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.

Software Development Agreement: 10 Issues to Cover

By | Copyrights, Software, Software Agreements, Software Lawyer | No Comments

software development agreementIf you’re a software developer, you’ll want to protect yourself by having a customized software development agreement that’s designed specifically for your business.

Why?

If you “borrow” someone else’s contract to use with your clients, chances are you’re (a) not fully protecting yourself and (b) you’re committing copyright infringement because you don’t any of the intellectual property rights to use the agreement (e.g. a license from the software lawyer who created it).

So, what should you include in your software development agreement?

The terms and conditions in your contract will vary because your business is unique. However, here are 10 of the most common issues you’ll want to address in your agreement.

1. Scope of Work. Your contract will cover both what you’re agreeing to develop for your client and specifically exclude work that you will not be doing without additional compensation.

2. Work Change Orders. Because it’s likely that the work involved will be modified during the course of the project, you’ll want to have your agreement include a mechanism for change orders by you and the client. These change orders should describe the additional work, cover compensation for the work, and any alterations to the project’s milestones and deadlines because of the changes.

3. Subcontracting. If you’re outsourcing any of the coding to third parties (e.g. programmers overseas in India or the Philippines), your software development agreement should make it clear that you have the right to do so as well as cover any restrictions on such subcontracting (e.g. confidentiality agreements).

4. Delivery and Testing. Your contract should address what constitutes delivery and the milestones for each deliverable. With a possible exception for cowboy coding, your development process will heavily influence these provisions (e.g. whether or not a prototype will be provided). As part of these provisions, you should address the client’s rights to test the deliverables, what constitutes acceptance or rejection of a deliverable, and any of your obligations to fix a deliverable that doesn’t satisfy specifications.

5. Payment. How and when will you get paid during the development process? Will the client be required to pay a portion of your fee up front? What milestones trigger subsequent payments? As a developer, it’s in your financial interest to front load the payments as much as feasible so that you don’t have to pursue the client for collection after the project is completed. On the flip side, the client will want to back end the payments in order to ensure your performance of the work.

6. Intellectual Property Ownership. Who owns the software you develop for the client? You or the client? Are you granting a client a license to use the software? If so, what’s the scope of the license? If open source libraries are used as part of the development, that should be addressed to in the agreement so that there are no misunderstandings as to who owns what.

7. Warranties and Disclaimers. What type of warranties will you give the client for the software? For how long? What’s the mechanism for the client making a warranty claim? What warranties are you specifically disclaiming (e.g. fitness for a particular purpose)?

8. Competition. Will you be able to sell the software to your client’s competitors? Can you compete against the client using the software you’ve developed? If so, under what restrictions? Will there be a waiting period or a geographic limitation?

9. Confidentiality. How will confidential information be handled? What constitutes “confidential information?” When the project ends, what responsibilities (if any) do you have for this data?

10. Software Maintenance and Support. Will you have any support or maintenance obligations for the software? Is there any obligation to upgrade the software (e.g. to be compatible with a new OS)?

Of course, these are just some of the major issues you’ll want to address in your software development agreement in order to protect yourself (and avoid unnecessary lawsuits in the process). An experienced software lawyer will customize the contract to meet your specific needs.

E-Book Publishing, Distribution, and the Death of Oyster

By | Copyrights, eCommerce and Technology | No Comments
oyster e-book publishing

What does the end of Oyster Books mean for indie authors and self-publishers?

In “E-Book Subscription Service Oyster To Shut Down,” TechCrunch Writer Catherine Shu discusses the announcement that Oyster’s ebook subscription service will disappear early next year.

This imminent shutdown provides one less platform for authors to distribute their works in an online publishing world that’s increasingly dominated by a few players like Amazon and Apple.

As Shu correctly points out, “even a great user experience and team that is obviously made up of bonafide bibliophiles is not enough to guarantee success in the online book industry.”

