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Why Paying For Code Doesn't Mean You Own It
Barence writes "Why do people think they own code just because they've paid for it? PC Pro's Kevin Partner says many of his clients believe that by paying for the work to be done, they take ownership of it. But, put simply, code is owned by its developer even once the client has paid, unless that developer is legally employed by the client or a contract exists that transfers full ownership (and even then it's far from clear-cut). He discusses the thorny issue of making clients understand that distinction and gives advice on how developers can assert their rights."
IAAL, but the issues here are complex so this is NOT advice for any particular person in any particular situation:
If what you are interested in is owning a copyright to source code there are two ways for a "customer" to get the copyright:
1. If the software is a work made for hire. "Work for hire" is a legal definition (see 17 U.S.C. 101), with two different paths. The first path is for the software to be written by an employee within the scope of employment of the organization claiming copyright. Employee specifically does NOT mean an independent contractor, and code written by a contractor is NOT a work for hire! The definition of an employee goes into all sorts of common-law factors a court will look at, but the shorthand is the tax status of an employee with the IRS.... merely calling a contractor an employee is not enough. Also, the work has to be made within the normal scope of employment, so no, the employer cannot claim copyright as a work for hire for something the employee did outside of work. In fact, even if the employee works for the organization as a regular employee, if writing code is not within the normal scope of employment it still might not be a work for hire (up to the courts to decide if things go south). While some works for hire can be done by an independent contractors along with a specific written agreement, software code generally does not fall into any of the specifically enumerated categories where these written agreements work (see 17 U.S.C. 101 for more details).
Interesting: Technically, code written for a big company like MS or IBM by the armies of independent contractors are NOT works made for hire. See point 2 for how the companies can still get rights.
2. Assignment of Copyright: This is much more common for any work not directly made by an employee. There is a written agreement assigning ownership of the copyright to the contracting organization. The usual rules of contract law cover what is and is not within the scope of the assignment. Assignments can be non-exclusive (we can do what we want with the code, but the developer is also free to do what he wants), or more commonly, exclusive (the assignee getting rights to the code has full control, the original developer loses his rights to that specific work). So is there any difference from a work made for hire? YES! In a work made for hire, the organization OWNS the copyright for the entire length of the copyright term. However, in an assignment, Copyright law specifically splits the copyright term into two parts. An assignment made when the work is created transfers rights to the assignee (usually the company) for about 1/2 the term (the time varies depending upon whether the author dies and some other factors, but it is usually a long time > 30 years). The copyright automatically reverts back to the original author, and the assignment agreement cannot override this rule. The law is written this way to give the authors a "second bite at the apple" in case a work they assign away for peanuts becomes very valuable later. The author can extend the copyright to the second half of its term by paying a nominal fee, and can then go out and the assignee loses all previously held rights.
The upshot for the software industry: Any assigned copyrights will eventually revert to the authors. Now, by the time the reversion occurs most software will be long out of date, but as we all know there is plenty of software out there that lingers for a LONG time, and non-employees DO get there rights to the underlying code back.
One other point: Binary code gets a separate copyright from the underyling source code. But binary code is a derivative work of the underyling source code, so even if the developer never compiles code he writes, the binary distribution using that code would violate the copyright of the original code if ther
AntiFA: An abbreviation for Anti First Amendment.
It's pretty simple. If you are an employee, your employer owns your code. If you are a contractor you own your code unless your contract or agreement states that the work is a "work for hire" (or uses equivalent language). Requisite Wikipedia reference.
Other posters have already said that legally it all depends on the license you work out with the customer, and they are correct.
Having said that, I find that the customer's expectations will depend on what the financing model for the product was. Typically when you get paid for software, it will have been developed under one of two models:
If you're using one of the above approaches but want your licensing to work differently, the key is to make this clear to the customer up-front (managing expectations isn't something techies typically enjoy spending time doing, but it's a very important part of having a successful business relationship with your customer) and make sure all your legal wording is done correctly as well. I've worked at companies before where product development was funded by customers, but the need the customer wanted addressed was sufficiently general that the company wanted to retain the copyright and IP to resell to others. In this case, the customer was granted cheap or free perpetual licenses to use the software that was developed, but the contract was written so that the company retained the copyright and the right to sell licenses to others as well.
As a matter of US law, you are wrong. Copyright in a work for hire resides with the employer (or whomever the work was made for). See Circular 9 of the US Copyright Office. If an entire program is being developed as a contract piece, it *might* not qualify as a work for hire, but contracted software components and anything a normal employee writes within the scope of his employment are works for hire, and the people writing the checks own those works.
I don't know about the corresponding laws in other countries, but if you work in the US, you are woefully misinformed.
Bottom line is that if you're buying COTS, then you get whatever the license says. If you're paying for development, then you get whatever you negotiate. Articulate your requirement for data rights in the RFP, carefully review the proposals for meeting your requirements, then follow-up to ensure the contract says what you need it to say.
Wedding photography has a very well established business plan where the base fee covers the basic costs of the photographer, and the prints supply the profit. You are not paying twice for the same thing - the real cost has simply been split up in a way which is convenient to both the photographer and the customer. As it is not exactly an uncompetitive industry, and you don't see many wedding photogs turning up in Porsches, i'd say the pricing and model were pretty fair.
The reasons for the model relate to the photographer having control over his/her reputation, not to screwing the customer - when photos were still taken on film, the quality of the final print had as much to do with the printing process as the actual taking of the picture. Retaining control over that was important to the reputation of the photographer - if he actually handed you a stack of negatives and let you have them printed by any old mail order company, the lousy final prints would impact his reputation. You *could* argue it is an outdated model now, with the rise of electronic media, but most couples still want prints, and the same problem actually still remains - giving out jpg's and letting people print at home or from a cheap online outlet is going to result in exactly the same quality/reputation problem as in the film days.
The industry is adapting to modern times though, so you will now find some wedding photogs will include a DVD of low resolution images for you to put on the web (and many will host a web presence for you as part of the package). But any you find who are willing to give you full size images and reproduction rights for anything less than a big pile of money are probably not the quality of photographer you want covering your wedding anyway.
a "good contract" may have loopholes you didn't think of
Then it isn't a good contract, is it? In the case of SCO and Novell, their problem was physically losing a lot of the original paperwork, and a bad contract with more legalize than plain English. Most contracts I have seen aren't good contract and suffer the same problem.
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