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 Developer Nondisclosure Agreement: 5 Issues to Cover

By | Software, Software Agreements, Software Lawyer, Technology Contracts | No Comments

software developer nondisclosure agreement

If you’re developing an app, you can benefit from having a signed software developer nondisclosure agreement (NDA) when dealing with clients and competitors.

For example, in a recent lawsuit, a software developer claimed that its rival engaged in misconduct, including breach of a nondisclosure agreement. The jury agreed and awarded almost $44 million.

However, don’t try to put together the contract without the help of an experienced software lawyer if you want the agreement to be enforceable.

Important Issues to Discuss with Your Software Lawyer

When talking with your software lawyer, here are five issues to consider for your agreement (there will be others too):

  1. Choice of Law. What law will govern the NDA if there’s a dispute?
  2. Jurisdiction. Which courts will have jurisdiction to handle a lawsuit if there’s a breach of the agreement?
  3. Parties. Which parties should sign the contract? For example, if there are subcontractors involved in software development, should they be required to sign nondisclosure agreements too?
  4. Liquidated Damages. Will you include a liquidated damages provision with a sum substantial enough to deter breaches?
  5. Attorneys’ Fees. If there’s a dispute, is each party responsible for his own legal fees or do you want a loser pays provision?

Of course, any NDA is only as good as the person signing it. If you’re dealing with someone dishonest (and why are you?), you should expect there will be a breach of any agreements you reach. In other words, due diligence is key before entrusting anyone with information that needs to be protected by a confidentiality or nondisclosure agreement.

Where can you get a software developer nondisclosure agreement?

If you’re looking for a customized software developer nondisclosure agreement to protect you and your business, you may want to have a consultation with Dallas Software Lawyer Mike Young. During your phone consultation, you will be able to discuss your particular legal needs and get advice on how to proceed, including what should be included in your contract. You can book your phone appointment by calling 214-546-4247 or by using the online scheduling system now.

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.


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.

10 Keys to a Successful International Software Distribution Agreement

By | Internet Lawyer, Software, Software Lawyer | No Comments
software distribution

Does your international software distribution agreement cover these issues?

Whether you own software as the copyright owner or have distribution rights that you can delegate to others, you may want to increase sales by entering into an international software distribution agreement with one or more distributors in other countries.

What to include in your international software distribution agreement

Here are 10 important issues your distribution contract should cover in order to protect you while making the deal beneficial to your foreign distributor(s) too.

1. Software Localization. Will your software need to be localized? For example, will the software need to be translated into another language for local users to understand and use it? If so, who is responsible for the localization? You or the distributor? Who owns the intellectual property rights to the localized software?

2. Geographic Scope of License. What country or countries will your distributor have the right to sell the software? Is the license exclusive for that region or can there be other distributors for that reach with whom you enter into distribution agreements? Will online distribution of software be permitted? If so, how will you limit sales beyond the geographic territory covered by the agreement?

3. Wholesale or Retail Distribution. Will your foreign distributor be a wholesaler who provides the software to local retailers? Is your distributor a retailer?

4. Manufacturing Rights. Will your distributor be able to make copies of the software to sell (e.g. OEM software) or is your distributor limited to distribution rights for software copies you provide?

5. Marketing and Advertising. Who is responsible for marketing and advertising the software in the covered territory?

6. Sales Targets. Will there be certain sales milestones that must be achieved in order to remain a distributor? If a distributor fails to meet sales targets, will the distributorship end and under what circumstances?

7. Payments. How will you be paid? In what currency? If a currency exchange must occur, how will the distributor’s local currency be valued for exchange into your currency?

8. Competing Software. Will your distributor be allowed to sell a software that competes with your software? If not, for how long after termination of the distribution agreement will the distributor be barred from selling your competitor’s software?

9. Records and Auditing. What type of records must your distributor keep? What auditing rights will you have to ensure you’re being paid what you’re owed for software sales?

10. Taxes. Who is responsible for collecting and remitting sales taxes, use taxes, VAT taxes, and other fees imposed on software sales made under the distribution agreement?

Of course, there are other legal issues you’ll want to address in your international software distribution agreement. An experienced software lawyer will include those in the contract to protect you.

EULA: 7 Key Parts of a Software End User License Agreement

By | Software, Software Agreements, Software Lawyer | No Comments
end user license agreement

Does your end-user license agreement cover these key issues?

The terms and conditions of the license you provide a user of your software will vary based on many factors. For example, your end-user license agreement (EULA) might be for commercial software intended for business use. Or it might be for a consumer software application.

However, there are important parts that should be covered in every EULA in order to protect you when selling or giving away your software. Here are seven key issues your agreement should address.

1. Type of License. What kind of license are you granting the end user? Is it perpetual or revocable? If revocable, how can the license be ended and what conditions trigger termination? Can it be transferred to another user? If so, how?

2. Restrictions. What type of limitations on software use will you impose on the user? Is it permissible to reverse engineer your software? Are derivative works allowed?

3. Compensation. Are you being paid for the software license? If so, how much?

4. Intellectual Property Ownership. Who owns the IP for your software? Are parts of the code open source? If a user is allowed to create a derivative work, who owns the copyright for that work?

5. Software Updates. Are updates included in the license? If so, are they for a fixed term (e.g. one year after initial purchase) or perpetual (lifetime updates)?

6. Dispute Resolution. How do you want disputes handled if the user violates the license? Lawsuits? Mediation? Arbitration? What about governing law? And where will the disputes be resolved?

7. Warranty Disclaimers and Limitations on Liability. To reduce the likelihood of a dispute that ends up in court, you’ll want to disclaim certain warranties (e.g. warranty of merchantability). Generally, the shorter the period of time that any limited warranties apply, the better. You can also limit the amount of damages a user can seek from you (e.g. bar punitive damages).

Of course, there are other important parts of a software end user license agreement. These are simply seven of most common issues to address.

If you need an end user license agreement, or want an existing EULA reviewed to ensure you’re adequately protected, you should retain an experienced software attorney. If you’d like to discuss your legal needs with Software Lawyer Mike Young, just schedule a phone consultation at a day and time that’s convenient for you.