Let’s face it — size, resources, and capital matter. With Oyster’s co-founders heading over to Google Play Books (h/t to Peter Kafka at re/code), perhaps Google is planning to compete head-to-head with Amazon’s Kindle Unlimited e-book subscription service.

For indie authors, it will continue to be important to protect intellectual property rights to their ebooks, particularly as options for e-book publishing and distribution shrink. Such protection includes:

  • Understanding the terms and conditions for each publishing and distribution platform
  • Registering copyrights
  • Making sure that each e-book has the proper legal notices, disclosures, and disclaimers

Note that to take advantage of higher royalty rates and other perqs, some platforms require exclusivity or impose other conditions upon publication elsewhere (e.g. pricing restrictions).

In such cases, it may make sense for different editions of the same book to be created in order to maximize the revenues generated by each work across all platforms.

Of course, if you have any questions about your legal rights and obligations as either an author or self-publisher, you should consult with an experienced attorney who understands the e-book publishing industry.

Internet Law News: Copyright Law Versus First Amendment

By | Copyrights, Intellectual Property, Internet Law News | No Comments
copyright law gag on free speech

Can copyright law gag Internet free speech?

Can a city’s mayor silence his critics on the Internet using copyright law? That’s the dispute apparently brewing because of voiceover criticisms made against the mayor on YouTube clips of city council meetings.

Are the opinions expressed protected by the First Amendment as fair use or do the videos constitute copyright infringement?

Hat tip to Mike Masnick at Techdirt.com. See City Of Inglewood Allotted $50,000 To Hire A Lawyer Flagrantly Abuse Copyright Law To Try To Silence A Citizen.

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Do Your Website Legal Documents Give You Ownership Of Submitted Content?

By | Copyrights, Intellectual Property, Internet Lawyer | No Comments
website legal documents

Do your website legal documents let you use or repurpose user-submitted content?

If you’re letting visitors submit content on your website, what rights are they giving you (if any) to the submitted content?

If they upload photos or videos, post comments, or write reviews, can you legally use, modify, sell, license, or give the content away to others? Can you strip out the audio from a submitted video to make an mp3 file or have it transcribed to use as text?

Does the submitter retain ownership of the content but license it to you? If so, what’s the scope of the license? What can you do and not do with it?

What do your website legal documents say about content ownership? If they are silent, how do you know what your rights are?

This isn’t an academic issue but one that could mean the difference between you being able to do what you want or getting sued.

Over at FastCompany.com, David Lumb raises the issue in “Read The Fine Print Before You Use Microsoft’s Viral Age-Guessing Tool” with regard to ownership and use of people’s photos.

If visitor-supplied content is part of your site, and you can’t figure out what rights you’ve got to those submissions, it’s probably time to talk with your Internet lawyer about getting the right website legal documents in place to give you the intellectual property rights you want.

It’s important to remember that the submitter can’t exceed the scope of his own legal rights when granting you rights to content.

For example, what if a website visitor uploads a meme pic made with a stock photo to your site. If the visitor lacks permission from the copyright owner or licensor to do so, he cannot grant you the right to use the photo because the visitor doesn’t have the authority to do so.

If someone makes a claim of copyright infringement because of submitted content, how will you handle it? Do you have a Digital Millennium Copyright Act (DMCA) Notice on your site? If so, are you following DMCA procedures to limit your liability exposure?

Don’t misrepresent repurposed content to place the submitter in a bad or false light. For example, even if you have a license to use a submitted photo, it’s not a good idea to take that person’s photo and use it with a caption or story that falsely implies the person is a criminal, has an STD, mistreats pets, etc.

Although sometimes referred to as the “fine print,” on a website using tiny fonts for your website legal documents isn’t a good idea if you want them to be enforceable. Ideally you’ll want to use a font size at least as large as the text in your website’s articles, sales pages, etc.

Your website legal documents should also be easy to read from a color standpoint too if you want to rely upon them as binding agreements. For example, black text on a white background is good. Putting gray text on a gray background would likely make the best legalese prepared by your Internet lawyer unenforceable because your website visitors can’t easily read it.

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