I am not saying that the code should be owned by the client.
I actually do not think that code can be owned.
Code is thought, crystallized in written form. Telling someone that he may not use a particular piece of code is the same as telling him that he may not think that way. Thinking just does not work like this.
Update: I realize that this seems like a pretty negative approach. I will therefore outline what I believe software developers are paid for.
I believe that a software developer is paid for developing software.
In other words, the client does not pay for code, he pays for coding. A teacher is likewise not paid for knowledge, but for teaching.
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