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Copyright vs Exclusive License?
cdanzig asks: "My company recently hired a development house to do some contract work for us. They did great work, but they are claiming that they now own the copyright on the code and are issuing us a permanent and exclusive license. My bosses are concerned that this will hamper our ability to make changes to the code or prevent us form being able to claim the software as a company asset. What is expected protocol between a client and a development house? What is the long-term difference between owning a copyright and owning an exclusive license? If we paid for the development of the code, is it fair for us to demand ownership?"
If your company didn't negotiate this when you hired the development company, it's your company's fault. But all is not lost. You may be able to prove that the software is a work-for-hire. Get a lawyer. Your laywer might be able to negotiate in a way that you can not, because it will be clear when the lawyer calls that you would consider a lawsuit. Tell the lawyer you want the other company to provide the copyright, and your legal fees.
Next time, have a lawyer work with you before you sign a contract with any company.
FYI: I am an expert witness. I get paid to testify in lawsuits when engineers don't call laywers before they accept a license or sign an agreement.
Bruce ~
Bruce Perens.
Expected protocol is to have your lawyer specify what you want in the contract before any work is done or money paid.
If you didn't think/plan ahead, take whatever you can get.
Sorry if that sounds rude, but I spend most of my day dealing with other people not thinking/planning ahead and then expecting somebody else (i.e. me) to bail them out. It gets old.
The masses are the crack whores of religion.
In either case you can do with it as you like. But you should have specified that before the work started. Try to get to one of these two alternatives now, but it might take legal action (and help).
Most ACs are not even worth the keystrokes to insult them. Be generically insulted by this and ignored otherwise.
<IANAL>
If the contract says nothing about who owns the code, it may probably be treated as a work-for-hire, which would mean you owned it. OTOH, if they assert copyright and you don't fight it, you probably won't be entitled to list it as a company asset. Contact your attorney.
</IANAL>
If it was, and the developers are misreading it, have your purchasing department and/or counsel disabuse them of that notion immediately and forcefully.
If it was, and they are reading it correctly, have your purchasing department and/or counsel taken outside and spanked hard.
If it was not addressed, have said purchasing department and/or consel taken outside and shot immediately, and then hire competent counsel to get you out of the mess.
"As God is my witness, I thought turkeys could fly." A. Carlson
What are the exact terms of the exclusive license? Is it a license non-exclusive, royalty-free, irrevokable, perpetual license to use, reproduce, modify, adapt, publish, translate, create derivative works from, distribute, perform and display the software?
Let us know who they are so we make sure to never, ever contract them.
Why they claim a "permanent and exclusive" license rather than just giving you the software. If the license is permanent, you have it forever, and if it's exclusive, they can't use or sell it. Unless I'm missing something, they are just being pricks and that's not a very good corporate culture for a consulting house.
"Eve of Destruction", it's not just for old hippies anymore...
You didn't specify the terms of the license agreement. It's great that it's permanent and exclusive, but if you want the copyright transferred to your company, be prepared to pay for that privilege. This is a fairly common practice.
In increasing order of expected value:
1. Temporary, non-exclusive right
2. Permanent, non-exclusive right or temporary, exclusive right
3. Permanent, exclusive right
4. Copyright transfer
The author has the right to expect greater compensation for greater value delivered. Perhaps you should try to negotiate a transfer agreement before you get too up in arms about this matter.
The question as to whether you own the work depends on the contract you signed with the development company.
The question of whether the exclusive license allows modifications and the terms on those modifications depends on the contract they are offering your company.
Without seeing either of these contracts, it's impossible to know what rights any party has (for the most part -- your jurisdiction may have case law or a statute which supercedes even explicit terms of a contract, but since I don't know your jurisdiction that still doesn't help). If the contracts are not themselves confidential, you should post them somewhere so we can look at them.
