Startups Face Source Code Ownership Issues

Startups and businesses are increasingly relying on external technology partners to build digital products. As a result, clearly defining ownership and delivery of source code has become a key aspect of software development agreements.

For businesses investing in digital platforms, access to source code is essential for maintaining, scaling, and further developing their products. Well-drafted contracts and milestone-based delivery obligations are becoming increasingly important.

With cross-border technology collaborations becoming more common, questions around software ownership, project deliverables, and intellectual property are drawing greater attention from businesses. Industry experts say software development agreements should clearly define source code ownership, delivery timelines, access rights, and preservation of digital assets to help minimize uncertainty and support business continuity.

A recent commercial matter involving Florida-based technology company I-Chrono LLC and Delhi-based software development company Fluper Limited has brought these considerations into focus. I-Chrono LLC engaged Fluper in January 2025 to develop a mobile application and web platform for an online luxury watch marketplace, followed by a subsequent engagement for an AI-based luxury watch authentication feature.

The company has stated that payments were made under the agreements and has alleged that the agreed source code and related project materials were not delivered despite repeated requests. It has further stated that the software required multiple revisions during development and that the AI functionality did not perform as expected during testing.

After I-Chrono sought suspension of the projects and requested delivery of the source code and related project materials, the materials were not released, ultimately leading the parties to seek legal resolution. The company has also stated that the delays affected its planned commercial rollout and fundraising efforts, and it has sought appropriate civil remedies, including delivery of the disputed source code and related project materials.

During the course of the matter, interim directions were passed for preservation of the disputed source code and associated electronic records while the contractual issues are being examined. The matter is currently under consideration, and the contractual claims of the parties are yet to be finally determined.

The matter highlights the importance of clearly drafted software development agreements that define source code ownership, delivery obligations, intellectual property rights, and preservation of digital assets. As businesses increasingly collaborate with technology partners across borders, clear contractual frameworks are essential to minimize disputes and ensure business continuity.

In conclusion, the issue of source code ownership is becoming a critical business consideration for startups. With the rise of cross-border technology collaborations, it is essential for businesses to have clear agreements in place to define source code ownership, delivery timelines, and access rights. This will help minimize uncertainty and support business continuity, ultimately leading to the success of digital products and platforms.