Software Source Code Ownership, IP Due Diligence and Copyright Assignment in Turkish SaaS Startups

In Software-as-a-Service (SaaS), artificial intelligence, and deep-tech enterprises, proprietary Source Codes, Algorithms, Database Architectures, and Intellectual Property (IP) constitute over 90% of total enterprise value.

However, during venture capital (VC) financing rounds, Series A valuations, and cross-border M&A acquisitions, the most frequent fatal flaw identified during Legal IP Due Diligence is the failure to properly and irrevocably transfer source code ownership to the corporate entity under Turkish copyright law.

This guide provides a comprehensive legal roadmap on software ownership under Article 18 of the Law on Intellectual and Artistic Works (Law No. 5846 - FSEK), contractor assignment agreements, statutory transfer requirements under FSEK Article 52, open-source viral copyleft traps, and IP Due Diligence checklists.

1. Legal Classification of Software & Ownership under FSEK Art. 18

Under Turkish copyright law (FSEK Art. 2/1-1), computer software and computer programs are categorized as ‘Scientific and Literary Works’ and enjoy statutory copyright protection upon creation without the need for formal registration.

Ownership rules vary drastically depending on the working relationship:

Scenario A: Payroll Employees (FSEK Art. 18)

Pursuant to Article 18/2 of FSEK: “Unless otherwise understood from the special contract between them or the nature of the work, the authority to exercise rights over works created by civil servants, employees, and workers in the course of performing their duties belongs to those who employ or appoint them.”

• Economic rights to code developed by payroll employees in the regular scope of employment belong to the employer by operation of law.
• Nevertheless, best practice mandates executing a dedicated IP & Inventions Assignment Protocol alongside the employment contract.

Scenario B: Freelancers, External Agencies & Independent Contractors

When a startup commissions software from external freelancers, software houses, or foreign dev agencies, FSEK Art. 18 DOES NOT APPLY.

• Paying invoices or service fees does NOT transfer source code copyright to the startup!
• Without a formal written Copyright Assignment Agreement (Telif Devir Sözleşmesi) compliant with FSEK Art. 52, the developer remains the sole legal copyright holder and can file copyright infringement lawsuits or injunctions against the company.

2. Mandatory Formal Requirements under FSEK Art. 52

Turkish courts and the Supreme Court of Appeals (Yargıtay) apply strict formal scrutiny to copyright assignment agreements. An agreement will be rendered VOID if it fails any of the following statutory criteria:

1. Strict Written Form: Must be executed in physical or qualified electronic writing. Email exchanges or Slack messages are legally insufficient.
2. Individual Enumeration of Economic Rights: Broad, generic clauses like “All intellectual property rights are owned by the company” are NULL AND VOID. The agreement must explicitly list each economic right by its statutory name:
   • Right of Adaptation / Modification (FSEK Art. 21)
   • Right of Reproduction (FSEK Art. 22)
   • Right of Distribution (FSEK Art. 23)
   • Right of Representation / Performance (FSEK Art. 24)
   • Right of Digital Transmission & Public Broadcasting (FSEK Art. 25)
3. Waiver of Moral Rights Exercise: The agreement must explicitly grant the company unconditional authority to publish, update, and modify the software without listing individual author names (FSEK Art. 14).

3. Open-Source Licensing Traps: Permissive vs Viral Copyleft

License Category	Examples	M&A and Commercialization Risk Level
Permissive	MIT, Apache 2.0, BSD	LOW RISK: Allows proprietary commercialization without disclosing source code.
Weak Copyleft	LGPL, MPL	MEDIUM RISK: Only modifications to the library itself must be shared.
Strong / Viral Copyleft	GPL v2/v3, AGPL	CRITICAL RISK: Forces the startup to make its entire proprietary codebase publicly available!

4. IP Due Diligence Pre-Investment Checklist

Before entering funding negotiations or M&A audits:

1. Ensure all founding engineers have signed retroactive Founder IP Assignment Agreements covering code written prior to corporate incorporation.
2. Maintain signed FSEK 52 assignment agreements for every contractor, external developer, and UI designer.
3. Conduct automated software bill of materials (SBOM) scans using tools like Black Duck or FOSSA to purge viral GPL/AGPL dependencies.

---

Related Practice Areas

• Intellectual Property
• Trademark Registration & Litigation
• Patent Litigation
• Copyright & Anti-Piracy