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Copyright 101

Copyright is a legal protection automatically granted to the original creators of software code, giving them exclusive rights to use, modify, distribute, and license their work. For developers and companies, owning the copyright ensures control over how the software is used and monetized. It helps prevent unauthorized copying or stealing of the codebase, making it a critical asset for building valuable, defensible products and attracting investors. Without proper copyright ownership, your business could face legal risks or lose its competitive edge.

Source Code as a Literary Work

Under copyright law, source code is treated as a literary work, just like a novel or screenplay, because it’s a written expression of ideas in a specific, fixed form. This classification means that the structure, organization, and actual lines of code are protected from unauthorized copying. Recognizing source code as a literary work reinforces its value as intellectual property and strengthens legal claims in the event of infringement.

Ownership of Copyright

By default, the person who writes the code owns the copyright. For W2 employees, the employer usually owns the code under “work made for hire.” In contract work, ownership depends on the agreement. Unless it clearly assigns rights, the developer may keep them. Clear contracts are key to avoiding confusion.

Open Source != “No Copyright”

Open source software is still protected by copyright. The difference is that the author grants permission to use, modify, and share it under specific license terms. Copyright ownership remains with the creator or project maintainers. Using open source doesn’t mean the code is free of legal restrictions; it just comes with a different set of rights and obligations.

The Copyright Office Report

The U.S. Copyright Office’s guidance and reports on AI and copyright reaffirm that copyright protection requires human authorship. Its 2023 registration guidance, followed by its 2025 report on the copyrightability of AI outputs, clarified that while AI-assisted works may qualify, only the portions with meaningful human creative input are eligible. These serve as guidance for creators and companies navigating copyright in the era of generative AI, especially in fields like software development, where human-AI collaboration is increasingly common.

Thaler v. Perlmutter

In Thaler v. Perlmutter, the D.C. Circuit ruled that works created entirely by AI aren’t eligible for copyright and that only humans can hold copyright protection. Thaler tried to register AI-generated art, but was denied, reinforcing that meaningful human authorship is required. This principle also applies to software code: AI-generated code without human creative input may not be protected by copyright.

Supreme Court Declines to Hear Thaler

On March 2, 2026, the U.S. Supreme Court denied certiorari in Thaler v. Perlmutter, declining to review the D.C. Circuit’s ruling. A cert denial isn’t an endorsement of the lower court’s reasoning, but the practical effect is significant: the human authorship requirement now stands as settled U.S. copyright law unless Congress acts. For software teams, this removes any near-term possibility that purely AI-generated code gains copyright protection on its own. Meaningful human creative input remains the price of ownership.

Allen v. Perlmutter

The open question is how much human input is enough, and that line applies directly to heavily prompted code. In Allen v. Perlmutter, an artist who used more than 600 iterative prompts to produce an image was denied registration by the Copyright Office and is now challenging that refusal in the U.S. District Court for the District of Colorado.

Thomson Reuters v. Ross

In Thomson Reuters v. Ross, the legal publisher sued Ross Intelligence for allegedly scraping and using its copyrighted legal content to train an AI legal research tool. Ross argued that its use was “intermediate” and transformative, not a direct republishing of Westlaw materials. The case highlights the legal tension between data scraping and fair use in AI training, raising important questions about whether using copyrighted text to train models constitutes infringement or innovation. In February 2025, the district court rejected Ross’s fair use defense and found infringement, the first decision to deny fair use for AI training. The Third Circuit heard oral argument on the appeal (No. 25-2153) in June 2026, and its ruling will be the first federal appellate word on the question.

What’s Settled, What’s Not

The core rule is now settled: copyright protection requires meaningful human authorship, and with the Supreme Court declining to review Thaler, that requirement stands as U.S. law unless Congress changes it. What remains open is narrower, but still consequential. Fair use for AI training is unresolved; the Third Circuit heard argument in Thomson Reuters v. Ross in June 2026 and a ruling is pending, so how models may lawfully be built is not yet fixed. The other open question is where the line sits for AI-assisted works, meaning how much human creative input is enough to earn protection, which cases like Allen v. Perlmutter are now testing. For creators and companies, the safe posture is to document real human authorship and treat purely AI-generated portions as unprotected.