Software Resale License Agreement: What You Need To Know

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Software Resale License Agreement: What You Need To KnowWhat Is A Software Resale License?

A software resale license agreement authorizes the purchaser (licensee) to sell copies of the software to third parties under certain terms and conditions. It’s also referred to as a “resell license.”

What Kinds Of Resale Licenses Are Available?

Although the terms can vary quite a bit based on the unique needs of licensors and licensees, these are the three most common types of app resale licenses:

  • Resale License
  • Master Resale License
  • Private Label Resale License

1. Resale License

A software resale license usually authorizes the resale licensee to sell software copies to buyers who receive an end user license agreement (EULA) to use the software. These EULA purchasers cannot in turn legally sell copies of the application to others.

2. Master Resale License

A master resale license typically permits the master licensee to sell resale licenses (see above) to purchasers. However, the master licensee will not have the right to sell master resale rights to others.

3. Private Label Resale License

A private label resale licensee can either have resale or master resale rights depending upon the language used in the private label license. What’s unique about private label licensing is that the licensee can rebrand/rename the software when selling it to others. However, the licensee likely will not have the right to resell private label rights to others.

What Are The Biggest Risks Of Software Resale Licensing?

First, many licensors do not know what rights they have to re-sell. As a practical matter, you can’t sell what you don’t have in the first place. For example, if a resale licensee tries to sell private label master resale rights, the scope of the license exceeds what the licensee actually owns and can legitimately sell to others. Whether you’re the seller or buy or resale rights, it’s essential that you know what’s being sold and whether it legally exists as intellectual property rights that can be sold by the vendor.

Second, do-it-yourself entrepreneurs try to create their own software agreements without the assistance of an experienced app attorney. They may even “borrow” another software’s license and misuse it for their own application. This type of shortcut leads to contradictory licenses, angry buyers, and lawsuits.

Related Article: Software Development Agreement – 10 Legal Issues To Cover

Third, many software apps are developed with code that is licensed from third parties. The code licensed may be restricted in such a way as to prevent sale of private label or master resale rights to anyone.

How Do You Avoid These Resale Licensing Dangers?

To reduce the risk of making these type of costly mistakes when selling or buying a software resale license, it makes sense to retain an experienced software attorney to handle the legal aspects. To speak with Software Lawyer Mike Young about about your app resale licensing needs, set up a telephone consultation with him.

Software Development: Who Really Owns A New App?

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Software Development: Who Really Owns A New App?Whether you’re a developer or you’ve contracted with one to create a new application, there’s often a big misunderstanding as to who owns the intellectual property at the end of a software development project.

If you paid to have the app developed, naturally you expect to own it. On the other hand, if you’re the developer, chances are you recycled some code on the current project and plan to use it in the future on other projects.

Open Source Code?

And then there’s the open source issue.

Was any of the code added per a GNU General Public license, Creative Commons license, or other open source license?

As you can see, there’s plenty of room for disagreement about who owns what intellectual property.

Related Article – Software Development Agreement : Who Really Owns The Intellectual Property?

Written Software Development Agreement

Of course, the solution to this problem is to having the project done per a comprehensive app development contract that covers ownership, licensing (including type of license), and any open source issues.

Related Article – Software Development Agreement: 10 Issues To Cover

Your written contract can provide not only for intellectual property issues but also prevent other problems from arising during all phases of development and testing.

Where Should You Get An App Development Contract?

By having your agreement professionally prepared by an experienced software lawyer, you’re likely to get what you want rather than leaving it to chance.

For example, our firm prepares a Software Development Legal Protection Package that’s designed to favor our client’s legal rights while offering a fair deal to the other side. Often the agreement is reused by our client on future app development projects with minimal changes.

Regardless of what you decide to do, whether you’re a developer or paying one, don’t just wing it when it comes to software intellectual property ownership, licensing, and related legal rights. That’s not only bad for business relationships but also an invitation to a lawsuit to sort things out after the fact.

Software Development Agreement – Who Really Owns The Intellectual Property?

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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?

get software development legal protectionOne 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

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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 phone consultation with Dallas Software Lawyer Mike Young.

However, it may make sense for you to invest in our Software Development Legal Protection Package instead to obtain additional levels of protection for your intellectual property.

Software Development Agreement: 10 Legal Issues To Cover

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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.

Related Article: Keys To A Successful Mobile App Development Agreement

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.

get software development legal protection3. 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.

Related Article: Software Development – Who Really Owns The Intellectual Property?

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?

Related Article: Software Developer Nondisclosure Agreement – 5 Key Issues To Cover

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. For more complete protection, be sure to check out our Software Development Legal Protection Package.