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Who Owns the Code? CE Industry’s Dirty Little Secret

When an integration company goes out of business, and customers don't have the programming code for their system, they can be left at the mercy of the bankruptcy courts.


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NOTE: In my original story, as many have pointed out, I was completely unfair to Baumeister, a Chicago integration company that was forced to close its doors after many years of contributions to this industry. I have not heard Baumeister's side of the story. I'm usually much better at giving the benefit of the doubt but in my haste to post this story in advance of the auction (ending today), I took too many liberties. I regret the insensitivity and am currently revising the story to talk about the important issues discussed here, rather than focusing on one of many integrators that has, sadly, gone out of business.

When you install a home control system, who owns the source code when the client is all paid up?

That's a contentious issue in the industry, and no one seems to be talking about it.

The long-brewing issue, however, has become more urgent with the souring economy.

Some once-reputable integrators are going out of business and they're taking their clients' programming with them.

Consumers may be left with a lot of worthless equipment because no one else can take over a job without the source code.

This is a dirty little secret and it's giving our industry a black eye.

What Happens When You Don't have the Code?


Let's say an integrator abruptly goes out of business and takes with it the Crestron code that was customized for each invidivual client.

Without the source code, no other integrator -- not even Crestron itself -- can access a client's system. That means that even the most basic changes to a system -- say, swapping out a DVD player, adding another light switch, or changing a channel icon -- cannot be made without starting from scratch.

Starting from scratch does not mean just programming the system from scratch. It means re-interviewing the clients, determining their preferences, learning how they live, and doing all those invasive things that the homeowner dreads.

Like they really want to go through it a second time?

It also means charting the subsystems, mapping out the wiring, troubleshooting, and so on and so on.

And then comes the programming. Potentially tens of thousands of dollars spent on the original programming could all be for naught.

Dave Haddad, president of Chicago-based Vidacom Corp., is a long-time critic of the "code-as-hostage" practice. He has taken over several jobs from Baumeister AV, an established, high-profile integration company that recently was forced to shut its doors.

Haddad estimates that he would have to charge one of the affected clients $50,000 "just to sort it all out," he says.

And he is not rejoicing at that new-found business.

"Frankly, I'm embarrassed," he says. "I wish I could buy all of that locked-up code and hand it out to the customers who put their faith in this industry."





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Article Topics

News · Business Resources · Home Automation and Control · Home Automation · All topics

About the Author

Julie Jacobson, Co-Founder, EH Publishing / Editor-at-large, CE Pro
Julie Jacobson, recipient of the 2014 CEA TechHome Leadership Award, is co-founder of EH Publishing, producer of CE Pro, Electronic House, Commercial Integrator, Security Sales and other leading technology publications. She currently spends most of her time writing for CE Pro in the areas of home automation, security, networked A/V and the business of home systems integration. Julie majored in Economics at the University of Michigan, spent a year abroad at Cambridge University, earned an MBA from the University of Texas at Austin, and has never taken a journalism class in her life. She's a washed-up Ultimate Frisbee player currently residing in Carlsbad, Calif. Follow her on Twitter @juliejacobson. [More by Julie Jacobson]

228 Comments (displayed in order by date/time)

Posted by Ron Goldberg  on  04/16  at  07:36 AM

Programming is documentation that the customer should be entitled to. The customer has purchased this equipment, not licensed it. The fact that there was no backup and no contingency plan is shockingly unprofessional.

Posted by EJ Feulner  on  04/16  at  07:49 AM

Julie, this is a great article about an issue that should have been addressed years ago in our industry.  Other trades don’t look at us as professionals yet our systems are the most complicated part of any construction project.  Some uneducated clients don’t view us any different from the blue shirt box pushers.  And we continually wonder why?  We need to wake up - this is a major reason why.  Every client at the Crestron/AMX level knows of at least one peer who has been burned/turned off by an integrator/project which sours the potential client and the industry as a whole.

As you point out, there are lots of ways to handle the code but the bottom line is that the client should never be without it if they want it for whatever reason.

The only caveat that should be pointed out is that not all integrators/programmers can take over existing code and make it work.  There are many different ways to program - like different written languages.  There are also well written and poorly written programs.  Many programmers wont touch a poorly written system and will demand that the project start over from scratch.  So just because the code is available doesn’t mean it is actually usable.

