Software Development Agreement – Who Really Owns The Intellectual Property?

By | Copyrights, Intellectual Property, Licensing, Licensing Agreements, Open Source, Software, Software Agreements, Software Lawyer | No Comments

software development agreementWhether you’re a developer or a client, one of the most important things to cover in your software development agreement is who owns what intellectual property (IP) rights.

Surprisingly, most developers and their clients either don’t know or having conflicting views on the subject.

Imagine you’re a client that’s just obtained an advantage in the marketplace with new software. Then you discover your developer now works for one of your biggest competitors on a similar software project.

Or, let’s say you’re a software developer. At the end of a project, the client is happy with your work but makes an off-the-cuff remark about owning the new software lock, stock, and barrel. You wonder if the client understands that’s not the case.

According to Dallas Software Lawyer Mike Young, there are two competing interests at play. “The client wants ownership while preventing the developer from re-selling the software to others,” he said. “On the other hand, the developer wants to keep ownership because some code can be recycled and used on projects for other clients instead of having to reinvent the wheel from scratch.”

So, how do you balance these competing interests in a software development agreement?

One method is to use a combination of licensing with non-competition provisions.

How does this work?

The developer retains IP ownership, licenses the software to the client, and agrees to restrict the purposes for which the code can be recycled. Often, this means the developer is agreeing that for a period of time, the developer will not use the software to compete with the client or recycle the code and sell it to one of the client’s competitors.

What if the developer doesn’t own some of the code used in the software?

The general rule of thumb is you can’t convey what you don’t have.

When it comes to software development, there’s often is some code the developer does not own. For example, a developer’s license has been purchased from a third party, the developer is using open source licensed code (e.g. GNU General Public and Creative Commons licenses), or some of the code has been taken freely from the public domain.

In other words, there may be multiple tiers of intellectual property rights associated with a single piece of software. And if those are not clearly identified in the software development agreement, it’s a recipe for confusion, hard feelings, and litigation.

What if the developer is the company’s employee?

Even if employees are doing software development for an employer, it’s risky to assume the software is the employer’s intellectual property as a work made for hire for two primary reasons.

First, certain criteria must be satisfied before the software is considered a work made for hire.

Second, the employee(s) developing the software may have licensed some of the code, used open source code, or taken code from the public domain.

Employers can reduce these risks by taking preventative steps before development begins. These actions can include written employment agreements that cover works made for hire, implementing employment guidelines to ensure the work-for-hire criteria is satisfied, and establishing a clearly defined project scope of work to identify the coding resources for the project and related intellectual property rights.

IP Ownership Is Negotiable

Whether you’re an independent contractor, client, or an employee involved with a software development project, it’s important to understand the intellectual property rights are frequently negotiable, i.e. there’s no one-size-fits-all standard to apply across all projects.

Before negotiating, work with your software lawyer to identify what you must have, what would be nice to have, and what you can live without. This makes it easier to cut a deal where each party gets what they want from the project.

On-Call Scheduling Of Hourly Employees: Should Employers Use It?

By | Employment Agreements, Featured Articles, Texas Business Lawyer | No Comments

on-call schedulingSome businesses require hourly employee on-call scheduling (also known as on-call shifts) to ensure there’s just enough workers to meet labor requirements for shifts. This means employees have to put their lives on hold, calling in a couple hours before coming to work to see whether not they’re actually needed for a particular shift.

For the employer, this appears to save money because during slow times labor costs can be minimized by telling an employee not to come in for all or part of a shift. And if the business has a high turnover, such as fast food restaurants, it may make sense to double book employees with the expectation one will quit or simply not show up.

For example, if two employees scheduled for the same position on a shift call in and expect to work, it’s easy to tell one he isn’t needed while requiring the other to show up.

Is On-Call Scheduling Illegal?

As pointed out by Daniel Wiessner in “Retailers to drop on-call scheduling amid state probes,” some states’ attorneys general contend on-call scheduling violates applicable wage laws because it requires hourly employees to perform some work (e.g. calling in one or more times) without getting paid. That’s in addition to the moral issue of putting workers in limbo where they cannot make concrete plans for a day they may or may not be working.

Implementing On-Call Shifts Effectively

If you’re going to use on-call scheduling in your business where it’s legal to do so, be sure to compensate the employee for the burden of being placed in limbo and try to keep such scheduling to a minimum per employee (e.g. no more than one shift per pay period). Just as you don’t want customers to get your goods and services for free, don’t steal your employees’ lives away by abusing their work schedules.

Alternative To On-Call Schedules

Although wage and hour laws vary by state, a better method to meet labor requirements is to replace on-call shifts with a financial incentive making it worthwhile for an employee who has a day off to want to come in and work an extra shift if requested to do so by management. Because the act is voluntary and compensated, employee productivity is likely to increase, legal risks are minimized, and the employer is less likely to abuse the system when there is a direct additional cost to making a call for more labor.

