Protecting Your Code While Allowing Source Access?

foo_48120 asks: "My small development shop, myself and four employees, is taking on a fairly large job that will run a substantial part of the clients business. To protect themselves they want the source code to the project. Frankly I don't blame them. We bid aggressively to get them to underwrite our own efforts to build this code, which we plan to resell again and again. That is the basis for our company. I have no problem with them holding the source but need to make it clear that we own the code and that they have a license to use it in their business. They may at their discretion hire others to modify the code, but would still be required to pay their maintenance contract and be prohibited from reselling it or using it to run an additional business. How do you provide open source without escrow, yet protect what we are documenting up front as out intellectual property rights in the ownership of this code?"

Of course third party developers may break things and we would not be responsible for that or for fixing it without further renumeration.

Ideally, if we make them happy then we will do all future upgrades and add on modules as well. I am not worried about that. I do want to know if anyone has experience in the writing of such a licensing agreement? Perhaps they could provide me with a sample copy of their text?

Let's leave aside for now the issue of totally open source vs. closed source. There are times when you want the product to be proprietary as we do, however I want them to feel comfortable using our code so that if a proverbial plane were to fly into our building and wipe us all out then they don't go down the tubes with us."

Comments

Signed contract... good lawyer.

[Jerry]

I ran my consulting business under the same premis for 15 years. The contract they signed with me included, among other features, their right to the source code with the restriction that they could not use it as the basis for competition against me. Terms included where a conflict could be ajudicated, the amount of damages, etc...

Contractual Clauses

[il_diablo]

Look into a Exclusive Use rights clause in your contract. There's nothing saying that you can't agree to let them use the software and have a copy of the source as a deliverable. However, you can limit their ability to resell/reuse the component.

Additionally, create an Intellectual Property clause in the contract spelling out specific ownership rights/responsibilities.



Insert IANAL comment here.

Outstanding service and support

[SmoothOperator]

If you offer them outstanding service and support throughout the time they use your product, they will come back over and over again to you. They will want you, and only you to maintain the code, as well as to provide upgrades. If you start jacking them up, have poor business relations with them, they will look for alternatives, and they will take your code, no matter how many clauses you place in your EULA.

My company

[RudeDude]

My company (I'm a founder and co-president) has dealt with this type of things many times. The bottom line has been we put a license and ownership statement in the contract.

There are two basic ways (as we see it) to do this. Keep ownership and grant a license that has a specific list of allowed uses or just the reverse where you give them ownership but retain specific license for yourselves.

You can usually make it work as you need it with either party having ownership, since ownership just means they have final say, can change the license, and get any non-specified (default) rights.

Keeping in mind this is only one small part of the whole contract and I don't promise this is safe or useful for you as it is... here is a paragraph right out of our standard contracts:

(b)Grant of License. Steem hereby grants to Client, upon the terms and conditions set forth in this Agreement, a non-transferable, non-fee bearing, single use, worldwide right and license, without the right to sublicense, for software developed by Steem for use with the Web Site. Any artwork, graphics, or designs created to Client specifications for use in the Web Site become property of the Client upon the Web Site Launch. However, Steem retains the right to display any created artwork, graphics, or designs as part of Steem's portfolio of design work. Steem retains sole rights and ownership of all interactive code. The provisions of this Section 7 will survive indefinitely regardless of the completion or termination of this Agreement.

Escrow contracts are voided by bankruptcy

[Bruce Perens]

Your customer is smart.

Conventional escrow doesn't work when customer needs it - when your company fails. A bankruptcy judge will review your company's assets, and may find that the source code is the only marketable asset, and must be preserved for your debtors. Judges have voided escrow contracts in order to maintain the remaining value of the company.

Thus, your customer is wise to ask for the source up front. And if your company is bankrupt, it's not going to matter much to you - except that you'll know you didn't screw the customer.

You need a lawyer. It's a pretty simple contract, once you've explained the parameters.

If you want to use Free-Software-friendly attorneys, I can direct you to several, but pretty much any attorney will do.

Bruce