Posted by Julie Jacobson  on  04/16  at  07:54 AM

EJ ... great point that some programming is so poor that it may have to be redone anyway. Advice to homeowners?

Posted by SecurityGuy  on  04/16  at  07:56 AM

Selling the code to a third party is an invasion of the homeowners privacy. Essentially, the code is the keys to the lifestyle not to mention the house.  Since virtually every automation system includes security as a subsystem there are potential safety and security implications.  $50 grand is not a bad price to have the keys to a bunch of high-end homes.

Posted by Julie Jacobson  on  04/16  at  07:58 AM

great point, SEcurityGuy—not to mention that the software enables the third party to tap into all those systems remotely. Yikes

Posted by EJ Feulner  on  04/16  at  08:10 AM

QUOTE BY JULIE: EJ ... great point that some programming is so poor that it may have to be redone anyway. Advice to homeowners?


Again, reasons why we are not viewed as professionals.  I don’t know of any *REAL* way for a client to know the true level of expertise of any integrator - much less the programmer working for that integrator.  At some point trust has to enter the equation.  I wish I could tell you differently but the low price of admission and easy yet professional marketing options can make any company look like a pro. 

I would encourage the client to do their due diligence - and not just about the integrator.  Look closely at the major vendors they are specifying like control,lighitng and high end video.  What are their track records?  Industry reputations?  A smart integrator would do this work for the client if they are confident in their vendors and are working with true industry leaders.

In the end there is no real way to know for sure.  Look at the main example in this article - they had a very high reputation in their market and in the industry.  It can happen to the best of us.  Just make sure the client has the right info available to them in the contract so they don’t get burned in the end.  Not much else can be done.

Posted by whdigital  on  04/16  at  08:17 AM

Great article Julie and I agree; it’s high time we dealt with this more proactively as an industry.

With a past life involved in the consumer software industry, I can tell that there is no ambiguity as to who owns the code as it pertains to customized GUIs and scripted commands for a given control system compiled for a unique application.  It is clearly “programming for hire” and becomes the property of whomever paid the bill for the programmer(s) time to do the work.

There may be some minor arguments re: intellectual property of any unique ideas and designs within it, but even then - once assembled, it is SOLD as a compiled package. The fact that it’s married to an installed system and is not transferable while remaining “whole” means that its ownership also changes hands when/if the home changes hands.

Boxed software like MS Excel that can be move from computer to computer, and that was NOT written for one individual computer and person’s use, is used under a “license” with the code remaining the property of the programming entity.  Again, assembled home control interfaces are the exact opposite.

Dare I say that part of the problem lies with the fact that Crestron’s “assembly language” (to stick with analogous terms) does not allow for ANY reverse engineering?  As an Integrator, I appreciate any measure I can take to preserve the opportunity to continue working with my clients.  However, that’s all it is: opportunity.  I have to continually earn it, and if I don’t - or if I go out of business, there needs to be a legitimate way for someone else to pick the ball I dropped and run with it relatively seamlessly for the client.

Posted by Chip  on  04/16  at  09:21 AM

Great article, Julie.

Just thinking out loud here, but after seeing mentions of Randy Klein’s task force and software escrow services, I’m wondering if it would be practical for the likes of Crestron and AMX to create their own in-house escrow services…  They could encourage their authorized programmers/dealers to make use of it - or perhaps even work a requirement for it’s use into their contracts, perhaps?

Posted by Lee Distad  on  04/16  at  09:31 AM

Great work, Julie.

Given the ethical issues here, it’s hard to imagine anyone attaching their name to the opinion that it’s okay to hold the client’s source code hostage.  As an industry there seems to be full consensus to the contrary. 

In this case, Baumeister’s receivers were wrongly informed that the source codes were an asset that could be liquidated.  That should never have happened, but the upside is that this case brings the issue out into the light of day, and hopefully the major vendors and their dealers can find a solution that benefits the industry as a whole.

Posted by Julie Jacobson  on  04/16  at  09:38 AM

Chip—that suggestion has come up, but I think it places an undue burden on the mfr. They would be left having to mediate between the dealer and the client. There are plenty of established software escrow firms out there. Why not just use one of them?