Signed, a Harvard Law School student
IANAL but... From the perspective of someone who has done a lot of freelance work, both development and graphic design, retaining copyright is not unheard of, but it sounds like someone screwed up in the negotiation process. When doing freelance work, it's common to retain copyright, even when offering an exclusive license, because it allows the developer to create derivative works. This allows the freelancer to re-use code modules in other projects without having to worry about being sued by clients. From the perspective of a business, this doesn't necessarily hurt you. Depending on how your license is written, you may still have the right to modify the source for your use internally. You'll really need to get a lawyer to work out the details of your rights.
Whenever I have done freelance work, I have always stated up front where I stand on retaining copyright. In general, I retain copyright for projects unless stated otherwise - but I let the client know that upfront and that it is open to negotiation (in general, I charge the lowest rate for clients who want a non-exclusive license, more for clients who want an exclusive license where I retain copyright so I can use modules in future projects, and the most for transfer of copyright).
As for work for hire, as a rule of thumb, a project is work-for-hire if the project is created using company resources, so if the contractor used your companies computers and office space, then it could reasonably be considered work for hire, whereas if you gave them specs and they came back with a disk, it might be harder to make the work-for-hire argument. Once again, you'll have to talk to a lawyer about that, since there are all kinds of subtleties and differences from state to state, country to country, etc.
I would say, get a lawyer and try to work out your situation in this instance, and consider that you may have to chalk up a lesson learned. In the future, discuss this with contractors before hiring them.
Famous Last Words: "hmm...wikipedia says it's edible"
1) Hire another company to invent time machine
2) Send blueprints, code, and a completed time machine, and source code for existing project, back in time
3) ???
4) PROFIT!!!
Knowledge is how to play a game, intelligence is how to win, wisdom is knowing what game to play.
Perhaps they bought a salable license to a library that they used to build the code they are selling you, thus they can't sell you a copyright they don't own. Double check that their coders wrote 100% of the code.
All ideas^H^H^H^H^Hprocesses in this post are Patent Pending. (as well as the process of patenting all postings)
I suspect they just have that to keep your company from reselling the software. They would probably let you modify it as you wish.
SJW: Someone who has run out of real oppression, and has to fake it.
Actually, the first thing that occurred to me was "What about the ability to resell the program?" It seems to me that, from the standpoint of the development house, maintaining the copyright is a means to prevent the client from going out and reselling your work, in all or part, and basically shutting them out from other potential clients. It would suck to be underbid by someone else legally reselling your own work.
I'll agree with almost everyone else here and agree that this sort of thing really should have been dealt with in the contract agreement. How was that not part of the bargaining process? Copyright control of the product would be a major factor in the price charge/paid for in any deal, from how I see it.
09 F9 11 02 9D 74 E3 5B D8 41 56 C5 63 56 88 C0
This will probably only be an issue if your company tries to sell the code or release it.
It should have no impact on internal use and maintenance.
The contracting house may not exist in a few years anyway.
She was like chocolate when she drank... semi-sweet at first and then increasingly bitter.
Bruce, is this your first First Post? I don't recall seeing one from you in the past. :)
So does anybody have a magic solution that gives the client the right to use the original work that they've paid for, without the developer having to give up the rights to every last generic utility class they wrote, and consequently having to clean-room their next project, lest the original client sells out to a litigation-only troll company?
(Yes, but apart from that, Dr Stallman...)
The amount of dilligence that can reasonably be expected from a developer rather depends on the length and scale of the project - if its a 5 year project to write a new operating system that's one thing, but if its just a 6-week website job the client can hardly expect to pwn your browser-sniffing code...
In a survey of 100 programmers, 111111 thought that duck-typing was a good idea.
This sort of thing happens enough among uneducated (legally speaking) developers and companies that there's a term for it---non-exclusive license of copyright---which is essentially a contract issue. This is an equitable issue (unjust enrichment) which falls under state law. The long and the short of is is that they cannot prevent your using it, redistributing it, or even selling it to another software house; but neither can you stop them.
/. We are not lawyers, and this is not legal advice.
