Who Owns the Code: Crestron Programmer Weighs In
Here is Morgan’s advice to integrators based on his experience regarding code ownership and communication with clients:
Intellectual property concerns are one reason our firm works closely with an IP attorney There’s a major difference between ownership and licensing when delivering source code. The rules have to be defined up front or the “unwritten” rules will always been in the author’s favor.
There are two major problems in the industry. If the author services the client properly, rarely is there a need to understand any of this. However, in business, an exit strategy is necessary just in case. Integrators and programmers don’t have this and when there’s a problem nobody knows what to do.
Loosely communicating about “source code” ownership opens the one with the loose lips up to other lawsuits. In other words, misrepresenting or not understanding the difference between ownership and licensing is a big problem.
A common area of confusion in the industry is ownership of copyright and other intellectual property rights in software. While the “work made for hire doctrine” applies to shift ownership of copyrights in some situations like for certain works created by W2 employees or independent contractors operating under written agreements with specific provisions addressing copyright ownership, in many instances the contractor retains ownership of the copyright. For example, a company writing code without a written agreement generally retains all copyrights in the code and the customer gets a license to use the code for its intended purpose.
“Our firm has handled hundreds of copyrights and software disputes. In many instances, the dispute erupts over gray areas not addressed in writing between the parties,” explains Darin M. Klemchuk, partner and intellectual property lawyer at Dallas-based Klemchuk Kubasta LLP. “We recommend the parties should documents the key deal points in an independent contractor or services agreement at the front end to avoid these issues.”
Many software development agreements grant a limited, non-exclusive license to use the source code developed for the project. The language of the license grant is extremely important because it defines how much of the rights are provided as well as retained. If the license is exclusive, it could restrict the developer from using the code for internal purposes or other projects. If non-exclusive, the developer may retain the rights to use the code for future projects. However, if all the copyrights are assigned to the customer and no license is granted back to the developer that could be very limiting on the developer going forward.
The nature of the license grant, assuming the copyrights are not assigned, are additionally important for legal reasons if a payment dispute arises later.
“We advise our clients to not assign any copyrights or grant a license until the project is paid in full. That way, if the customer gets the code, but does not pay, the developer may be able to sue for copyright infringement in addition to breach of contract,” explains Klemchuk.