Transfer of Financial Rights under Article 52 of FSEK and Source Code Ownership in Software and Web Design Contracts

Software development, mobile applications, and web design projects represent one of the fastest-growing yet most legally contentious commercial fields. Many businesses mistakenly assume that paying a software developer or digital agency in full automatically transfers full intellectual property ownership and source codes to the client.

In practice, clients frequently suffer severe business disruptions when a developer withholds domain name administrative access, refuses to surrender raw source codes, or licenses the exact bespoke code to direct competitors. These disputes arise primarily from a failure to recognize the mandatory statutory requirements of the Turkish Law on Intellectual and Artistic Works (Law No. 5846 - FSEK).

This article examines the legal classification of software, the formal validity requirements for the assignment of financial rights under Article 52 of FSEK, source code ownership, domain hijacking, and the copyright status of AI-assisted code generation.

Legal Status of Software and Web Design under Turkish Copyright Law

Under FSEK Art. 1/B-a, an intellectual creation is legally protected as a 'work' if it reflects the author's personal originality and falls into one of the statutory categories:

1. Computer Programs (Software): Classified under FSEK Art. 2/1 as 'Scientific and Literary Works', protecting source code, object code, and preparatory design materials.
2. User Interface and Graphic Layouts (UI/UX): Protected as 'Works of Fine Art' under FSEK Art. 4.
3. Databases: Original structural compilation databases receive sui generis protection under FSEK Art. 6.

By operation of law, original authorship vests exclusively in the natural person who authored the code. Without an express, compliant legal assignment, the developer remains the sole copyright holder.

Strict Formal Validity Requirements under FSEK Article 52

Turkish copyright law imposes an exceptionally strict formal rule under Article 52 of FSEK:

"Agreements concerning financial rights must be in writing, and the rights assigned must be specified individually and distinctly."

Precedents of the Court of Cassation (11th Civil Chamber) establish the following strict criteria:

1. Mandatory Written Form: Oral discussions, WhatsApp messages, or generic invoice descriptions do not satisfy the statutory written form requirement.
2. Individual Enumeration Rule: Sweeping clauses such as "All rights belong to the client" are null and void. Each statutory financial right must be individually enumerated:

• Right of Adaptation / Modification (Art. 21): The right to alter, enhance, or debug the code.
• Right of Reproduction (Art. 22): The right to copy, host, and install the software.
• Right of Distribution (Art. 23): The right to sell, lease, or disseminate copies.
• Right of Public Communication (Art. 25): The right to broadcast the website or SaaS platform across digital networks.

Source Code versus Object Code Delivery

A frequent crisis arises over source codes:

• Object Code: The compiled, executable machine-readable format hosted on production servers.
• Source Code: The human-readable programming commands, libraries, and architecture required to maintain and modify the system.

Unless explicitly stipulated in a written development agreement, the developer is generally required only to supply the executable object code. To guarantee full technical independence, clients must ensure the contract explicitly stipulates: "The developer shall deliver all source codes, repository access, documentation, and development libraries upon completion."

Domain Hijacking and Unauthorized System Interruption

Withholding access credentials or domain registrations during commercial payment disputes constitutes an unlawful act:

1. Domain Hijacking: Registering a client's trademarked domain in the developer's name constitutes bad-faith registration subject to TRABİS or ICANN UDRP transfer proceedings.
2. Unlawful System Interference (Turkish Penal Code Art. 244): Disrupting an active commercial website or blocking administrative access may constitute a criminal offense punishable by imprisonment under Art. 244 of the TPC.

Frequently Asked Questions

Question: Who is liable if a freelancer used copyrighted fonts or unlicensed stock photos on our commercial website? Under FSEK Art. 71, both the developer who copied the asset and the business operating the website are jointly liable to the copyright holder. However, the business can seek full indemnity and legal costs from the developer under the warranty clause of their contract.

Question: What remedies exist if a developer withholds proprietary GitHub/GitLab repositories on their personal account? Repositories constitute proprietary company assets. Withholding code constitutes an unlawful breach of loyalty and computer sabotage under TPC Art. 244. The client should review contract ownership terms, serve a formal notary demand granting a reasonable deadline, and petition the Intellectual and Industrial Property Court for injunctive relief and specific performance under HMK Art. 389, while evaluating cybercrime complaint remedies under TPC Art. 244 where elements are satisfied.

Question: A freelancer built my website but withheld the domain name and CMS credentials. Is paying the fee enough? Payment proves financial performance but does not specify the scope of deliverables. The client must establish the agreed scope through written records, serve a formal notary notice demanding immediate handover of credentials, and file for provisional court injunctions if domain diversion is threatened. Furthermore, under FSEK Art. 52, obtaining login passwords does not equal legal copyright acquisition unless a written financial rights assignment is signed.

Question: Can I legally compel a developer to hand over raw source codes if the contract is silent? Under standard precedents, a general contract for work does not automatically oblige the developer to deliver source codes unless agreed in writing or unless adaptation rights (Art. 21) were assigned. However, where bespoke software involves the client's proprietary trade secrets, delivery can be claimed under good-faith performance rules (TCC Art. 2).

Question: Who owns copyright if the developer used generative AI tools like ChatGPT or Midjourney? Under Turkish law, copyright vests strictly in human creativity. Under FSEK Art. 1/B, copyright requires human intellectual creation. Purely autonomous AI outputs lack human authorship and do not confer copyright ownership on the user. However, this does not mean they are risk-free; if AI-generated code or assets infringe third-party intellectual property, commercial use may still trigger civil liability. Where a programmer substantially refactors and curates the code with original intellectual choices, copyright may arise over that human creative contribution.

Question: What happens if a developer incorporated copyleft open-source libraries (e.g., GNU GPL v3)? Copyleft licenses (such as GNU GPL v3) mandate source code disclosure when derivative software is publicly distributed; purely internal, closed deployments do not trigger external distribution obligations. However, integrating copyleft libraries into commercial software intended for distribution without consent constitutes contractual defective performance under the Turkish Code of Obligations, entitling the client to demand remediation and indemnification.