Who Owns Source Code When a Company Folds?

pipeb0mb asks: "A few years ago, I worked for Chilliware, Inc. as the 'Technical Development Manager'. Some of you may remember us for the software iceSculptor, Mohawk and Mentor. Chilliware folded rather quickly and harshly back in May of 2001 due to money issues. Within days of the first layoff, everyone was gone, from the CEO and VP's to the receptionist. Now, years later, I've been digging through some old CDs, and am reminded that I still have the final production source code for the products we released in the retail channel. I've attempted to contact several folks over the past couple of years to gather information about the software and who owns it now. To no avail though. Either I get an 'I don't know' or 'No one' from the dis-interested parties. I feel like these programs are my children that never got a fair shot. I hate to see so much work wasted and lost to the ages. So, Slashdot: What do I do with this source code? It's a great deal of well commented and well written code, performed by over 100 developers in a former Soviet Republic (who formerly worked with Boomerang Software). Where do my binary children go now?" As things are now, if a company folds, the code is buried and forgotten unless someone buys the rights to it, before the source code is lost. This issue was discussed a long time ago and there didn't seem to be much in the way of answers. Have 3 years made any difference?

Comments

Lawyers

[aridhol]

Do you know who was the corporate counsel for the company? If so, have your lawyer contact them. If not, your lawyer may be able to discover who it was. Also, your lawyer may already know the answer, or be able to get in touch with someone who does.

In short, contact a lawyer

Re:Lawyers

[Anonymous Coward]

"This code belongs to SCO!"
-- the SCO Minster of FUD

Re:Lawyers

[TekPolitik]

Do you know who was the corporate counsel for the company? If so, have your lawyer contact them.

This is not correct. First, the liquidator is the one that would have done anything that need to be done. That's your first port of call.

If the liquidator didn't sell it, then what happened to the property depends on what country (and state, in some cases) the company was incorporated in. Typically the undistributed property of a delisted company vests in the securities regulator or government for the company's incorporation jurisdiction.

Even if the liquidator didn't sell the IP, they should be able to tell you who gets it by default. There shouldn't be a need for a lawyer, and let's face it, who wants to give money to a land shark if it's something you can do yourself.

Thus there is almost certainly an owner somewhere - you need to contact them and see if you can buy the rights, which you will probably be able to do if they're held by a regulator who has no other use for them (especially if you have the only copy of the code that could be used to make use of them).

The correct answer is, of course...

[Walter Wart]

... "ask a lawyer".

But failing that, try to find the principals of the company, the original owners. They owned the assets of the firm. If they don't want it try to get a "whatever, do what you want with it" from them before you try to sell or publish it.

Re:The correct answer is, of course...

[Anonymous Coward]

But failing that, try to find the principals of the company, the original owners. They owned the assets of the firm. If they don't want it try to get a "whatever, do what you want with it" from them before you try to sell or publish it.

NO, NO, NO!

Folks, please pay attention to the thread on this. If it was this easy, there would not be a problem. There are three possibilities:

The original owners almost certainly do not own the code anymore when a company closes the doors but does not go through a formal bankruptcy to distribute assets. The code, as well as all other assets, are owned by the creditors (most likely, especially in a venture-funded company, but even this can vary dependent on how original agreements were drafted). Even if there is no longer any board of directors, as long as the corporate entity itself exists the assets will probably be owned by the creditors in this situation. However, there will usually still be at least a chairman of the board, so you could contact that person to see if a deal can be cut with the creditors to open-source it, etc.

If the corporate entity no longer exists, because it was shut down through a bankruptcy, then this issue was taken care of through that process, and the bankruptcy lawyers will know what to do (somebody else already owns the code, most likely).

If the corporate entity no longer exists, and there was no formal dispersal of the assets (i.e., through a bankruptcy), then things are stickier. This would be the time to hire a lawyer to go back and figure out what reality is. Different states have different laws about "abandoned property", and in many states these laws apply equally to corporations and individuals alike. If this is the situation, and you can find out what the time limit is for property to be considered abandoned, your best option might just be to wait quietly until that time limit has passed.

No, I am not a lawyer, and the above is not legal advice. I'm just an ex-CEO who suffered through a business partner killing a company we co-founded, and I had to try to keep the legal pieces together...

You don't

[tarquin_fim_bim]

I would imagine SCO have already registered a Copyright and will be contacting you shortly to save you from unwittingly using someone elses intellectual property. Either that or the creditors.

Like with BeOS

[zephc]

Be folded, and I guess sold its IP to Palm, but sold the source code to the yellowTAB guys, which was absolutely the right move. Palm is sitting on their hands (pardon the pun) about using any Be IP, but the yTAB guys are hard at work on the next version of BeOS, now called Zeta. Check it out.

Who owns the code?

[stratjakt]

I do.

I will license it to you for 699 dollars.

How to find out who owns the code.

[pclinger]

Post it online, wait to get sued.

Re:How to find out who owns the code.

