Software Code: Who Owns It?

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software code development and ownershipWhether you’re a developer or a business owner who pays for applications to be developed, it’s important to know who owns the software code.

Many software development agreements don’t properly address this issue. And often both developer and client each believes they own the code.

Sometimes it makes sense for the developer to retain copyright ownership while licensing the code to the client. This is particularly important where the developer plans to recycle the code on multiple projects for different customers.

On the other hand, a business owner may want proprietary rights to prevent development of competing applications. If this is the case, the owner may pay a premium to own the code. And perhaps license some rights to the developer for future non-competing use.

Of course, there’s also the issue of open source code (e.g. GitHub) and code that’s in the public domain (e.g. Unlicense). Because it’s common practice for software developers to “borrow” these to incorporate into a software application rather than reinvent the wheel.

If some of the code is open source, that needs to be disclosed so that the client knows the licensing limitations imposed on its use.

Similarly, if there’s public domain code in the new application, the client needs to know. For example, the application’s end-user license agreement (EULA) will need to address the use of open source and public domain code in addition to the proprietary code created.

Whether you pay for app development or are a developer, an experienced software lawyer can prepare the right legal documents that identify and protect your rights.

Software Development Agreement: Who Owns The Code?

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software development agreement and code ownershipWhether you’re a developer or you’re paying to have a software application developed, one of the most important issues you should resolve in the software development agreement is who owns the code.

Unfortunately, many app development contracts ignore this issue. Instead the parties focus on the scope of work, payment milestones, and the like without giving a thought to intellectual property ownership.

Now if you’re a software developer, you’ll want to be able to recycle code on future projects. On the other hand, if you’re paying for a mobile app or other software to be developed, chances are you believe you’re purchasing ownership of the code. And that’s at least partially false in most cases because of what’s in the development contract and what’s omitted.

For example, developers frequently use open source and public domain code on projects instead of custom coding everything. And they’ll reuse code from prior projects for other clients. After all, there’s no sense in reinventing the wheel. Of course, the developer took this into account when quoting a price for the project in the first place.

So, how do you avoid a legal mess because of vagueness in your software agreements?

Ideally, the software development agreement will clearly identify…

  • For custom coding, which party owns the code, which party will receive a license to use the code, and the scope of the license.
  • Which parts of the code is open source and the type of license the client receives to use that open source code.
  • Public domain code that’s included in the app.

Now if a client wants exclusive ownership of custom code, the client should expect to pay a premium for that exclusivity. In some cases that makes sense, particularly if there’s a likelihood the custom coding could be used by the developer to create a competing application.

Of course, whatever’s decided with respect to ownership and licensing, it should clearly be documented. For example, a copyright assignment, software license(s), and the like. So that both parties are on the same page as to their legal rights. This reduces the chance the developer, client, and third parties will end up in software litigation over app ownership and licensing rights.

What if you’re in the middle of an app development project but the contract is missing essential ownership and licensing terms? An experienced software lawyer can help you modify the agreement so that the parties know what they’re really getting out of the deal.

App Development Agreement – Scope Of Work

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Just reviewed an app development agreement with a scope of work that stated, “to be agreed to by the parties.”

Other than a general description in the opening paragraph of the contract, there was nothing that gave a clue what exactly was being developed.

This is an agreement to agree…and when it comes time to perform, there will plenty of disagreement between the developer and the client.

Take time on the front end with your software lawyer to get a software development contract prepared correctly to protect you. Otherwise, it’s a recipe for a failed project and lawsuits.

How A Software Developer Sabotaged His Own Business

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software development agreement

How risky is your software development agreement? Will you get sued because of it?

One of the most common mistakes app developers make is to write their own software development agreement. This typically involves copying (stealing) from someone else’s copyrighted agreement and rewording the contract into what the developer mistakenly believes protects him.

I recently reviewed one of these do-it-yourself software agreements where the developer “borrowed” (stole) the agreement a large company uses to hire developers.

Guess what…the company’s software lawyers drafted that agreement to protect the company, not the developers.

Although there were lots of legal grenades in this developer’s patched-together contract (including who owned the code), probably the most devastating part was the non-compete clauses.

This developer was freelancing using an agreement where he agreed not to do projects for his clients’ competitors for three years. And he also agreed not to do any development projects within the geographic areas his clients did business.

If you were going to agree to not work for three years for clients in most parts of the English-speaking world, chances are you’re going to want to get paid a lot more than this developer was asking in his amateur contract.

Now, perhaps the software developer won’t get sued for his numerous violations of the app development contracts he’s signed. But would you bet your business on that type of senseless risk?

Instead of being a cheapskate by trying to save a few bucks on the front end, the developer should have retained an experienced software lawyer to prepare a custom software development agreement template that fit his business and protected his interests. And if something unique came up for a particular project, have the software attorney modify the development contract’s language to reflect that uniqueness while protecting the developer.

Software Development Agreement – Scope of Work

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Software Development Agreement - Scope of WorkWhether you’re the developer or the client, the scope of work in your software development agreement is essential to performance by the other party. If the deal falls apart during performance, an app development lawsuit is time-consuming, stressful, and expensive.

Also know as a “statement of work,” your app development contract’s scope of work should be as detailed as possible as to what specifically is being done as part of the development.

For example, does the project include beta testing and revisions to the application prior to release? Many app development projects fall apart when the parties start fighting over whether something omitted from the contract is included…and whether or not the developer should be paid more if that work is performed.

Related Article – The Ugly Truth About Software Development

In addition, the software development agreement scope of work should specifically exclude what is not part of the scope of work that the other party might mistakenly believe is included.

For instance, it’s common for software maintenance and support to be a separate issue from app development. And the developer expects to be paid for such maintenance and support because time and expertise are involved.

On the other hand, the client may expect at least an initial period of support and maintenance to be included (e.g. 90 days) post-release as part of the development deal.

Whether it’s included or excluded is part of the negotiations that should occur between the parties. But the issue should be resolved from the outset instead of getting into an argument about it after the app is released.

A good software lawyer can prepare an app development contract that’s right for your project. And if you’re a developer, a template contract can be created for you to use in multiple deals with different clients as part of your software development business.