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?"

Comments

Re:This is an Ask Slashdot FAQ

[Timesprout]

Tell the lawyer you want the other company to provide the copyright, and your legal fees.

Admitting you made a mistake and then trying to bully your way out of it with implied legal action and the threatof costs is a pretty transparent strategy that is more likey to cause animosity and a countersuit. Better to ask them first if they have any objections to you modifying the code for internal use, which they probably wont and get that in writing.

Say byte me...

[Eric Pierce]

Let us know who they are so we make sure to never, ever contract them.

Not enough information.

[amper]

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.

Re:This is an Ask Slashdot FAQ

[Anonymous Coward]

if they have any objections to you modifying the code for internal use, which they probably wont

It is very likely that that is exactly why the developers want to retain copyright. If they can forbid modifications by the customer or people hired by the customer, then they have a monopoly on the supply of further development, with the cost of the first version as a barrier to entry into the market for anyone else.

Re:This is an Ask Slashdot FAQ

[Timesprout]

Of course they should get a lawyer to examine what if anything they signed and clue them in. They may be fine or as you point out if they did not request copyright in a written contract then (a) they are naive and (b)in a difficult position. Trying to immediately legally intimidate (I am assuming the initial agreement was a lawyer free mutual one) and pass on the costs of their mistakes to the developer will most likely immediately kill all good will and unless the developer is poverty stricken eliminate all chance of future business. Furthermore it may in fact cause the developer to reexamine their licensing terms and enforce them to the very letter with suits for anything and everything they consider a breach. Again as you say consulting a laywer should clue them in to this possibility.

Look at the screaming hysteria that takes place round here if an OSS project gets a nice C&D letter from a lawyer. I would agree with your suggestion that they seek legal advise and based on this approach the developer in the same manner as the initial negotialtions, seek suitable agreement and _then_ get the lawyers to sign it off to everyones satisfaction. Failing mutual agreement the legal approach can be tried but thats an approach that works both ways and the developer may in fact be in a far stronger legal position in this case and could potentially cause all sorts of problems and embarassment for the company.

Re:What does the license include?

[rossifer]

If the development company isn't assigning the copyright, they probably aren't giving that, either, and plan to leverage upon this software with other customers. This is a game that most contracting developers play.

Of course, the licensing of code used in a contract is more sophisticated than you're letting on, so it's more serious than a game.

When I've done contract software development in the past, I've brought a common library of foundation code that gets me started very quickly. I wrote this library after completing projects for two clients and realizing that I started each project with the same two months worth of work. So in the next downtime, I wrote a more flexible/reusable version based on lessons learned.

I'm perfectly happy to license this code to my clients and allow them to maintain it themselves once I'm out of the picture, but I don't want to lose the ability to use that library for the benefit of my next client.

IMHO, the best option is to negotiate the licensing terms of all of the parts of the project up front and in good faith. This means being clear that the contractor is bringing code written elsewhere to the project and wants to retain ownership of that code. This means being clear that code written specifically for this client (embodying confidential and domain-specific knowledge) will not be owned or re-used by the contractor. This also means being crystal clean about billing of time spent maintaining the outside library (*). There are a few ways to clearly differentiate between the three kinds of time. I find that a "domain-specific" test is generally enough to leave both parties satisfied that their interests will be protected.

* If we expect significant expansion of the non-domain-specific code I've brought, I'll ask for a lower rate when working on that part of the system. Otherwise, if the maintenance take more than an hour in a week, I'll eat the time, less than an hour in a week and I'll bill the time. This has usually been acceptable to my clients and acknowledges that we both benefit from that time.

Playing games just means a lot of hard feelings, a lost reference, no assistance maintaining the project, and nobody is happy at the end of the day. Be clear, be honest, and negotiate from shared goals instead of trying to screw every penny or minute of time from the other.

Ross

Re:This is an Ask Slashdot FAQ

[B'Trey]

IF this isn't a simple work-for-hire situation, that seems quite fair, unless the customer is willing to pay a lot more money to the developer for sole ownership of the copyright, who then be saddled with the need to reinvent the wheel on future projects.

If this is the company's standard method of operating, it's quite likely that they reused a few wheels in this project. Turning over the copyright may require extensive rewriting to remove code that's already in other projects to which they retained the copyright.

Re:As a feelancer

[Skjellifetti]

IANAL but...

That's obvious. The relevant law:

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

This seems to be the problem faced by the questioner: They hired a company to do the work for them, not an individual so 1) does not apply. Software is not one of the 9 categories listed under 2) for which such a contract may even be written so 2) does not apply. Therefore the development company owns the copyright.

Get it in writing beforehand.

[jonadab]

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.

Re:This is an Ask Slashdot FAQ

[BobPaul]

If you tell a Lawyer "These guys won't give us our copyrights like they were supposed to! Sue them and make them pay our legal fees to." The first thing the lawyer is going to say is, "Ok, but it's $100/hr and you have to pay me for the time being. You'll get a "rebate" if we win legal fees" The next thing the lawyer will do is examine the contract and size up the opponent. This results in "Contract is in our favor, we should sue," "Contract is not in our favor, but they'll probably blink first" or "Contract is solid and they're not likely to budge. You should pay me and drop this."

If you ask a lawyer to sue, they'll tell you if you're an idiot long before they file proceedings.

Re:This is an Ask Slashdot FAQ

[Bruce Perens]

My own company often negotiates to own the copyright to something it creates. But we make it very explicit when we do that, and we would be loath to even sign a contract in which the other party had no lawyer participating, because we would have little assurance that there was a "meeting of the minds". I don't really approve of a vendor who does that. In this case it sounds as if the customer thought they were buying more than the vendor thought they were selling. Is the vendor taking advantage? Maybe. Contractors very often try to sell the same work multiple times, it's a basic play in how to leverage your consulting business. I think it's fair for the customer to negotiate from a position of strength rather than be a dupe, which is what they've been doing so far. What I suggested was that they get a lawyer to call the other company. If the other company knows they've been playing fast and loose with the customer, they'll give in at that point. If they haven't, they will probably hold the line.

Bruce

Re:As a feelancer

[cpt kangarooski]

They hired a company to do the work for them, not an individual so 1) does not apply.

Whether it's a company or not doesn't matter. 1 can apply, but it's very dependent on the details involved.