Help! Copyright and Licensing Issue with a client

Rails
1

Hello,
Here’s my situation, any advice is greatly appreciated.

I was hired as a contractor to advise on technical and IT issues for a
media company in April.

They were searching for a database system that would work for them.
We couldn’t find one off the shelf so I said I could code one with
Rails for them.

Well now the contact management piece is done and the reporting piece
is half done and they asked me today to sign over my copyright so I
can’t sell the software to any other companies.

I am employed as a sub contractor and the checks go to my LLC.

I am (well was) planning on marketing this software to several other
media companies as there is no solution like the one I’ve made
available so my price is (was) going to be substantially high.

My question to the group is how do I retain copyright, appease my
client, and sell my software?

My thoughts were to license it exclusively under some sort of open
source license to the client, so that I could, as an “outside”
developer, use my own code and resell it after modifying under the
terms of the license.

Thanks,
Tyler Montgomery

2

Unless it is in your contract that your work on this project belongs to
them, it is up to you. You can license it to them and have a “general”
release that is open source. But it sounds like they want full
ownership.
I wish you luck.

HTH,
Richard

On 8/23/07, [email protected] [email protected]
wrote:

Rails for them.

–
Richard J Hancock
Developer/System A.

3

On 8/24/07, Richard H. [email protected] wrote:

Unless it is in your contract that your work on this project belongs to
them, it is up to you. You can license it to them and have a “general”
release that is open source. But it sounds like they want full ownership.
I wish you luck.

This would be my interpretation as well. If it is not explicitly stated
as part
of your contract, then this is your property. Generally the law is on
your
side here, though with all legal advice, SEEK A LAWYER!!!

Just because you are in the right though does not mean that it could be
pleasant, they can sue you if you refuse etc. They could fire you (so
make sure
you have the source).

However both of you seem to realise that the end product is quite
lucrative -
its worth something. To your employer its a novel product and a
competitive
advantage. To you - its steaks on the table. As with any ownership
transfer
its a sale, you should be compensated.

But they seem to want it for free, or they have just realised that they
didn’t
do the contracts properly.

I would also consider this: the fact that they are asking you to sign
away
the copyright, means that they acknowledge you as the rightful copyright
holder. This would make it hard for them to argue that ownership was
implied by your employment contract.

Make sure you keep their forms and bring them to your Lawyer to see
what his interpretation is.

In general though, the best thing to do here is negotiate the sale of
the IP
to your current employer. If they are being stupid about this, refuse.
But
keep a cool head about this, be patient. Try and keep on good,
emotionally
neutral terms with your employers about this. When you get the forms,
just
tell them that you are going to run them past your lawyer. If they get
testy
about this, then you know they are trying to trick you. If that happens,
cut
the meeting short.

I have seen one blogger in the Ruby space talk about this. I am damned
if
I can recall the link.

regards,
Richard (another)

4

I’m not lawyer, so yes, it would be prudent to seek one. However, you
can probably retain copyright this way:

Have an exclusive deal with them only against companies that have
similar business natures w/ them. For example, if they plan to make
money from it then there won’t be any competition because all your
other clients will be in different fields.

But, by giving them exclusive access for their business, you can
charge a lot higher since your handing over copyright a certain part
of the market only.

If you really can’t seem to get out of this rut, check out what you
need to change in this to make it a different product all together. I
might be pulling this number out of nowhere, but I remember for
graphic work to be considered different from a derivative, it has to
be 25% different. There is probably something like this for
programming. Since you’re not patenting it anyway, copyright is
something different all together.

On 8/24/07, [email protected] [email protected]
wrote:

My question to the group is how do I retain copyright, appease my

–
Ramon T.

5

Not only do I agree with Steve’s reduction here, I think more important
is the notion that fair to all parties dictates that an agreement be
reached between the parties.

In addition to the ownership issue itself, there is also the ‘license’
issue and it may very well benefit the original consumer to release the
code as GPL License so that they can obtain any improvements to the code
base too.

Craig

On Fri, 2007-08-24 at 11:31 -0700, s.ross wrote:

Their advice was that I would have a difficult time asserting

can probably retain copyright this way:
If you really can’t seem to get out of this rut, check out what you

Hello,
Well now the contact management piece is done and the reporting piece
client, and sell my software?

–
Ramon T.

–
Craig W. [email protected]

6

On 8/24/07, s.ross [email protected] wrote:

I don’t think it’s as cut and dried as “if you wrote the code, you
own it.”

