Vibe coding has gone mainstream. Founders, marketers and operations managers who have never written a line of code are shipping real software by describing what they want to an AI tool and accepting whatever comes back. It is fast, it is cheap and it feels a bit like magic.
Then somebody asks who owns the code, and the room goes quiet.
Under Australian law the answer is not automatic. For a lot of AI-generated code, there may be no owner at all.
What Is Vibe Coding?
Vibe coding is software development by conversation. You describe the app you want in plain English, an AI coding tool writes the code, and you improve it by prompting rather than programming. Industry surveys now put more than 40% of new code in the AI-generated or AI-assisted bucket. Entire products are being built this way, often by people well outside the tech industry.
The productivity gains are real and nobody should be talked out of them. The legal position is just messier than most people assume.
A Conversation We Never Enjoy Having
A client came to us mid-raise. Strong product, paying users, term sheet on the table. They assumed the software was theirs because they had paid for it, built it and shipped it.
Almost all of it had been vibe coded.
We had to tell them that large parts of their codebase probably attracted no copyright at all. No copyright means nothing solid to warrant to an investor and nothing clean to assign at completion. That was a rough meeting. Watching a founder work out that the asset they spent a year building might not legally be an asset at all is something you remember.
Deals do fall over on this. Investors walk. Founders end up rebuilding from scratch at enormous cost and months of lost momentum. Worse, it makes an otherwise sharp team look amateur at exactly the moment they need to look bulletproof.
All of it avoidable with a bit of foresight.
Copyright Law Wants a Human Author
In Australia, source code is protected as a literary work under the Copyright Act 1968 (Cth). Copyright is automatic, with no registration system to worry about, but it is not unconditional. Section 32 requires a work to have an author, and our courts have consistently held that an author has to be a human being who applied independent intellectual effort to the actual expression.
That last bit is where vibe coding runs into trouble. Setting up a system, choosing the inputs and pressing the button will not get you there. The human effort has to go into the particular form of expression that ends up in the codebase.
The Cases That Built the Rule
Three decisions set the framework, and none of them involved AI as we know it today.
In IceTV Pty Ltd v Nine Network Australia Pty Ltd [2009] HCA 14, the High Court confirmed that originality turns on independent intellectual effort directed at expression. Sweat and expense on their own count for nothing.
In Telstra Corporation Ltd v Phone Directories Company Pty Ltd [2010] FCAFC 149, the Full Federal Court found no copyright in the White Pages and Yellow Pages. The directories were largely produced by automated systems and Telstra could not point to identifiable humans who had exercised the necessary skill and judgment in creating the final compilations. A telco lost copyright in its own phone books.
Closest to home for software is Acohs Pty Ltd v Ucorp Pty Ltd [2012] FCAFC 16. The Court held that copyright did not subsist in HTML source code generated by a software system, even though humans had written the system itself. Justice Jessup put it plainly: a work has to spring from the original efforts of a human author. Writing the tool does not make you the author of what the tool produces.
Read that last sentence again with an AI coding assistant in mind. It should make you a little uncomfortable.
Patent Law Landed in the Same Place
The point got tested again on the patent side. In Commissioner of Patents v Thaler [2022] FCAFC 62, a five-judge bench of the Full Federal Court unanimously held that an AI system, the now-famous DABUS, cannot be named as an inventor under the Patents Act 1990 (Cth). The High Court refused special leave.
Different statute, different test, same instinct. Australian intellectual property law is built around human creators and the courts have declined to stretch it.
So Who Owns Vibe Coded Software?
No Australian judgment has dealt squarely with code from a large language model yet. The existing framework still gives us a spectrum.
At one end sits the developer who designs the architecture, writes detailed specifications, reviews output line by line, rejects and rewrites big chunks and integrates everything into a wider system. Strong argument that the codebase reflects genuine human intellectual effort. Copyright almost certainly subsists.
At the other end sits “build me a booking app”, followed by shipping whatever appeared. That is the exact fact pattern Acohs and Telstra warn about. The person prompting configured and started an automated process, which on current authority may not be enough to make them an author.
Most projects sit somewhere in the middle, which is the real problem. You will not find out where you sit until a competitor copies your product or an investor asks you to prove title. If software is your core asset, get proper intellectual property advice long before either of those things happens.
What You Can Still Protect
Copyright is one tool. Often it is not the sharpest one available.
- Confidential information and trade secrets. Unpublished code, architecture and business logic can be protected in equity and by contract whether or not copyright subsists. For vibe coded products this is frequently the stronger position.
- Contracts. Development agreements should deal expressly with AI-assisted output, warranties about which tools were used and what happens if copyright turns out not to subsist.
- AI tool terms. Most major providers purport to assign output rights to the user. Helpful, but nobody can assign a right that never existed in the first place.
- Documentation. Keep records of human input: specifications, design decisions, code review history, commit logs. If you ever have to prove authorship, contemporaneous evidence of human effort is your case.
- What goes into the tool. Pasting customer records or confidential material into an AI coding assistant can trigger privacy and data protection obligations under the Privacy Act 1988 (Cth), and can quietly waive confidentiality in the very material you are trying to protect.
- Infringement risk. AI tools trained on public repositories can reproduce protected code or output carrying restrictive open source licences. Ownership is only half your exposure.
The Bottom Line
Vibe coding is here to stay and that is mostly good news. But any business raising capital, licensing product or heading into a technology M&A transaction will get asked one deceptively simple question in due diligence: can you demonstrate that you own this? Australian copyright law will not answer it for you.
The teams who handle this well treat AI-generated code as an asset that has to be actively secured. The ones who assume it arrives pre-wrapped tend to find out the hard way, usually with a term sheet already on the table.
If your product was built with AI tools and you have not mapped where your rights actually sit, have that conversation now. It is a great deal cheaper than having it in a data room.