[Anonymous Coward]

Better yet:
Post it online in co-workers name, wait until co-worker get sued.

It has to be said ...

[Greedo]

It's a great deal of well commented and well written code, performed by over 100 developers in a former Soviet Republic ...

Well, we all know that in Soviet Russia, source code owns YOU. So maybe you should ask IT.

In my experience...

[JohnGrahamCumming]

IANAL

That really depends on the definition of "folds". Some examples from my
experience...

1. Company simply stops operating.

In that case the company itself may still exist (in fact if you go to
the web site of the Secretary of State for your state you may be able
to determine if the company is still "active" in which case someone's
filing simple forms on the company each year). In that case the
company (and by extension the shareholders) own the code.

In this case you might find that the owners, who probably have little
interest in the company, and acquire the rights for a small fee.

2. Company is bought outright by another company

This one's pretty simple, the new company probably bought all the
assets of the old company and that would include the copyright on the
source code.

3. Company's assets a bought but company remains alive

This can happen when a company gets into serious trouble, as happened
with many boom companies, and is effectively worth nothing because
there are no customers. The remaining assets (e.g. physical stuff
and copyrights) sometimes get acquired by another company for a small
fee. This happened to me, and in that case the new company acquired
the assets and got the source code.

4. Company goes bankrupt

If the company owes money to people then all its assets are going to
get valued, and that will include the source code, and who gets them
will probably be in the hands of a court. In this instance see what
happened in the bankruptcy clean up.

In the case of venture backed companies there might be specific
clauses in the investment that state what happens if the company goes
under and the VCs may end up with the code.

John.

Re:In my experience...

[Anonymous Coward]

IINAL, but I've been through this as well, and am currently attempting to acquire some source code in a similar state.

Since I was a founder of a company that went under, usually what happens if the company just "goes bankrupt" is that they do NOT go "bankrupt," as that implies that it's seeking legal protection from its creditors. Rather, it undergoes a voluntary liquidation.

During a liquidation, all "assets" are divided up amongst the shareholders of the corporation in some way that seems fair to the shareholders based on their share classes. In our case, the Series B investors (who had preferred stock) chose to give a kick-back to the Series A investors (who had preferred stock, but not as preferred as Series B), out of good will, though they had no obligation to do so. However, and this is a kicker, this only works with fungible assets (such as stuff that can be sold).

If the source code was not sold before liquidation, meaning that it is not a fungible asset, then what happens is that rights to the IP get divided up amonst the shareholders of the corporation in a way appropriate with the corporate governance of the liquidation. In other words, if Series B investors got 80% of the loot, and Series A investors got 20% of the loot, then the exact same proportion happens with the rights to the source code.

So in order to get it, you essentially have to find everybody that has a proportional right to the source code if it's not been seized by someone in the liquidation, and convince them to give over their rights to it. This usually means finding every shareholder in the corporation, and figuring out who owns their stock. It's going to be really rough.

Reverted To Author?

[wo1verin3]

The author of a Mac game called Glider worked for a company called Casady & Greene. He seems to believe that since the company went bankrupt, the rights have reverted back to him as the author.

I guess this would hold true so long as they didn't sell or assign the rights elsewhere.

Even then, regardless of the answer, you can still be taken to court and it will be up to a judge.

Re:Reverted To Author?

[Walker]

That is not an adequate example. C&G closed their doors before going bankrupt (they intentionally avoided bankruptcy). That allowed them to actively return the rights of all their software to the authors. Which they did.

This is not a general precedent. C&G were just nice guys to the end.

Who owns the source code?

[oZZoZZ]

Flip a coin

heads = SCO
tails = Microsoft

Find the liquidator

[daceaser]

I'd advise that you find out who was in charge of the liquidation of the company, and approach them. They would be in charge of the assets. See if they were sold on. If the liquidator still has possesion of them, offer a modest sum ($100 or something) to buy the rights to it off them. The liquidator will probably just pocket the money anyway.

If someone bought the rights when the company was liquidated, see if the liquidator will tell you who, and approach them.

school

[zumbojo]

"Where do my binary children go now?"

Either Binary District Elementary or Binary Memorial High School.

You will need to check the BK court records

[alen]

When a company goes BK, the creditors own everything and either divide the spoils or it gets liquidated at auction. Most likely someone bought the rights to the software for pennies on the dollar. You will need to check the records at the federal or state BK court where the action was filed. Since there may be service fees involved to search online, you may have to visit the court and search yourself.

Re:You will need to check the BK court records

[kelnos]

When a company goes BK...

all i can think of while reading this: "when a company goes to burger king..."

Retain an IP lawyer?

[Bravo_Two_Zero]

I'm not suggesting this is cost-effective, but maybe it would pay to consult with an intellectual property lawyer? It's a cop-out answer, I know. But assets are normally liquidated from dead companies by the last holder of the company. Maybe it's a trivial venture to purchase the rights (via a foundation, new or existing) to the now-deceased company from the former owners? Someone has to still be holding the bag... even a VC.

