Slashdot Mirror
"Licensing" of Already Delivered Software?
Matterama asks: "My partner and I are treading on thin ice. We delivered six microprocessor controllers with source code libraries to a customer, under a written agreement to negotiate the license for that code from us once they got it working with their system. That time is upon us, and we realize that we do not know how to go about this (yep, we're pathetic). They want to buy 1000 units, and we are not setup to be a Microsoft (nor do we want to be). If I'm going to get a good, simple answer that puts money in our pockets for our work, it will be here. Can Slashdot recommend solutions or sites with solutions?"
This is the kind of matter that's not meant for Slashdot, unless you enjoy seeing your question published and replied to without any gain in real knowledge. Consult an attorney, as they really know how to manage situations like these, unless the armchair-lawyers here. I can't quite understand why you would base your business decisions on replies from /.
A blog like any other.
If I'm going to get a good, simple answer that puts money in our pockets for our work, it will be here.
Yep: get a lawyer. Also, don't ask for legal advice on Slashdot.
Are you hoping to make money off the code? Off of the controllers? Given the information you gave us so far you will end up selling 1000 controllers ("units" I'm assuming refers to hardware) so that is good. License the code any way you like and charge a one time cost for the code. GPL, MPL -like, whatever, allows you to charge for your code. If the code gives you some particular advantage in your market then write up a license that stops them from delivering the code to others but allow them to modify it for themselves.
In short, license it in the most liberal way you can to allow your company to keep the value invested in it without ruining its value to the buyer (they have been working with it all this time, if they lose the ability to alter it now they won't be happy).
Insert pithy comment here.
You've basically got two questions to answer:
1) What do they get now (binary usage, source usage, source ownership) at what price
2) What will be your ongoing relationship (will you provide bug fixes, future versions, telephone support) at what price.
Make sure you handle both sw and hw.
But, the key thing is to talk to a lawyer who knows this area and understands the tradeoffs between different approaches, especially between proprietary and open source.
the clock on the wall says 4 til 7
lots of folks saying you need a lawyer... if you have a lawyer, go talk with him, but remember, it's the *lawyers* that come up with these long convoluted "licenses" which blur the boundaries between "license" and "contract" and are full of of BS. It's "job security" for lawyers.
When it comes to copyrights and licensing, the law is on your side to begin with. If you deliver 1000 units with your software, and no license, then they can use the software in the usual way, but they cannot redistribute, copy, etc., etc.
You can grant them additional rights through a license, or you can REMOVE their rights with a *signed* *contract*. Contracts and licenses are different things. Usually a contract includes a license, just to keep things simple, but look at the GPL or other open-source licenses, they are not signed, because they aren't contracts.
So what I would do in your situation is come up with a contract that says you will deliver the units for X dollars, and include a "license section" in the contract that simply says they can't copy, redistribute, perform, reverse engineer, whatever (look at some open-source licenses for ideas).
If you don't have experience with contracts, then definitely get a lawyer since a contract is so "general". But when it comes to software licensing I wouldn't sweat it. If they do anything with your software, the law is on your side, you can sue (you might want to register those copyrights too, by the way).
When I enter a contract with a costomer, my biggest fear is "what if they don't pay, and there's some loophole in here", not "what if they start selling my program", because unless you explicitly give them that right, they can't sell it. Then again I'm an open-source-minded guy, I don't believe in per-copy licensing fees, I only charge for labor and "set up fees" and so forth. I go out of my way to simplify the licensing for the customer.
Just remember that a lawyer is going to go out of his way, making your license as complicated as possible, for *his* benefit.
Unless there is something saying they can use the software, they can not. the whole point of a license is to give the customer a right to use it, and it will not matter how many thousands of pounds they paid you to build it! Therefore it doesnt technically matter if it is delivered. to put it into context they are un the same situation as if you had a warez copy of MSWord. Of course they know you've done the development so they may think they are in a very strong bargaining position, so its just how much you are prepared to stick to your guns. Id say your position is strong er than if you'd done this before starting work, as they know the quality of the end product and if you tell them "the license is you can use it on christmas day" they will have to pay someone else to develop and have yet more delay.
In short, be a hard bastard!
"under a written agreement to negotiate the license for that code from us"
That probally means nothing. You need to see a good attorney ASAP, because you probally don't have any kind of valid contract.
Conformity is the jailer of freedom and enemy of growth. -JFK
Negotiate payment BEFORE A SINGLE LINE OF CODE IS WRITTEN. Your contract starts with a MINIMUM amount, which MAY INCREASE depending on the work involved in the project. Don't EVER give the client a chance to screw you, BECAUSE THEY WILL.
If you do business with people who will screw you just because you can, you're fucked no matter what contracts you have. Even if you have 100% airtight agreements written by the world's best lawyers, a malicious client can make your life a living hell. As my lawyer says, "They can sue you for anything they want. Eventually you'll win, but that can take a long time."
Instead, do business with people you like and trust. Then, as you suggest, get everything in writing up front. The main benefit isn't the ability to have a court enforce things; the benefit is that everything's clearly spelled out while things are still sunny. That makes getting through the storms much easier.
In either case, just ask them honestly what there budget for the project is. Do this /after/ explaining your expenses; that is, how much you want and why you want it, broken up (honestly) into sunk costs, future development, and the stuff for your pocket.
No no no, don't do that! Your costs have nothing to do with the price a customer will be willing to pay. One of the basic tenets of capitalism is that goods trade at or near their perceived value. If that value exceeds your cost, you make a profit (congratulations!), if not you take a loss. How much profit you make is direct compensation for the value you added to the parts you obtained before selling the result to your customer. This is the true meaning of "value added" (not to be confused with the "value added reseller", a synonym for "retailer").
Once they quote a budget, if it's reasonable, take 80% of it. If it's not reasonable, say so. That'll make them want to come back.
Now that's good advice, or at least almost. There are two schools of though on deals: "Everyone should feel some pain" and "Everyone should feel happy". The former is based on non-recurring sales, where you can squeeze all the profit you want and then scorch the ground. The latter assumes that your repuration with this customer is valuable to you, and theirs with you likewise. If you believe in recurring sales (usually a good thing!), you should always leave some money on the table, although I'd say 20% is too much.