The code belongs to the founder as its author, not to the company, unless they wrote it in the course of work for another employer or client. The rule on employee works does not apply as against the company, because the company did not exist when the code was created and the founder had no employment relationship or office with it. The company may use the code only with the author's consent, and therefore needs a written licence agreement: exclusive, covering every necessary manner of use including modifications, and with consent to sub-licences and assignment of the licence given in advance.
A typical start-up beginning: one of the founders writes the first version of the application in the evenings, shows it to friends, and only then forms an s.r.o. with two others. Since then the company has built on the prototype, paid for servers and sold it to customers. At the first conversation with an investor, however, the question arises on what basis the company actually uses the code. The answer that the author is, after all, a co-founder is not enough in law.
Who owns the code
A computer program is protected by the Copyright Act (Act No. 185/2015 Coll.), and rights in it arise for the author. The exception is an employee work, the economic rights in which are exercised by the employer. An employee work is, however, only a work created in the performance of duties arising from an employment relationship or from membership of a body of a legal entity (Section 90(1) and (2)). Code written before the company was formed does not meet that condition as against the company, because the company did not then exist. It should, however, be checked whether the founder wrote it in the performance of duties for their employer at the time or to another party’s order; the economic rights would then be exercised by that party (Sections 90(4) and 91(4)). If not, the basic rule applies:
A work may be used only with the author’s consent, unless this Act provides otherwise.
— Section 19(2) of Act No. 185/2015 Coll. (unofficial English translation)
Copyright cannot be transferred: moral rights are non-transferable (Section 18(3)) and so are economic rights (Section 20(2)). The company therefore does not acquire ownership of the code, but a licence. If two founders worked on the prototype in such a way that their contributions cannot be separated, the rights belong to both jointly and severally (Section 15(2)) and both must grant the licence.
A licence that stands up to due diligence
A non-exclusive licence is a weak foundation for a start-up, because the author could licence the same code to competitors as well; unless the agreement expressly states that the licence is exclusive, it is deemed to be non-exclusive (Section 70(1)). An exclusive licence has a form prescribed by the Act:
A licence agreement must be in writing where the author grants an exclusive licence.
— Section 65(3) of Act No. 185/2015 Coll. (unofficial English translation)
The agreement should not omit the following points:
- manners of use – including adaptation and combination with other works (Section 19(4)), failing which the licence is limited to the manner necessary for the purpose of the agreement (Section 66(1)),
- time and territory – usually for the whole duration of the economic rights and without territorial limitation,
- sub-licences and assignment – without the author’s prior consent the company may neither grant a sub-licence nor assign the licence (Section 72(1) and (2)), which affects licences for customers and partners as well as moving the product to another company,
- remuneration – if the agreement neither sets remuneration nor states that the licence is granted free of charge, the author is entitled to customary remuneration (Section 69(6)),
- source code and documentation – the duty to hand them over, together with any further versions the founder creates outside the company.
For code that the founders write after formation, the relationship must be arranged separately, by an employment contract or a contract for work. How commissioned software works is explained in who owns the copyright in software from a supplier.
A non-monetary contribution instead of a licence?
If the prototype is to carry value in the registered capital, a non-monetary contribution comes into consideration. The Act, however, permits as such a contribution only assets whose economic value can be determined, and their value is determined by an expert report; the contribution must be paid up before the registered capital is entered (Sections 59(2) and (3) of the Commercial Code). With an early prototype the valuation is uncertain and a report will delay formation, so a licence is usually simpler, with the founder’s contribution reflected in the size of their ownership interest as set by the memorandum of association; the reasons for and conditions of that division may be captured in a founders’ agreement.
How to proceed
The licence to the prototype is best signed together with the memorandum of association, while the founders are still of one mind. We prepare it as part of our legal package for start-ups; a standalone licence agreement for existing code is covered by our software and licence agreement service. What else an investor examines when reviewing rights to the product and ownership of the company is summarised in the article on legal due diligence of a start-up before the first round. Send us details of who created the prototype and when, whether it contains third-party libraries and how you plan to finance the company, and we will propose a licence covering what an investor asks about when reviewing rights to the product.
This answer provides general information on the law as at 12 September 2026. It does not constitute legal services or replace an assessment of an individual case. The details of your situation may differ. Book a consultation to discuss them.