The normal rule is the author of the work owns the copyright. However, when the work is done by an employee for an employer, or when the contract explicitly transfers ownership, we typically have a work-for-hire. When the contract is silent and the author is not an employee, we can have a non-exclusive transfer of license. Since the author did the work and was compensated, then the compensating party has the right to use the property free of any license control. The _Foad_ case is a good example of this. (http://www.ivanhoffman.com/nightmare.html)
The author cannot prevent you from using the software because you paid for its development. Heck, the author cannot prevent you from giving the software to a third party for them to improve it. Foad involved an architecture firm creating plans of a shopping mall for a contractor who sold the construction project to another contractor. The second contractor then gave the plans to its outsourced architecture firm who removed all references to the original firm and essentially copied it. The Ninth Circuit said the nature of the relationship between the original parties created a non-exclusive license which allowed for this. In law, this is grounded in equitable principles of quasi-contract or unjust enrichment. The court in _Foad_ split in two directions (2-1) on the underlying cause of the transfer, but were unified in the existence of the transfer.
This is a state law issue because Congress implicitly ignores non-exclusive transfers, and the occurrence of these transfers is contractual in nature. Contracts are usually governed by state law.
I think they can revoke the license; but only by paying you back all that you spent. When the grant is made "for compensation" (usually money), the grant is irrevocable. In two circuits, the revocation can only happen when the license is between 35 and 40 years old!
Get thee to a good IP attorney and stop asking
As an aside, the Open-Gaming License put out by WOTC (Hasbro is it now) is a explicit non-exclusive license grant.
What those who want activist courts fear is rule by the people.
IANAL, but I believe it's called sharing the copyright as joint owners. Once both companies jointly own the copyright, either can do anything with the code it wishes except preventing the other from having that same freedom.
Better yet for both the contract developers and the client, the developers could assign the copyright on the complete work to the client but retain copyright on the libraries. This could allow the client who paid for it to do whatever they want with the whole project. They'd have exclusive ownership of the parts that are unique to their business model and to their vision of how the software helps their efficiency. The contract developer could use any wheels-and-cogs type utility libraries for as many other clients as they wish, and continue licensing the libraries as 'do-what-you-will-with-this' to each client.
Who cares what they say, what does the contract say?
If someone is passing you on the right, you are an asshole for driving in the wrong lane.
Unless the copyright issues are explicitly spelled out in the contract, two things are true:
1. The development house owns the copyrights, not your company. Period.
2. Your company has an implicit non-exclusive license to use, modify, improve and even sell the software if it can be done in a manner consistent with the purposes you discussed with while creating the contract. Note however that they would be entitled to a reasonable portion of the proceeds in any outright sale of the software.
There are a few exceptions that could render those statements false, but they're pretty narrow. A couple of them are:
If their development was an extension of existing work then its a derivative work and the development co-owns the copyrights to the new work with the prior owner, possibly you. There is no you own this part and they own that part. You both own the entire work.
If your and their developers both wrote the software with their developers merely contributing components as specified then it probably eeks in to work-made-for-hire territory, leaving the copyrights firmly in your hand. You'd have to be the primary developer with them contributing components as specified.
Bottom line: if the difference impacts your company's bottom line then you need to invest in a lawyer. If it doesn't, move on and be smarter next time.
Moderating "-1, Disagree" is simple censorship. Have the guts to post your opinion.
IANAL, at first I though this might fall under Work For Hire:
Works Made for Hire. -- (1) a work prepared by an employee within the scope of his or her employment; or (2) a work specially ordered or commissioned for use as a contribution to a collective work, as a part of a motion picture or other audiovisual work, as a translation, as a supplementary work, as a compilation, as an instructional text, as a test, as answer material for a test, or as an atlas, if the parties expressly agree in a written instrument signed by them that the work shall be considered a work made for hire. 17 U.S.C. sec 101
But now that I looked it up it says specifically that it has to be in writing and it has to fall under one of 9 categories. Software development is not listed although it could be if it is part of a contribution to a larger work.
Alot of us have been, will be or are contractors so it is always good advice to do some research and hire a good lawyer to protect your IP.