Posted by Joe Calise  on  04/16  at  09:56 AM

Julie - as usual, you do an excellent job of pointing out both sides of the story here.  Although in the end I think you side with the homeowner / end user, let me add a few points to this discussion.

As a guy who started out very small in this industry, I would have completely agreed with you.  After experiencing the years of countless hundred hour + work weeks, I realize just how much goes into a system, and the knowledge it requires to be at this level.

We are now a pretty large Crestron dealer that is very careful on how we take care of the code in house.  Offsite back-ups to our servers is just one way we are sure the clients code is always safe and secure.  In our area, we have experienced the downfall of Harvey’s.  I tried desperately to buy their code before they shut down, but they would not consider it without me taking over their poor lease agreements (which is one reason I believed they shut down to begin with).  We have since taken over some former Harvey clients that needed us to restart from scratch, and were very upset about it.  However, as crazy as this seems, they did not ask me for the code when finished.  We assured them it was safe, and if we ever had any problems in the future, we would turn it over to them.  I also know of other larger than us Crestron firms that have many more systems out there than we do, however when they send programmers to jobs, they don’t have the code anyway since their in house system is so poor!

I believe as an industry we have a moral responsibility to at least make customers aware if we are closing down, or at least be responsible enough to offer our client list/code for sale before closing up shop.  It has to be handled in a way fair to both parties, but how is the magic question.  I like the idea of an escrow service when the client requests it.

However, in this crazy economic times, we also have to look at the whole picture here.  Look at the guys who are closing down, and the vendors that are also struggling.  There must be good reason why strong dealers of Manufacturers like Crestron are still doing well.  A product with this type of programming protects US in the end.  This is probably a good reason why there are so few good Crestron programmers out there to begin with.  If anyone could just get the code, and scan it to see some of the things that took me years to create, well that would just once again saturate another area of our industry.  Not to mention they would be stealing what I have created. 

If you are not fully aware of companies like Crestron, and how it all works, it is very easy to form an opinion in the light of the consumer.  I look at it as I am not holding anything back from them, or trying to hold them at ransom, I am just protecting my systems from becoming cookie cutter for the next guy who just decided to become an integrator because he set up his brother in laws home network and thought “this is pretty cool, I can get into this computer stuff”.  Or how about the Security guy who thinks he can just undercut my pricing and take over my territory?

Years ago I never understood why so many Crestron dealers were so passionate (or some even arrogant) about the product.  Now that I am a dealer in my 6th year, I completely understand.  It is only a Dirty Little Secret if you have plans on not doing the right thing for the client.  It would not be right to force all of us to change a format that has been successful for so many, because of poor judgement made by others.

Posted by Julie Jacobson  on  04/16  at  10:00 AM

Why not, as part of your monthly/quarterly maintenance fee, include escrow/backup services?

Posted by David Thompson  on  04/16  at  10:04 AM

A solution to this problem would be for Creston to hold the programming code in a data bank.  If a company goes out of business and there is no other way for the customer to secure the code the customer could petition Creston for the code. 

This would protect the initial programmers that developed the code from being stolen by another company that downloads the entire code when swapping out a DVD player. 

This would be one way that would protect consumers and would also protect the programmers.  Creston should strongly encourage this because their reputation is also being hurt by the negative publicity and reaction of existing and future customers.

Posted by Dallas Dingle  on  04/16  at  10:23 AM

There is incentive for the original dealer to control the programming. Handing it over to a customer, allows for easy access for other dealers.

Posted by Here we go again...  on  04/16  at  10:34 AM

Quote - Julie Jacobson:
“great point, SEcurityGuy—not to mention that the software enables the third party to tap into all those systems remotely. Yikes”

Maybe you should really figure out what you’re talking about before making all of these statements.  Having the source codes in NO WAY, SHAPE, OR FORM, gives anyone the means of connecting to a system remotely.  Not all systems are configured for remote support, and those that are usually have some sort of security measures in place.  Also, the person with the code would also need to know the WAN address (or domain) of the property they plan to connect to as well as the ports configured for that property.  You really should apply for a job at the National Enquirer with this garbage you spew.

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