For a product sold to customers in the EU and the United States, that is most of the asset.

The undocumented EOR link. Companies that scaled an Armenian engineering team through an EOR frequently hold a services agreement with commercial terms and no present assignment of the rights the EOR holds. Ask the provider for the IP provisions of the underlying employment contracts as well as the services agreement.

Signing an assignment after the code was written

Before paying to cure a gap, establish whether there is one. Where the work was created by employees acting within their duties, Article 33(1) places the economic rights with the employer unless the contract provides otherwise: the company owned the work from creation, and what it needs is evidence of that basis — the employment contract, the job description, the task assignments — not a transfer. What follows is for the cases where no such basis exists. Most of those involve an assignment signed today for work done years ago, and Armenian contract law does accommodate that between the parties: Civil Code Article 441(2) allows the parties to agree that the terms of their contract apply to relations that arose before it was concluded. The contractor who signs a confirmatory assignment in 2026 covering their 2022 work is bound by it.

That retroactive dating binds the people who signed it. It does not establish, against an investor, an acquirer or a court, that the company owned the work from the creation date. Article 441(2) is confined on its face to relations between the parties; Article 346(3) provides that an obligation imposes no duties on anyone outside it; and the Copyright Law fixes no date from which an assignment takes effect against non-parties. The contrast with trade marks is instructive — Article 26(3) of the Trade Marks Law expressly makes an assignment effective against third parties from the register entry, and nothing equivalent was written for copyright. Nor is there any register in which a software copyright assignment can be recorded to fix priority: deposit, notarisation and timestamping are evidence, not title. Treat a confirmatory assignment as curing the relationship with the signing developer, and plan the transaction disclosure on that basis. Disclose the gap and the cure to investor counsel; a late-signed document presented as though it had always existed invites the question the disclosure would have answered. Backdating the signature itself, as distinct from expressly agreeing retroactive effect, is a separate and serious problem.

Two practical points sit alongside it. Armenian employment contracts must be in writing, which is what makes the job description and service assignments retrievable years later. The drafting-language requirements for an IP assignment executed in Armenia were not confirmed by this research, so a bilingual execution copy remains the cautious approach for an instrument a foreign investor’s counsel will read.

For registration, enforcement and the wider protection strategy that sits on top of a clean chain of title, see our guide to protecting intellectual property rights in Armenia’s tech sector.

Frequently asked questions

Last updated: 21 September 2026