An experienced business lawyer can help you avoid the legal pitfalls of on-call scheduling and other employee wage and hour practices.

Don’t Treat Your Employees Like Strippers

By | Business Contracts, Employment Agreements, Independent Contractor Agreements, Taxes | No Comments

employees independent contractorsAs reported by Jessica Anderson in the Baltimore Sun (Strip club dancers are suing clubs over pay – and winning), strip clubs are getting in trouble by improperly treating strippers as independent contractors instead of as employees.

Although there’s no hard and fast rule as to whether an individual working for your company is an employee or an independent contractor, the U.S. Internal Revenue Service (IRS) does provide some guidance on the issue.

Important Employment Factors

Two key factors that favor employment status are setting the work schedule and controlling how the work must be done by the person. For strip clubs, this meant club management telling the dancers when they had to perform and dictating what they could and couldn’t do when stripping/dancing.

What’s the potential damage by mislabeling employees?

If you treat your employees as independent contractors, you may be liable for back wages, statutory damages, penalties, employment taxes, plus contributions to workers compensation and unemployment compensation funds. These misclassified employees may also be eligible for benefits you’ve provided to your other workers, such as 401k contributions, paid vacation, and health insurance.

How to this problem?

If your workers are really employees, treat them as such from the time you extend an offer to work for you. Pretending they’re independent contractors when they’re not creates a ticking time bomb of legal and tax liabilities you don’t want.

On the other hand, if a worker truly is an independent contractor, it’s often a good idea to make that relationship clear in a professionally prepared written independent contractor agreement signed by the parties. If the contractor decides to assert employment status, you’ve got a contract to point to when trying to convince a judge or government agency that the worker is not an employee.

IRS Form SS-8

If it’s truly unclear whether your workers are employees or independent contractors after consulting with an experienced business lawyer, you may wish to file a Form SS-8 “Determination of Worker Status for Purposes of Federal Employment Taxes and Income Tax Withholding” (PDF file) with the IRS for a determination as to the workers’ status.

Google Privacy Policy, the FTC, and Your Rights

By | Business Legal Alerts, Federal Trade Commission, Privacy, Social Media, Social Networking | No Comments

According to the WaPo’s Craig Timberg (“Google facing FTC scrutiny over privacy — yet again”), Google has been accused in a consumer advocate complaint to the U.S. Federal Trade Commission (FTC) of engaging in deceptive trade practices by changing its privacy policy earlier this year to permit merging user profile data collected across the company’s various platforms.

Whether or not there is anything wrong with the Google privacy policy change remains to be seen. The FTC may even dismiss the claim on the merits.

What is clear is that the general rule of Internet free services applies. If you’re not paying for the service, you’re the product. It’s a Faustian bargain you enter into willingly with every online service that you use (from Facebook to Gmail).

Rule of Internet Free Services: You trade information about yourself and others in exchange for the service provider delivering what you want.

And if you don’t want to trade that information to be used for targeted advertising and other purposes, don’t use the “free” service. It’s really that simple.

Evernote Privacy Policy Change: Much Ado About Nothing

By | Business Legal Alerts, Internet Lawyer, Privacy | No Comments

evernote privacy policy updateUpdateEvernote has rescinded its planned change to its privacy policy because of the backlash. Users must affirmatively opt in before the company’s employees will be reading the content of user notes as part of the machine learning process. This is somewhat silly because the same issue has been ignored for many years by Evernote users who also use “free” email services like Gmail and Yahoo mail.

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Original Article

Evernote is updating its privacy policy to reflect that some company employees may view your content as part of overseeing the machine learning process.

There’s an uproar because some users (e.g. technologically-impaired journalists) naively think their information is stored online secure from prying eyes.

Here’s What You Should Know About the Evernote Privacy Policy Change

First, the general rule of thumb is that anything stored online is not secure. Just ask the celebrities whose naked selfies were exposed in “The Fappening.”

Second, many of those complaining about Evernote’s policy change think nothing about using Google Gmail, Yahoo Mail, and other email services where machine learning is also supplemented by company employees viewing user content.

Third, Evernote is doing the right thing by disclosing how the machine learning process actually works with the assistance of real people. If the company hid this information, you’d undoubtedly see shakedown lawsuits because of the lack of transparency (Tip – if you’ve got a website or an app, you should have your Internet lawyer make sure your privacy policy is consistent with your actual practices).

If you don’t want your stuff seen by third parties, don’t put it online. If you want to access everyday tools that make your life easier (like Evernote and Gmail), then understand there’s a trade-off that includes a loss of privacy.