Obligitory Wikipedia link
Bet this
In the FLOSS arena, I've long been a fan of joint copyright assignment, such as the one used by Sun and OpenOffice.org [pdf]. I'm not sure if there are any potential pitfalls for doing this in the client-freelancer scenario. But, in theory, it gives both parties carte blanche to do what they want.
The Busy Coder's Guide to Android Development
Get the terms of the agreement in writing before you pay anything. Duh.
Verbal agreements, basic quotes, and general practice are one thing if you're talking about off-the-shelf stuff, but when somebody's doing custom work for you -- of any kind, whether it's software dev or landscaping or advertising or business consulting or whatever -- you want everything spelled out in black and white before you pay them a dime. Things you want spelled out include, but are not limited to, the following:
* exactly how much you are going to pay them up front (hint: no more than half the total)
* exactly how much you are going to pay them on completion
* exactly what they are going to do for you and provide you with
* exactly when they have to have it completed, and what happens if they don't
* what the secondary deadline is when they owe you back even the up-front money if it's not done
* exactly what it means for them to have the job "completed"
* the terms under which it is decided whether there will be an ongoing relationship
(e.g., maintenance contract)
* what you have to do to back out of the deal at any given stage, and what they
have to do to back out of it, and what happens if either of you do back out
* what kind of warrantee you have from them, and for how long
If you pay large amounts of money for custom work without getting in writing what you're paying for and when it must be delivered and so forth, you've been had. If you have a good lawyer you *might* be able to get some of what you wanted ex post facto, but then again you might not, and in any case your lawyer's time is worth money too, and going after them after the deal is done is not an efficient use of that time, compared with getting things in writing up front.
Don't be stoopid. Get it in writing.
Cut that out, or I will ship you to Norilsk in a box.
Are you really going to take advice on your IP from a Slashdot post?
Perhaps I'll go ask my barber how to configure SSL on Apache? I'm sure he'll have some good advice.
Usually the arrangement that I have used is that the copyright on the work that's paid for by the client (the "Work") is a work-for-hire and the copyright goes to the client. The code that the developer brings to the table ("Pre-Existing Code") is of course owned (and copyrighted) by the developer, and as part of the deal, the client gets a perpetual, fully-paid-up, nonexclusive, worldwide license to use the Pre-Existing Code. They don't own it, but for all practical purposes they do. There need to be specified some restrictions on what "use" means back there two sentences ago, so the client can't decide to post the Pre-Existing Code on the web to try and hurt you if the relationship turns sour. If it's a big job and the client is actually in a related field (web development firm hiring an individual web developer) then the Pre-Existing Code might only be licensed for use internal to the client, so they can't use your cool framework to outbid you in a year when trying to get that juicy Fortune 500 account. I have done contracts where there was an appendix listing the files that comprised the Pre-Existing Work, and if you wanted to be more diligent you could actually print out the suckers and put it all in as an appendix. Or something more sophisticated like burning it on CD and specifying some giant-key-length, uncrackable digital signature in the contract, so when the CD goes bad you can show them the file and have an expert witness testify that those are really the files that were specified back 10 years ago when the contract was signed; and you would have to talk about it in the contract and have both sides acknowledge that a matching digital signature using XXX utility means both sides will agree it's the same file. (I've never done that though)
If you have a good working relationship with the client, then you may be able to also negotiate the rights to the Work itself (I'm talking now about the Work, not the Pre-Existing Code) to be the other way around, where you, the developer, get a perpetual nonexclusive worldwide fully-paid-up license to use portions of the Work, without the need to give a copyright credit to the client. "Portions of" might mean everything, or underlying stuff, or sometimes "everything that doesn't embody the client's IP". And if the client doesn't want the developer to go sell the code he just paid for to his closest competitor, which means 100% of the time, then the developer is bound by a two-year noncompete agreement on similar products developed for other clients, or else the code licensed above is subject to a two-year (or maybe perpetual) noncompete agreement. This might be totally off the table depending on the client and your relationship and how much you're getting paid.
