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(Message started by: bob morrison on Jul 29th, 2005, 4:53am)

Title: Software Ownership
Post by bob morrison on Jul 29th, 2005, 4:53am
 I am currently in the process of licencing some software with a company that I work with( not for! ).   Obviously its not going as smoothly as it should !  
The problem is  that the company has ( > 12 months ago ) paid for a small part of the software development ( about 10% cost ), and to agree to the licencing agreement they want delivery of the source code for this product when the company is sold. I am not happy with this as the same software is used in several other products ( with user interface modifications )
 A licence will be required ( a fee and a serial to activate ) on all other products except for this one ( in total 5 products share a large amount of the 'engine' about 75% ).
 My question is  this...if I hand over the source code to one of the products, who owns the source code and does licencing/ownership still stand on the similar products ?  
 I am pretty sure I'm not going to like the answer, so am planning for the worst !!!


Title: Re: Software Ownership
Post by mactheknife on Jul 29th, 2005, 8:52am
My guess is it depends on what your agreement actually says.  By default, the copyright law makes a distinction between transferring copyright ownership in a work and transferring the physical object on which that work is embodied.  For example, if you paint a picture and sell it to me for say $50 (hey, I'm cheap) I have bought the canvas with your work on it, but I have not bought the right to reproduce that artwork on the cover of the album I'm releasing at the same time.  However, if you also had a written agreement transferring the copyright in that painting to me, I could do more or less what I want with it.

IANAL so I won't give you any hard and fast solutions, but it would seem to me that the more specific your licensing agreement is in asserting your retention of copyright in the source code and the terms under which the contracting company can use the code, the better.  If it's vague on these points, it's likely that there could be some confusion as to what you actually sold/licensed to the company.  You probably want an attorney on your side who can make the terms clear and negotiate out any "work made for hire," transfer of copyright, or other red flags that may come up.   BTW, this is only answering your question about the copyright ownership part--with software there may be trade secret material and other contractual issues which are way over my head--I'll let the pros handle that.  HTH

Title: Re: Software Ownership
Post by Isaac Clark on Jul 29th, 2005, 8:57am
After you "hand over" the code, your rights and your clients rights will be whatever you have agreed to and put into writing.  The physical transfer of the code does not transfer any exclusive rights.  

I highly recommend that you negotiate what rights you want for yourself and for your clients after the transfer and that you put the agreement into writing.

If possible I would recommend *NOT* assigning the code to the client but rather giving them a non exclusive license to do whatever you want to let them do.

An alternative plan if you must assign the code is to include in writing with the assignment a reservation of the rights you need to continue using your code.

Absent a written agreement, most likely you as a contractor own the code you wrote.  Most likely the code is not a work for hire.  Handing over the code probably allows your client to make use of the code for the intended project but not necessarily to modify the code or to sell it to others.

Title: Re: Software Ownership
Post by bob morrison on Jul 30th, 2005, 7:28am

Thanks for the response guys.

I think I'm just concerned that by giving them the source for project A, after six months they could replace project B which is where my licence fee is charged. ( Currently only Project B has a licence, Project A does not ) However, serial keys are required for both versions.

I think you're right Isaac, by handing over the source code, I am effectively signing away any future work/licecen fees. Its pretty obvious to me that with ProjectA they will create project B and remove me from the loop.

So, handover of the source is not really an option.

I think the best approach is to give them a non exclusive license and say I'll support upgrades for 3 years or so. If they want to get someone else in, then I'm ok with that - but I 'm not going to make it easy for them !

The reason that they want the source code is so that if the company is sold in the future, then a potential buyer will know that they get the source code. They could be put off if it belongs to someone else. I suppose the exclusive licence should be ok for this !? As long as it states that the software will be maintained/updated by me for a period of X years as long as it is in use.

How does that sound to you guys ? Fair ?

If you were buying the company would that put your mind at ease ?

thanks again for the responses, I really appreciate it.

Title: Re: Software Ownership
Post by Isaac Clark on Jul 30th, 2005, 10:54am
It sounds like you are negotiating payment and terms. In a way that is a good thing because you haven't yet signed away your position.  But the bad thing is that it seems you are negotiating for at least some money you've already earned.

The company may want source code for a number of reasons including:
a) insurance in case you go out of business
b) insurance in case they find it difficult to work with you
c) they want to fix their own bugs
d) they want to make new products based on the code.

But simply giving them the code does not mean they are free to make new products or even to add new functionality to the existing products.

Depending on the reason for wanting for source code, they may like some of the terms you are offering them or they may reject anything but an absolute ownership of the code.  Perhaps they would be satisfied with an escrow arrangement where a third party holds the code unless some triggering event occurs.

Another way of looking at things is what rights do they want you to give up with the code.  For example they might insist on:

a) You have no rights to use the code or to create further derivative works
b) You have no right to stop them from using the code in any manner they see fit
c) You have only the right to stop them from using the code in a future product or in competition with you.
d) You have the rights and they have the code to look at unless something bad happens

Title: Re: Software Ownership
Post by bob morrison on Aug 2nd, 2005, 7:15am
Thanks Isaac,

 I think the thing that makes me nervous at the moment is that if another company should buy the client, they could take some kind of legal action for the other products that I have written. I mean, if they have the source code then they could believe that they own the rights to it and all derivatives. I guess I cannot avoid this though.

thanks again

Title: Re: Software Ownership
Post by Isaac Clark on Aug 2nd, 2005, 9:27pm
The purchaser of the company might make the mistake of thinking that
they own the code, but if you've registered the copyright (and you should) you ought to be able to put a quick end to any legal action they attempt.  You should also include copyright information in the header.

If the purchaser exceeds the scope of the license you granted, your
registration plus your copy of the license agreement ought to be enough evidence.  Mere possession isn't going to beat that.

Title: Re: Software Ownership
Post by bob morrison on Aug 3rd, 2005, 2:25am
Thanks again Isaac.

I think i'll copyright the software today. I've put lots in the code ( could be deleted though! ), and in the executables header.
Another thing it that the company keeps talking about having a rotalty agreement instead of a licence agreement - any ideas as to why ? Sounds like they want to muddy the waters a little to me !?

Title: Re: Software Ownership
Post by Isaac Clark on Aug 3rd, 2005, 4:00am
Royalties means how you get paid.  There should still be an agreement
as to what rights are being licensed or yielded if you are giving them
your source code.

Title: Re: Software Ownership
Post by bob morrison on Aug 4th, 2005, 10:37am

 In the preliminary discussions, things have not gone too well !
 The company is claiming that they own the software because they paid some $30,000 2 years ago. The fact was, that this was for another project. It just so happens that  I started the current project then too - but nobody knew of it. Now, I know that this muddies the waters a little bit. The question is this - if someone pays say $10,000 in january and the work continues to until december - but no invoices were paid and nothing was signed - does this mean that they own the software/source code as of January, or december ???

I knew I should have avoided being a software guy!

Title: Re: Software Ownership
Post by JSonnabend on Aug 5th, 2005, 7:05am
Don't be put off by an initially tough response from the other side.  One approach might be to have an attorney review everything and then write a nasty letter, if appropriate.  I've had more than one adversarial party change its tune after I became involved.  

- Jeff

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