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Who Owns the Code? The Law Says the Integrator

According to a legal expert, there are two legal claims that give the integrator intellectual property ownership of programming and passwords, but not of the software itself.


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A few years back, Julie Jacobson asked, “Who Owns the Code?” when a client wants to change his home automation system to another integration company. The debate was raucous.

Should companies have a stranglehold over their clients? Now, security industry legal expert Ken Kirschenbaum of Kirschenbaum & Kirschenbaum in Garden City, N.Y. is weighing in, saying there are two points of law that indicate the integrator owns the code, not the client.

According to Kirschenbaum, the programming is intellectual property owned by the integrator under two legal claims:

  • “First and best, though probably impractical, is filing for Federal Copyright protection. Anyone violating your copyright would be subject to stiff penalties. Filing each job may not be practical however,” he says.
  • “The other form of protection is Common Law Copyright. Even without filing you get copyright protection,” notes Kirschenbaum, adding a caveat that he is not a copyright specialist.

However, there is one important distinction for CE pros to remember. Integrators do not own the software itself…it is merely licensed by both the dealer and the client from the developer. Kirschenbaum has amended his legal contracts for integrators to indicate programming and passwords are the property ownership of the integrator. He notes the ownership is important, especially since it can take an integrator just as long to program a system as install it in many cases.

Of course, this declaration still does not resolve the dilemma of what is best for the customer. If the integrator refuses to release the passwords and codes to another company, then that takeover company has to re-program from scratch. The only savings for the incoming dealer is the cost savings of the equipment. 

That’s exactly the situation currently facing Statcomm Inc. in Mountain View, Calif. Richard Schwank, vice president, operations/general manager, recently wrote to Kirschenbaum saying he is currently trying to takeover a fire alarm system for a building and the sole proprietor electrician who did the initial work is refusing to hand over the existing password.

Schwank believes the building owner/client has the right to ask the electrician to change the programming codes back to the factory default code. He also believes integrators should be obligated to inform their clients that they are changing factory default settings in advance that might limit access to the system programming and database information. He contends that if the integrator does not inform the customer of this, he is on “weak ground” in terms of claiming ownership of the programming.

Schwank writes the property owner “is being ‘handcuffed’ with options of either retaining the services of the existing contractor or spending a few thousand dollars to replace the existing fire panel, create new database of existing devices, reprogram and verification testing, as well as submit for permit as is required in this respective jurisdiction. From our firm’s perspective, the owner of the equipment should not be prevented from having the equipment serviced by their contractor of choice and in absence of being bound by currently effective contract.”

 





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Article Topics

News · Business Resources · Home Automation and Control · Control Systems · Security · Legal · All topics

About the Author

Jason Knott, Editor, CE Pro
Jason has covered low-voltage electronics as an editor since 1990. He joined EH Publishing in 2000, and before that served as publisher and editor of Security Sales, a leading magazine for the security industry. He served as chairman of the Security Industry Association’s Education Committee from 2000-2004 and sat on the board of that association from 1998-2002. He is also a former board member of the Alarm Industry Research and Educational Foundation. He is currently a member of the CEDIA Education Action Team for Electronic Systems Business. Jason graduated from the University of Southern California.

3 Comments (displayed in order by date/time)

Posted by Andrew Southern  on  01/28  at  10:24 AM

I really don’t think keeping the code hostage is the right move for any integrator. Talk about burning a bridge.

I spec all codes and passwords are the property of the customer and will be delivered via thumb drive upon completion of the job along with as-built drawings. This is work for hire, if the Integrator chooses to ‘reuse’ code modules they’ve made in order to competitively bid their time on future projects, that is their advantage.
This entire debate is actually a little too late. As the best-in-breed products are now app-based solutions, the idea of integrated systems built on proprietary code will seem funny. We can’t light up millions of homes with smart technology doing custom coding on closed systems. It won’t scale. What we should be debating is the role of the Integrator in 2013 and beyond, positioning them as the ‘tech guy in the room’ who can provide guidance, product, install and support for a fee.

Posted by JerryS  on  01/29  at  06:12 AM

Jason,

When I was in the computer programming business, I had an attorney who was a copyright expert (there are a lot of them in D.C.!).  He is in agreement with Mr. Kirschenbaum. The copyright law is very clear that the integrator owns the copyright for the code.  The integrator can give, sell or license the code, but without an agreement the client has no ownership claims.

However, I’m not sure this includes the passwords.  In the computer world, passwords are generally not considered part of the code.  However, I don’t know for sure, and am no longer in a position to ask my ex-attorney (without paying $$$ for the answer, anyway smile ).

I do agree it is bad for the electrician to hold the client hostage.  It may get him a few bucks in the short run, but will hurt him in the long run.  Or maybe he’s already hurting and desperate to keep clients any way he can.

Posted by Andrew Tanreb  on  01/29  at  06:59 AM

As a practical matter, changing and securing the factory default codes is not only smart business, it prevents unauthorized access to the system. Using this as a tactic to hold the customer hostage is clearly bad business.

Whether security, fire or automation systems are concerned, the code, procedures and programming dialect are your proprietary and protected property.

As a common practice, you can offer to restore any system to factory defaults. Doing so provides the new company with the ability to start with a clean slate and releases the customer from any connection to your company. Everyone wins.

In some instances, the new company banks on using your programming to generate their revenue when offering to “take-over” the project. Perhaps if Microsoft let us have the source code to Excel we coude create our own revenue streams too? As Kirschenbaum points out, you need contracts to clearly spell out these details. If you review their website, you may be surprised to see how affordable such contracts really are.

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