BeOS sourcecode and Yellowtab

[Anonymous Coward]

They didn't sell their code to YellowTab.

YT has a license to use the code until 2005 or something (and that doesn't seem to include the kernel as they havn't announced any of the bugfixes the BeOS community has been longing for).

ask the owners

[UnderAttack]

Well, if a company seizes to exist, either due to bancrupcy, or it is just disolved, all assets are usually sold off. The source code was likely part of this. Now it may happen, that nobody bought it, and it got abandonded for anyone to pick up. But to make sure, you need to check with whoever took care of the company.

Re:ask the owners

[Vainglorious Coward]

a company seizes to exist

You're thinking of another company that siezes to exist. Chilliware has merely ceased to exist.

Not you

[Malc]

Although you worked on it, you never owned the copyright. What makes you think you'd own it now, or that there isn't somebody out there with a legitimate claim to it? Use it at your own risk.

Difficult call

[The Bungi]

Well, the issue here is the copyright. If the copyright is owned by a corporation that no longer exists, then there's nobody to enforce it. You can't slap another license on top of it. If you release the code to the public domain (because I assume that you can't legally claim the copyright) and make absolutely no money, there's a good chance that nobody will give a rat's ass if your attempts at contacting the former officers of the former company are any indication. If you sell it or claim copyright on it, there's a damn good chance that you'll start to see the previous owners coming out of the woodwork to sue your geek butt - and this of course is also a possibility even if you don't make a dime off the code as someone will probably contest your release to the public domain because it wasn't yours to give away in the first place. People tend to be weird that way.

My advice? There's no way you can just release this without getting an OK (a legal OK) from whomever owns the copyright (this may be the company that auctioned the corp's assets for all you know). If you're the only known holder of this code, you're out of luck. You already posted to /. =) Otherwise you could have just released it to the wild without a peep using Kazaa or Freenet or something like that. Not ideal of course, but it would be better than having it sit on a CD for the next 20 years or whatever the IP laws dictate, and it would have been nearly impossible to trace it back to you, I think.

Tough situation, for sure.

Well written AND well commented?

[Anonymous Coward]

What do I do with this source code? It's a great deal of well commented and well written code

Well written AND well commented? Put it in a museum, dude!

creditors and dead code

[siskbc]

Do you know who was the corporate counsel for the company? If so, have your lawyer contact them. If not, your lawyer may be able to discover who it was. Also, your lawyer may already know the answer, or be able to get in touch with someone who does.

You are of course correct. Again, asking /. for legal advice isn't sound advice. However, I'll tell you what would happen, basically. If you tell that lawyer you have something from this company of value, it should technically belong to the company's creditors - I assume it went out of business for a reason, correct?

What will likely happen is that the lawyers for that company won't be interested in developing the software - but they'll be damned if they'll just give it to you and see you do something with it of value. Likely, they'll tell you to fork over the code and decide to archive it in case anyone wants to screw with it. No one likely will.

There are basically three options you have. The first two certainly involve getting a lawyer.

1. Buy it from them. Problem there is that they will not know how to attach a value on it, so they will pick an arbitrarily high one. Remember, if no deal is struck, they get it back once you admit to having it. They also don't want to get fired when they sell it to you for too little. Not reaching a deal won't get them fired, and burning the code is probably best for them.

2. License it from them. Give them some money up front and a cut of whatever you get. This will cut your upfront costs, but they will likely want a huge cut. However, they won't be as afraid, at least, since they get more money if you do. Nobody looks too bad.

3. Pretend you don't have it, and do a "dirty room" re-write of it. Effectively plagiarize it and assume that anyone else involved with it won't remember, won't notice, etc. Then, if you do anything of value with it, worst case scenario is they sue you, you settle, everyone's happy. Bet you wish you hadn't posted this now, huh?

The problem is that, as the article poster mentions, this is a software dead-end, and it's very hard to revive dead code. The current owners don't want to look like idiots when they get pennies for valuable code that they didn't correctly value. They'd rather bury it, which is your problem now.

Note that this is not to be construed as actual legal advice. You'd have to be an idiot to listen to me, particularly since option 3) is pretty illegal. ;)

Re:creditors and dead code

[micromoog]

• 4. Just go ahead and give the code to SCO, since they own it anyway and have all along.

Re:creditors and dead code

[Ingolfke]

Then, if you do anything of value with it, worst case scenario is they sue you, you settle, everyone's happy.

Please tell me you've never done any Linux development for IBM.

Re:creditors and dead code

[Anonymous Coward]

the company probably had a receiver setup, who liquidated all the assets at fair market value and returned the cash to the creditors.
Contact them. Ask to have a fair market value assigned to the intellectual property, if it was not done so, and you may license it from them @ that price. They will use an external company to do this valuation.
Typically the IP with no programmers left is not worth very much. You may be able to buy it outright for very little money.