My local engineering association recommends only giving out licenses for all engineering works. The reasons are fairly obvious. Firstly, you can design a building (or a software program) for a client to use, without owning all the copyrights associated with it. For instance, suppose the consulting company used some example source code from Microsoft in the production code. They are allowed to do that. They aren't allowed to give the client the copyrights to Microsoft's example source code. It doesn't take long to realize that all those subsidiary libraries, code snippets, etc., are very difficult to get full copyright ownership on. However, using them in a piece of code is allowed and often encouraged. A license that ensures the client has the rights to use the software, and sidesteps the complexities of the copyright issues.
The other reason engineers stick to licenses is that portions of the engineering work may be in proprietary libraries used on a variety of client's projects. Again, this is okay, as long as the exact same piece of code isn't being sold to multiple clients with each client understanding that they have sole rights to "custom" code.
Finally, if you are dealing with engineers, a critical issue is who holds the liability insurance on the contract. If your software house has liability insurance, you are going to have a hard time proving "work for hire." Specifically, it isn't work for hire if you try suing them for non-performance of contract. That's a liability. It is only "work for hire" if you as the customer are absorbing all risks and pay all costs, and the software company is set up accordingly. Similarly, "work for hire" will be difficult to prove if the software house provides its own software, laptops, and/or offices.
I run a software development house and we used to get into this kind of sticky situation from the other end a few times many years ago, until we explicitly stated in all proposals who would own the end product, whether it was a license etc etc.
The default years ago used to be that if the ownership question was not addressed it would belong to the development house. Nowadays it's not so clear, and can go either way in court. You pays your money and takes your chance.
My $0.02-worth is this - I think it's unreasonable for customers to expect to automatically get the copyright of what is developed. Bear in mind that if copyright is truly transferred, the developers will have designed a profitable, saleable application using their many years of experience, and they are then expected to give all rights to any future revenue from that application of expertise to you. Also, if the letter of the law is followed, they are never again to design or build a similar application that works in the same way! Nor can they re-use any of their developed code/modules/snippets that they implemented in your system.
And what if they used other bits from other systems to build your program? Most development houses do that, it's like re-inventing the wheel otherwise! If they grant you the copyright to the system, well then technically their other clients ought to now pay you license fees - a preposterous proposition.
Think of a professional photographer. You ask him/her to come take photos at your wedding. You pay a large amount (if he's any good!) of money to have him there on the day, then he goes away and comes back with a huge array of photographs. You then buy an album of your favourites, having already paid for his time. Can you now go and copy these as many times as you like? Do you automatically get all of the photos he took because you paid for his time? Of course not! He still owns the copyright. You want another album? You have to buy another from him! We wouldn't expect any less.
In my opinion we hugely undervalue intellectual property in the IT arena. Your software partner has invested literally years and years of time in building a standard code base to get to the point of being able to develop a competent system for you at an appropriate cost. You have an unlimited license to use it (and hopefully modify it - I agree with an earlier post that they are likely to agree to that) - but by having paid for developers time spent on it, does that automatically give you a right to its copyright, all potential future revenue from it, and all use of any code contained within it? I think not!
Unless the software is created by employees of your company, or you agree up front that you will have copyright, the copyright goes to the developer as the author of the work. It's no different than you going to the store and buying Office 2007 off the shelf, and the same accounting rules apply.
What I find more interesting is the licensing. You should have been told what the license would be before the work was begun. A permanent, exclusive license is the next best thing to owning the copyright, as they cannot turn around and license the complete application to anyone else.
However, unless the developers are idiots, they've written the majority of your application as a collection of libraries suitable for reuse for other purposes -- many of which may precede your project or have been licensed to the developer from other developers. So, even though they offer you an exclusive license, they may be planning to repurpose portions of the application for other uses.
Others have suggested that you should bring a lawyer into the discussion, and you're certainly welcome to do so. But, unless they've given you the source code for you to maintain the application, you might want to start looking for another developer to write a replacement application under terms you do like. Once you involve lawyers and the threat of a lawsuit, expect the developer to stop maintaining the application.
Some people have a way with words, and some people, um, thingy.
In fact, their IDs are both in the 3800's (3872 and 3800). I think that makes them cousins. ;)