Help! Copyright and Licensing Issue with a client.

rubyonrails-talk
1

Hello, Here's my situation, any advice is greatly appreciated.

I was hired as a contractor to advise on technical and IT issues for a media company in April.

They were searching for a database system that would work for them. We couldn't find one off the shelf so I said I could code one with Rails for them.

Well now the contact management piece is done and the reporting piece is half done and they asked me today to sign over my copyright so I can't sell the software to any other companies.

I am employed as a sub contractor and the checks go to my LLC.

I am (well was) planning on marketing this software to several other media companies as there is no solution like the one I've made available so my price is (was) going to be substantially high.

My question to the group is how do I retain copyright, appease my client, and sell my software?

My thoughts were to license it exclusively under some sort of open source license to the client, so that I could, as an "outside" developer, use my own code and resell it after modifying under the terms of the license.

Thanks, Tyler Montgomery

2

Unless it is in your contract that your work on this project belongs to them, it is up to you. You can license it to them and have a “general” release that is open source. But it sounds like they want full ownership. I wish you luck.

HTH, Richard

3

Unless it is in your contract that your work on this project belongs to them, it is up to you. You can license it to them and have a "general" release that is open source. But it sounds like they want full ownership. I wish you luck.

This would be my interpretation as well. If it is not explicitly stated as part of your contract, then this is your property. Generally the law is on your side here, though with all legal advice, SEEK A LAWYER!!!!!

Just because you are in the right though does not mean that it could be pleasant, they can sue you if you refuse etc. They could fire you (so make sure you have the source).

However both of you seem to realise that the end product is quite lucrative - its worth something. To your employer its a novel product and a competitive advantage. To you - its steaks on the table. As with any ownership transfer its a sale, you should be compensated.

But they seem to want it for free, or they have just realised that they didn't do the contracts properly.

I would also consider this: the fact that they are asking you to sign away the copyright, means that they acknowledge you as the rightful copyright holder. This would make it hard for them to argue that ownership was implied by your employment contract.

Make sure you keep their forms and bring them to your Lawyer to see what his interpretation is.

In general though, the best thing to do here is negotiate the sale of the IP to your current employer. If they are being stupid about this, refuse. But keep a cool head about this, be patient. Try and keep on good, emotionally neutral terms with your employers about this. When you get the forms, just tell them that you are going to run them past your lawyer. If they get testy about this, then you know they are trying to trick you. If that happens, cut the meeting short.

I have seen one blogger in the Ruby space talk about this. I am damned if I can recall the link.

regards, Richard (another)

4

I'm not lawyer, so yes, it would be prudent to seek one. However, you can probably retain copyright this way:

Have an exclusive deal with them only against companies that have similar business natures w/ them. For example, if they plan to make money from it then there won't be any competition because all your other clients will be in different fields.

But, by giving them exclusive access for their business, you can charge a lot higher since your handing over copyright a certain part of the market only.

If you really can't seem to get out of this rut, check out what you need to change in this to make it a different product all together. I might be pulling this number out of nowhere, but I remember for graphic work to be considered different from a derivative, it has to be 25% different. There is probably something like this for programming. Since you're not patenting it anyway, copyright is something different all together.

5

I don't think it's as cut and dried as "if you wrote the code, you
own it." I agree with the recommendation that you obtain an
attorney's opinion before continuing discussions with your client.
However, I'm not sure that the absence of an agreement defaults to
you owning the copyright. A reasonable expectation on the part a
client *paying* for your services is that they would own the end
product. Not just the rights to use it, but the product itself, as
you were paid for the time you produced it.

I'm not an attorney but I did ask one about a similar situation.
Their advice was that I would have a difficult time asserting
ownership because I was compensated for the creation of the work.
Absent the agreement that I owned the resulting code, the gray area
was likely to favor the client who paid me. Perhaps I misread the
original post, and there was some mitigating factor that would favor
the IP belonging to a paid contractor...

6

Not only do I agree with Steve's reduction here, I think more important is the notion that fair to all parties dictates that an agreement be reached between the parties.

In addition to the ownership issue itself, there is also the 'license' issue and it may very well benefit the original consumer to release the code as GPL License so that they can obtain any improvements to the code base too.

Craig

7

I don't think it's as cut and dried as "if you wrote the code, you own it."

In general, if you wrote it, you own it. There need to be pretty solid agreements in place to make that not be true. Normally if you're a full-time employee you'll sign something that talks about "work-for-hire," and you can do the same as a contractor - that changes the story.

However, I'm not sure that the absence of an agreement defaults to you owning the copyright. A reasonable expectation on the part a client *paying* for your services is that they would own the end product.

This often causes problems - it's a frequent assumption, but it's wrong. The default is more like the copyright belongs to the creator, and they've bought some sort of license to use the software.

Sure, you should talk to an attorney, but some of this stuff is pretty basic business/IP law that you want to learn about before spending the money. Nolo Press has a good book on the topic - I think it's Copyright Your Software by Fishman, but I'm not near my bookshelves right now.

8

You're getting a lot of advice to the effect of "you wrote it, you own it". In many places, and in may cases, it's not that simple.

For example, here in Australia, who owns rights to the code would need to be agreed before you start on it. If not, the assumption is that because you were paid to write it, the code will be owned by whoever paid you - in other words, **you don't own the code you wrote**. However, you are free to recreate the code and sell it, provided it's "substantially different" - you'd need to consult a lawyer, but my understanding is that e.g. if your original code was in C# and your reproduced code was in Java, then that would qualify as substantially different.

Elsewhere, the "you wrote it, you own it" doctrine isn't necessarily that straightforward either. If you were contracted to produce a specific piece of work (as distinct from being a paid-per-hour worker), and the entity paying you had that in mind, they may have a good case that all copyrights on all work you've done belong to them. As an example consider writing a report for a client documenting their current situation (e.g. a network security review): if you were brought in to do that specific piece of work, then the client owns the document - it wouldn't make sense for you to own it, as you could then freely sell it to their competition (who would then find out all the network security issues).

As another example, if you create e.g. an entire Internet banking application for a bank, you probably won't then be free to take that source code and do whatever you want with it - there would be security implications that come into play. That's probably an extreme case, but common sense would tend to suggest that things aren't as cut and dried as others in this thread are making out.

Bottom line: see a lawyer, rather than rely on the opinions of people here who probably don't know much about your specific circumstances. If you take copies of all contract documents with you, it shouldn't take them more than an hour or so to give you their opinion - even at big dollars, that's gotta be small change with respect to the money you're (presumably) talking about here.

Regards

Dave M.

9

The usual rule is that If you are their employee, then it’s theirs. If not, then it’s yours.

Generally, when you are hired as a consultant, you’re being paid for your skills and knowledge. They know this, or they wouldn’t be wanting the copyright. They screwed up.

But, it’s not about who owns what, it’s about making everyone happy. Compromise is not nearly as good as collaboration. IF they pay on time and are good to work with, you don’t want to screw that up by being difficult. If you charged them for writing the application, they will feel like they have a stake in it. I propose these three options, all of which I have used with clients in the past.

  1. Sell them the copyright outright, for a certain dollar amount that you can use to invest in your business. Also, they got no warranty with this option, and you will not provide support. THis is a transfer of ownership. They want enhancements to it, they have to pay for it.

  2. Sell them a stake in future sales. Offer them x amount (a royalty, if you will) in the sale of future versions of the system.

  3. Retain the copyright but give them a free license. Give them lifetime updates.

Be creative. Good luck!