Certainly you do not own it, you probably signed employee agreement stating you wouldn't have this code around home anyway :)

Re:creditors and dead code

[jonsmirl]

5. Convinvce them to donate it to the FSF. FSF can work with them to set a reasonable valuation. This valuation then becomes a tax shelter to the current owners. FSF releases the code GPL.

Getting a tax shelter is probably worth more that trying to get $$$ from out of work developers.

Valuation could be based on what it cost to create the code. $1M in valuation could be worth $300K real cash as a tax shelter.

One of the reasons Microsoft pays almost zero corporate income tax is because of all of those software donations to schools at full retail. Copy CD for $1, donate to school as $800 MS Office license. $800 x 40% corporate tax bracket equals $320 in taxes saved. $320 is really created by this transaction, without it the $320 would have to be sent to the government. MS does hundreds of millions of dollar worth of these donations each year. It also has the added plus of brain washing everyone to use their software.

Re:creditors and dead code

[Anonymous Coward]

1. Buy it from them. Problem there is that they will not know how to attach a value on it, so they will pick an arbitrarily high one. Remember, if no deal is struck, they get it back once you admit to having it. They also don't want to get fired when they sell it to you for too little. Not reaching a deal won't get them fired, and burning the code is probably best for them.

I used to work for a UK company that was liquidated. Basically the receivers were legally obligated to get as much money for the creditors as they could, so not selling the code when somebody is willing to pay for it is not an option. Everything of value was sold to the highest bidder. In the case of the source code there were two interested parties - a customer (who had acquired a couple of the dead company's developers) with a vested interest in a particular piece of software and a company formed by some of the employees who planned to take the code and build on it. The two parties bidded against each other until one gave in.

Re:creditors and dead code

[plierhead]

A better version of your option "4" would be to:

• 1. Release the code under a BSD license via an anonymous web site - hotmail address for admin contact, use an internet cafe without security cameras when doing the deed, absolutely no trace back to you.
• 2. Hide the web site from search engines. Make sure there's no links from anywhere.
• 3. Contact a notary and have them go to the web site and record the fact that it exists. You'll need this later.
• Copy the code and a little while later, take down the web site.

Now the code is effectively open sourced, and you have an audit trail to prove it, but only you can access it. Since its BSD you can freely create derivative works and sell them without restriction.

The worst that can happen is that if by any chance the actual owners of the code (as per the many other responses to this post, these will likely be some creditors if the company actually did go bankrupt) were to find out what you are doing, your defence will be that the code was open sourced and you thought you had every right to use it. The notary will back you up here.

Of course you would immediately lose the code - but you will be safe from any legal nastiness. So make sure you've taken plenty of money out of the business by then. And better still, create a trademark or brandname that will have some value to the real owners, then you can sell it to them.

Go away, Darl

[A nonymous Coward]

He didn't say it was Linux code.

Are you this guy?

[Mournblade]

Are you this "Technical Development Manager"?

Interesting (one might say prescient) commentabout Chilliware from Bruce Perens in that discussion.

Cheers!

Re:Are you this guy?

[pipeb0mb]

Yes, that was us. That was me, in fact.
I like to think that since I managed to get 3 out the door, it was only a partial failure. Vanity++

Re:Really and truly abandoned?

[Xerithane]

Let's say for argument's sake that the source code really and truly didn't get included in the liquidation, and wasn't included in some blanket "..and all other assets of value or works produced thereof.." statement.


This contradicts itself a bit. Since software authored by members of a corporate entity is automatically copyrighted by that entity it becomes an asset. Instantly. Just because they don't know about it, doesn't mean it isn't there. Just because they don't know, doesn't mean it's not theirs.

Does ANYBODY own it at that point? Is it considered public domain? Can it be re-copyrighted?

If the company simply stops operation, than yes. It will revert back to the original author (I believe, I'm not 100% sure on this) -- if there are any creditors or any other interested party that has control of the assets it will always belong to them.

But no, if something goes into the public domain you can't re-copyright it. You can do a dirty-room re-write of it, and copyright that but the public domain will stay in the public domain.

I'd guess that most liquidations do include a statement like that above, just to prevent stuff from slipping through the cracks -- name all the nameable stuff, and then have a catch-all for everything else.

They don't even name the nameable stuff. What happens (usually) is creditors for company XYZ hire liquidation firm ABC, and the liquidation firm values everything then tells the creditors the assessed value and they get to split up the money or the equivalent in goods (if they want them.)

This stuff has been going on for way too long for there to be things falling through the cracks. I'm sitting on tons of source code that is owned by a liquidation firm that has no clue what the hell they have.

Immortal Code

[zlite]

In Feb Wired magazine had an article, headlined Immortal Code, about how some software survives the implosions of its company. "The CEO goes to trial. The programmers hit the street. And yet sometimes a piece of code is so elegant, so evolved, that it outlasts everything else." The main example was the DragonSoft speech recognition code, but it also goes into "software repo men".

I'd say it's..