In general, if you wrote it, you own it. There need to be pretty
solid agreements in place to make that not be true. Normally if
you’re a full-time employee you’ll sign something that talks about
“work-for-hire,” and you can do the same as a contractor - that
changes the story.

However, I’m not sure that the absence of an agreement defaults to
you owning the copyright. A reasonable expectation on the part a
client paying for your services is that they would own the end
product.

This often causes problems - it’s a frequent assumption, but it’s
wrong. The default is more like the copyright belongs to the creator,
and they’ve bought some sort of license to use the software.

Sure, you should talk to an attorney, but some of this stuff is pretty
basic business/IP law that you want to learn about before spending the
money. Nolo Press has a good book on the topic - I think it’s
Copyright Your Software by Fishman, but I’m not near my bookshelves
right now.

–
James M. | [email protected]
Ruby and Ruby on Rails consulting
blog.restphone.com

7

I don’t think it’s as cut and dried as “if you wrote the code, you
own it.” I agree with the recommendation that you obtain an
attorney’s opinion before continuing discussions with your client.
However, I’m not sure that the absence of an agreement defaults to
you owning the copyright. A reasonable expectation on the part a
client paying for your services is that they would own the end
product. Not just the rights to use it, but the product itself, as
you were paid for the time you produced it.

I’m not an attorney but I did ask one about a similar situation.
Their advice was that I would have a difficult time asserting
ownership because I was compensated for the creation of the work.
Absent the agreement that I owned the resulting code, the gray area
was likely to favor the client who paid me. Perhaps I misread the
original post, and there was some mitigating factor that would favor
the IP belonging to a paid contractor…

8

You’re getting a lot of advice to the effect of “you wrote it, you own
it”. In many places, and in may cases, it’s not that simple.

For example, here in Australia, who owns rights to the code would need
to be agreed before you start on it. If not, the assumption is that
because you were paid to write it, the code will be owned by whoever
paid you - in other words, you don’t own the code you wrote.
However, you are free to recreate the code and sell it, provided it’s
“substantially different” - you’d need to consult a lawyer, but my
understanding is that e.g. if your original code was in C# and your
reproduced code was in Java, then that would qualify as substantially
different.

Elsewhere, the “you wrote it, you own it” doctrine isn’t necessarily
that straightforward either. If you were contracted to produce a
specific piece of work (as distinct from being a paid-per-hour
worker), and the entity paying you had that in mind, they may have a
good case that all copyrights on all work you’ve done belong to them.
As an example consider writing a report for a client documenting their
current situation (e.g. a network security review): if you were
brought in to do that specific piece of work, then the client owns the
document - it wouldn’t make sense for you to own it, as you could then
freely sell it to their competition (who would then find out all the
network security issues).

As another example, if you create e.g. an entire Internet banking
application for a bank, you probably won’t then be free to take that
source code and do whatever you want with it - there would be security
implications that come into play. That’s probably an extreme case,
but common sense would tend to suggest that things aren’t as cut and
dried as others in this thread are making out.

Bottom line: see a lawyer, rather than rely on the opinions of people
here who probably don’t know much about your specific circumstances.
If you take copies of all contract documents with you, it shouldn’t
take them more than an hour or so to give you their opinion - even at
big dollars, that’s gotta be small change with respect to the money
you’re (presumably) talking about here.

Regards

Dave M.

9

The usual rule is that If you are their employee, then it’s theirs. If
not,
then it’s yours.

Generally, when you are hired as a consultant, you’re being paid for
your
skills and knowledge. They know this, or they wouldn’t be wanting the
copyright. They screwed up.

But, it’s not about who owns what, it’s about making everyone happy.
Compromise is not nearly as good as collaboration. IF they pay on time
and
are good to work with, you don’t want to screw that up by being
difficult.
If you charged them for writing the application, they will feel like
they
have a stake in it. I propose these three options, all of which I have
used with clients in the past.

  1. Sell them the copyright outright, for a certain dollar amount that
    you
    can use to invest in your business. Also, they got no warranty with this
    option, and you will not provide support. THis is a transfer of
    ownership.
    They want enhancements to it, they have to pay for it.

  2. Sell them a stake in future sales. Offer them x amount (a royalty, if
    you
    will) in the sale of future versions of the system.

  3. Retain the copyright but give them a free license. Give them lifetime
    updates.

Be creative. Good luck!