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Ownership rights for custom software?

.. or 'Who owns the final product?'

A few months ago when I had some time off I wrote a web-based lead management/CRM tool.  Since that time I became gainfully employed and dropped the lead mangement app.  Last week I got a call from some people I used to work with who are interested in paying me to finish the app.  They would use the app internally, then have me make some tweaks, then they would sell it to their clients using an ASP model.  Their business is a hierarchical one, where their clients actually do the same thing they do.

The question that's come up is, who will 'own' the software?  I would like to license it to them with right to  modify and redistribute the app as they see fit.  They would like me to work as an employee, giving them 100% ownership of the software. 

My concern is that I may want to sell a similar product to another company in a different vertical market.  If I'm an employee of this company I won't have that option.  The company is concerned that the ASP aspect of their businss could be based on software that they don't technically own.

does anyone have any suggestions on how I should approach this situation?

Tuesday, November 12, 2002

open source it and charge them for consulting

Tuesday, November 12, 2002

Rules regarding who owns the IP work product aren't set in stone; they're just defaults.  I'm pretty certain you could retain ownership of the software -- even if you work as an employee -- so long as you have an employment contract that explicitly states that you retain ownership despite working as an employee.

I am a lawyer, but I'm no expert in employment law or software.  You'd best consult with a lawyer who is well-versed in these issues.  They should be able to give you a quick answer.

Herbert Sitz
Tuesday, November 12, 2002

You have the right to sell your work however you wish. If they want to buy it outright, and you don't want to sell it that way, then you've got a situation that calls for negotiation.

Have you tried offering them non-excusive rights? They can sell the code, do whatever they want to with it, but so can you?

Also consider that they want to take ownership of not only the code they'd be paying you to write, but also the stuff you already wrote. Make sure you get paid for the stuff you'd already be supplying.

The best advice I can give you is: GET A CONTRACT LAWYER. Sit down with him/her/it, figure out what you want do do, and have the lawyer write up the contract in proper legalese.

And finally, if you don't get what you want out of the deal, be willing to walk away.

Chris Tavares
Tuesday, November 12, 2002

Another approach would be to work out some revenue-sharing arrangement where you finish the software on your own and the company you're working with provides the distribution channel for the software that you create (via their ASP channel).

A 50/50 split of gross revenue would be a good starting point for a negotiation. If the company is successful selling subscriptions to your software you'll both have a nice annuity and you'll still be able to sell your software into new verticals.

Michael Bean
Tuesday, November 12, 2002

There is one more thing to consider if you will be working at current job while you are developing the new software. Many companies have you sign agreeements that anything you develop while employed is theirs. 

You may be able to get a wavier or something but you should consider that. 

See a lawyer is the best advice.

John McQuilling
Tuesday, November 12, 2002

Unless they're willing to compensate you for the original development, at a value which recognises what it would cost to use either an equivalent commercial product or to pay for the time taken to develop an equivalent then just say no. 

Separately, you can either agree that any modifications belong to you jointly and you are paid pro rata for the development, or that they have an exclusive licence for their own use but that use does not include the production of derivatives in any form and you get paid a fixed sum for the delivery and charge an annual licence which covers future support.

Personally I wouldn't get into this kind of relationship as an employee regardless of the terms of the employment contract, the presumption of rights and ownership would become confused and tangled.  In the end they would always have more muscle to do what they like, even take your code, your new development and then say bye bye.

Treat them as a client be open with them in the first place and define exactly what you want and how you are going to support them in the future (which will be one of their legitimate concerns).

I wouldn't dissuade anyone from seeing a lawyer, but at a guess that might be outside your current resources.

Simon Lucy
Wednesday, November 13, 2002

The answer to this question is very simple. You tell the company that you will be selling a licence to them. They might not expect or like this. If they don't, don't let them use your work. Simple as that.

People always says to see a lawyer. You don't really need to do that; it's not that hard. The company won't be giving their work away for free; why should you.

Must be a manager
Wednesday, November 13, 2002

must be a manager is correct. sell them a license to the current code, then charge them consulting fees to extend it.
the way to go here, is for YOU to draft a license agreement/development contract that they sign. that way you have control over the situation.  what you dont want to do, is sign an agreement that they create.

Wednesday, November 13, 2002

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