[El_Smack]

Well, from this line...
"Some of you may remember us for the software iceSculptor, Mohawk and Mentor."
I'd say Troy McClure owns it.

A little time will help...

[ConceptJunkie]

The copyright will expire eventually.

Just wait 70 years after everyone dies and you're home free.

Someone threatened me with legal threats one time

[eric76]

Years ago, I was Director of Technical Services (Software Development and Research & Development) for a small, high-tech company. I was also the tenth largest stockholders in the company when it went bankrupt.

My agreement with the company included my rights to keep a copy of any and all software I developed for the company and to use it as I wished.

In fact, some of the software came from a large engineering company where I had worked previously. In that case, I had asked for and been granted permission to keep and use a copy of a specific set of programs I had written.

At one bankruptcy hearing, I gave the secured creditor a good copy of all the software. He asked me where I got it and I told him I made him a copy from my copy.

The secured creditor went through the roof and started threatening me with lawsuits for "illegal conversion".

My lawyer said that I while I would probably prevail in court on the matter because of my agreement with the president of the company, it would cost me thousands to do so.

I'm pretty hard-headed. It didn't matter that the software had no commercial use except for a very narrow segment of companies (there were about three in the United States that did the same thing and they already had their own software), I refused to give it up and wasted a lot of money on lawyer fees to keep it. The bad thing is that my lawyer took it upon himself to start negotiating away my rights to keep the software without telling me.

So I fired the lawyer and kept the software.

Since neither of us really had a use for the software, he never did file suit against me and I still have a copy of the software.

All I need to use the software, besides a reason to use it, is a PDP-11 and a VAX.

News for nerds, not lawyers

[Unregistered]

/. is not the place to go for legal advice. A lawyer is. If you listen to /. you're gonna be following the advice of people who are just talking out of their ass and get in trouble.

I can see future Ask /.s:
I got charged with DUI. What do i do?
I got arrested for murder. How can i get off without having to pay for an expensive defense?
I plan to rob a bank. Any tips?

You have to be kidding

[siskbc]

4. Convince them to assign the rights collectively to the old development team, under an open license. This way, both the old developers and the general public will benefit. That's what any respectable company would do.. (of course, ideally, said company would not have produced proprietary code to begin with and this wouldn't have been an issue)

Right, and then we'll all dance in fairy land and everyone will be happy. I mean seriously, there's no chance in hell that would happen. If the team ever did anything worth a damn with it then the lawyer might have his boss come in and say "Why the hell did you give this away, you are FIRED!"

I mean, that's just not the way this world works. I'm pretty sure parent is a troll (and a good one! ;>), but it does raise a good point, namely the following...

The only chance you would have of open-sourcing this would be for the guy to convince the company to donate it to FSF or some other non-profit. The FSF would then value the code at some ridiculous value, giving the owner a massive tax write-off that is much more valuable than it sitting around collecting dust, and more than the guy could have ever paid for it.

That's the only chance of open-sourcing this stuff.

Re:You have to be kidding

[BlackHawk-666]

Put the code on an FTP server with anonymous access and place the address on SlashDot and an ad in the newspapers and ask them to come pick up their fucking code which you have been looking after for the last few years. Charge them rent on the hard drive space and cartage to take it away ;->

Re: Ask a Lawyer

[booch]

OK, we really need a new acronym here. IANAL is good, but we really need something better. Here are some ideas:

• AAL - Ask a lawyer
• OAACPLA - Only an attorney can provide legal advice
• TISDWWK - This is Slashdot; we wouldn't know
• DYALTFYC? - Do you ask lawyers to fix your computer?
• RAM:IWNASDFLA - Repeat afer me: I will not ask Slashdot for legal advice

Re: Ask a Lawyer

[hazem]

Actually, there is some benefit to asking for this kind of advice - but not to determine the course of action. Rather, for getting an idea of what's possible before seeing your lawyer.

If I were to get divorced (I'm not even married), I'd be talking to my divorced friends to find out what I can expect on the legal front - not because they're legal experts, but because they have experience dealing with my situation. They might be able to help steer me away from bad advice, or help me know what questions I need to ask.

I definitely wouldn't "ask Slashdot" when I've been caught with 40g of cocaine and a 12 year old prostitute in my car. But it is perfectly germane and sensible to ask a bunch of coders about their experience and advice in a situation dealing with writing software and the legal ownership of that software.

Prevention?

[4of12]

Sounds grim but true.

So I have to wonder,

Why don't corporations have easy legal means for property disposal after "death", just as Last Wills and Testaments offer individuals a convenient means for avoiding probabe and all those complications?

Is it just that no one thinks their corporation will ever die? Are bankruptcy proceedings so sloppy that they leave any property unassigned?

And, if there is no hope for this particular after the fact problem, or for corporations to put in general legal safeguards for tidy disposal of property without the need for expensive lawyers, then is there some small "sunset" clause that software developers could put in their code to ease the transfer, like a quit-claim that goes into effect if the corporation dissolves and no creditors assert any rights for a period of one year.

IANAL, but, now and then, they're indispensible.

[It's too bad the code author didn't have some claim on the company's assets, such as a paycheck that didn't come. I could see where he could submit a claim as a creditor and negotiate to settle for said source code.]

Re:Prevention?

[Rasta Prefect]

Why don't corporations have easy legal means for property disposal after "death", just as Last Wills and Testaments offer individuals a convenient means for avoiding probabe and all those complications?

They do. Assets are liquidated. Banks get paid, bond holders get paid, preferred stock holders get paid, and then common stock holders get anything thats left. Theres no "last will and testement" because the company doesn't get to choose who gets paid off when they liquidate - The courts decide which creditors have first pick. Everything gets assigned to someone. The code the original poster asked about undoubtably belongs to _someone_, either creditors or someone who bought it and gave the money to the creditors.

Are bankruptcy proceedings so sloppy that they leave any property unassigned?

Generally not. Creditors tend to fight tooth and nail for anything thats of value.

Check that law there.

[siskbc]

They either deal with him fairly, or they get zilch. All he must do is "lose" the disks.

That's a one-way ticket to jail. If he has those disks unknowingly, it's a potential oversight. However, if he 1) finds them, and 2) contacts the rightful owner, he's obligated to return them immediately. I suspect they'll record the conversation, and no judge/jury on earth will go for the old "I lost them" routine. Well, maybe the OJ jury.

Remember, his copy is legal under fair use (backup copies made while employed)

The hell! He doesn't have a license to anything he used as an employee. When he quits (or is fired, or laid off) his rights to use company property ceases. I've seen the fair use law, and it ain't that. If MS fires me, can I do whatever I want with a Windows CVS, like develop it into another product? Uh, no. That isn't fair use.

and the only thing the owners can do is compel him to destroy it. They can't compel him to give the code back - he doesn't have a relationship with them anymore.

Legally they sure as hell can. He has their property. Period. They can't threaten to fire him, but he can go to jail.

Re:Check that law there.

[R2.0]

Read my post carefully. At no point do I suggest he "uses" their property at all. His POSESSION of it isn't illegal - the copy itself was authorized by the copyright holder. And if the company allowed him to take the CD's when he was laid off, the CD's are his.

Lets put it this way. I write a doctoral thesis. A copy gets put in the university library, SOP.

Flash forward 10 years. The university calls me to ask if I'd be willing to sell them the copyright, because the research now has value. I look in my files and realize that I have lost my only copy.

Question - Do I have a right to demand that the University hand over their copy of my work because I have lost my original?

Answer - Hell no. They may not have permission to use it beyond the library, but that copy is theirs, fair and square, and they don't have to give it back.

If I meet David Drake while reading a copy of Hammer's Slammers, he can't just grab it out of my hands and keep it because he own the copyright.

California law on abandoned property

[Animats]

Chillisoft was in California, so California law probably applies. And it's complicated. See California Civil Code section 2080-2080.10.

This comes up all the time, often when someone leaves property behind when they move. You'll need some simple legal advice, but there's a procedure, which involves a police report and the publication of some notices, and if nobody steps forward and claims it, it's yours.

"Wills"

[siskbc]

Why don't corporations have easy legal means for property disposal after "death", just as Last Wills and Testaments offer individuals a convenient means for avoiding probabe and all those complications?

Well, they do, actually. There are preferred creditors, less preferred, and non-preferred. The first are banks, the last something like common-stockholders. There is a VERY well-defined pecking order - basically, the higher ups basically get what they want until the debts are satisfied, and if there's anything left, you go down the chart.

The problem here is this guy's code is like Grandma's shitty costume jewelry - it wasn't worth Grandma putting in the will, and before she died, no one really makes a fuss about it. They likely didn't even notice it when the family divvied up Grandma's grap when she died. But if anyone actually wears Grandma's shitty old necklace to a family reunion, say, then everyone's going to get all pissed asking you how come you got Grandma's necklace. Then, the oldest sister wants it an pulls rank, and a nasty fight ensues. Yay.

Same thing here. Everyone assumes that code is comepletely worthless, and doesn't even want it - that is, until you come along, mention that you have Grandma's necklace from the estate (ie, the source code from this project) that you weren't really entitled to. Now, everyone else ahead of you in the pecking order (ie, the preferred creditors) wants the code, simply because it now might have value. Remember, they don't care if they make money off of it - but if you do, that means they could have, and somebody's ass is grass.

And, if there is no hope for this particular after the fact problem, or for corporations to put in general legal safeguards for tidy disposal of property without the need for expensive lawyers, then is there some small "sunset" clause that software developers could put in their code to ease the transfer, like a quit-claim that goes into effect if the corporation dissolves and no creditors assert any rights for a period of one year.

I like that idea - problem is, I don't think it's enforceable unless it is agreed to (probably ahead of time) by every potential lienholder/creditor of the company, down to common stockholders. You could make it boilerplate. The problem is that creditors don't want to give things that might have value away, and would rather just have it "just in case." Most likely, they'll just assert their rights over all software in general, in case something comes up they didn't know about.

4. A better idea

[Lord Prox]

It is presumed that the coded is gone. As in tossed in the trash, right. So do it.
Here. 33N 38' 8" by 117W 56' 28" in back, on friday 8th of August at 11:00 pm. in a brown paper bag...
Now you have tossed it in the trash. I'll come pick it up and do a back alley GPLing... All for only a pack of Camels and a Mt. Dew.
Contact me for details.

OP: The very first thing you do ...

[Glonoinha]

Well the first thing you do is not broadcast to the world that you have all this intellectual property.

If I had to guess, it goes something like this :

1. Company goes belly up.
2. You find source code to a market ready product
3. DON'T BROADCAST TO THE WORLD VIA SLASHDOT THAT YOU HAVE IT.
4. Change it up a little, particularly change the name and some visual aspects of it.
5 ...
6. Profit!

Re:OP: The very first thing you do ...

[WindowsTroll]

Contacting the CEO or VP may not be enough. Did the company have shareholders? If so, they own it. Did the company leave any debt? There may be a line of people trying to collect, any assets, including code, are theirs.

Re:OP: The very first thing you do ...

[ppanon]

You're assuming there was a buyer. The bankruptcy trustees would attempt to sell the IP to pay off any creditors. But if there is no entity willing in purchasing the IP, who gets it? The largest secured creditor? In exchange for what value? What if all the creditors prefer to get whatever cash they can? What happens to a company's IP assets during liquidation if there is no buyer?

I think you need to track down the trustee that was in charge of liquidating the firm's assets. I would guess only they can tell you who, if anyone, owns the IP assets of the company.

Code ownership: common practise in Sweden

[truth_revealed]

1. Offer goose for code and post notice in town square.
2. Wait 30 days
3. If no one claims the code in that time you may keep the code and eat the goose.

I've seen this "donation" racket

[siskbc]

The way it really works is more along the lines of: How much did it cost the company or individual doing the donation? In the above example maybe they could write off the amount that was donated- development costs if it was never publicly released and they *paid* development costs.

Not really - it has an intrinsic value that is independent of their actual cost. I've seen a lot of this lately, all involving nonprofits as recipients. MS donates copies of windows to schools, and typically deducts retail price. Another biggie is companies donating patents to universities. Typically the patents are things that didn't work out for them, and got shelved. They donate the stuff to the university in exchange for a "favorable" valuation of the donation, which is typically more than they could have ever sold the patent for.

So, from examples I have actually seen, there is frequently a disconnect between what a donation should be valued at and what's been happening. Supposedly the IRS is going to look more closely at this, but good luck there. This has been a nice loophole for a few years now, as everyone but the government wins. The nonprofit gets something that might be of some value for free, the company gets a big writeoff. The nonprofit doesn't pay taxes, so that's not a consideraton. Nice racket, eh? Some big companies have been doing this too - can't remember exactly, but Big Oil comes to mind, as does Dow Corning.

Re:I've seen this "donation" racket

[Anonymous Coward]

> MS donates copies of windows to schools, and typically deducts retail price.

This is an urban legend. They get cost of goods, or something like that.

The answer is 100% clear

[werdna]

and it is this: It depends.

I can fantasize all sorts of facts completely consistent with your story that would result in dramatically different answers. It just depends.

It depends on who owned the assets before the financial worries (determining clearance and ownership of any work is not always a trivial matter; who wrote the code, were they contractors or consultants, if contractors, what do the work for hire agreements say, how about other ip, what was it derived from, any third party incorporated codes, etc).

It depends on the structure of the company. Corporation, partnership, llp.

It depends how it shut down. Was it liquidated, with assets distributed? Bankruptcy.

It depends upon the agreements of everybody who worked on the software, and whether there were provisions that dealt with whatever eventualities occurred.

It depends upon the nation and, sometimes, the state in which these events occurred.

It depends.

Only a lawyer can ask the questions, determine all the issues and answer them, if an answer is available.

Anybody who pretends otherwise is lying to you.

Re: Ask a Lawyer

[eht]

So what did you do when you were found with 40g of cocaine and a 12 year old prostitue in your car? My uh friend is in a similiar situation.

Not too hard to determine

[rjamestaylor]

When a company closes who owns the office furniture, the wall art, the company name, the trademarks, logos...?

Can I start a company called WebVan today? Maybe. How about using WorldCom's logo for my new venture?

Bigger question: will anyone who can claim rights to those things pursue me if I use them for myself? Probably not -- unless I am successful. If I am successful that will get the attention of people who might have told me "who cares." If there is a legal heir, they will fight for the throne.

I've seen the legal agreements for software ownership at software companies -- there is always a clear deliniation of ownership rights for contingencies such as sale, merger, public offering or dissolution, etc., of the company.

In one recent agreement we had a partner who was responsible for writing and maintaining the bulk of the application system. We had contract language to the effect that if the company could not support the application or if the company folded we would obtain rights to the software. That's just an example.

Point is, there most likely is a legal owner and if you do something unauthorized, you'll be vulnerable to legal repercussions.

BTW: Don't mix that source code in any forum that could be seen by GNU or Open Source developers, or you'll taint the community.

Salvage

[cait56]

salvage (s?l?v?j)Pronunciation Key

n.

1.
a. The rescue of a ship, its crew, or its cargo from fire or
shipwreck.
b. The ship, crew, or cargo so rescued.
c. Compensation given to those who voluntarily aid in
such a rescue.
2.
a. The act of saving imperiled property from loss.
b. The property so saved.
3. Something saved from destruction or waste and put to
further use.

The concept of salvage is a long established part of
maritime law, because it was recognized that there
was no benefit to protecting ownership rights of
property that the rightful "owners" could not secure.
Allowing somebody else to rescue the property would
be a benefit to society as a whole that outweighed the
theoretical loss to the "rightful" property owner.

Some definition of "abandoned" software really needs
to be developed. The only thing that is different about
this type of "shipwreck" is that the losses are less
visible.

Creditors should have first claim, but when they have
no capacity or desire to do anything with the code
then there really should be a mechanism to allow
it to fall into the public domain.

It depends - but here is your answer

[rtrifts]

First off, this answer applies in Canada. I am a Canadian lawyer and quite confident about my advice in this country. My familiarity with American law is necessarily less thorough, but I do know the US Bankruptcy code reasonably well.

Ok. "My company folded". What is THAT supposed to mean? Was there a bankruptcy order made? That makes all the difference in the world.

If so - the source code vested in the Trustee in Bankruptcy. His task was to sell it on behalf of the creditors and remit to the court.

VERY often however, this does not come to pass.

So what happens?

Here is your answer:

When a Trustee in Bankruptcy does not sell an asset, the asset remains vested in the Trustee. By default, under Canadian Bankruptcy law, property that is not disposed of by the Trustee is supposed to be returned to the bankrupt prior to the Trustee being discharged.

In practice, this hardly ever happens in a corporate bankruptcy. Trustees don't do anything they aren't paid to do and if no one is watching about i dotting and t crossing, nothing gets done.

In Canada, the post bankruptcy corporation is neither alive nor dead. It can be revived by the shareholders but this is highly unusual and typically this is never done. A post bankrupt corporation is a lurking mess and the responsibilities for tax filings and potential director's liability issues is hardly ever worth it.

As there is no one left around to pay the corporate fees for the corporation, it is dissolved by order of the Director of the Business Corporation statute in its jurisdiction and it becomes essentially dead. (But if someone were to acquire the shares from the former shareholder and file articles of revival, THEN persuade the Trustee (who is almost always discharged by now) to go back on as Trustee and THEN make the necessary motion to the Registrar to return the property to the bankrupt, you could then
have the corporation AND the rights to the code.

But - not so fast. That is assuming there was a deal in place for the corporation to actually own the code. Sometimes there is not and the bankruptcy itself reverted ownership in the code to someone else because of a defaulted royalty.

In other words - it's a complex answer which is highly dependent on the facts.

Under Canadian law at least - one thing is NOT true - the property does not vest in a creditor be it secured or unsecured. It is highly unusual for a creditor to foreclose and this is almost never done. The property does not belong to the creditor - the right to sell it for FMV and keep the proceeds is what the creditors - both secured and unsecured - had.

(While I won't vouch for this analysis under US Bankruptcy law as 100% correct - it is MOSTLY correct I expect).

So - is this lurking code something you can manage to make your own? Yes. With the fees to a lawyer and the Trustee, it's possible. The problem is, questions of this kind alert people to residual value in an undisposed property. People who are otherwise unaware of value will be alerted by your inquiries and requests.

Which is a nice way of saying that sometimes it's best to shut your mouth and make some quiet and discrete inquiries.

If the worst case scenario is there is some Trustee theoretically who did not dispose of a copyright it should have, and it would at law have reverted to a dead corporation, then it isn't very likely that anybody would have any right to assert that - say - code you claimed was yours was NOT yours.

Get the picture?

YMMV

simple solution

[Anonymous Coward]

copy the code and accidently leave it behind an the next local Linux User Group meeting. Shortly after that it might a anonymously posted to a newsgroup and from that poing, the creditors have to work really hard to protect their intellectual property and you are free to work on it in the meantime.

Accidents happen.

Re:IP in source code belongs to the programmer

[Tazzy531]

Chances are this will not hold up in US courts. In most places that you are employeed, you sign a contract giving up all claims that you may have on the IP of anything you develop on "company time." In paying you a salary, the company has fulfilled it's end of the contract. The IP and source code should then belong to the company.

Amazon still sells it...

[Lord Prox]

Found this
And this containing contact info (may be out of date)

If Amazon still sells this then someone is connected to the money and that means trouble... So forget droping it in the trash and I don't know you...