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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.


Julie Jacobson · April 16, 2009

Those Poor Clients

I first became aware of this issue – indeed the whole who-owns-the-code debate—in late January when I received an email from a Baumeister customer who had spent $50,000 to $75,000 on his system, of which the Crestron “programming” costs seemed to amount to about $10,000.

He was stunned and disappointed to learn that he’d been left with a system that no one could now support.

“It seems like I’m SOL if I can’t get at that code,” he says quite correctly. “Truly a shame. It would be one thing if I (and others) tried to find someone cheap on the Internet to program my system that wasn’t licensed, but Baumeister had a great reputation and I paid for that. … I don’t think installers want to release the source code as it is the ticket to ensuring that customers still need the installer.”

I doubt that was the case with Baumeister, but it rings true for many home systems integrators.

If integrators need to hold their customers hostage by keeping the source code, then perhaps they’re in the wrong business. The correct way to keep a customer is to treat them well.

Then they wouldn’t need the code, right?

Many integrators are either paranoid that some other dealer will steal their code, or they simply think the customer doesn’t deserve it because, like shnakz69 says on RemoteCentral.com, “I use a lot of my personally written modules.”

Schnakz says, “I never give my AMX or Crestron code to clients as the intellectual rights belong to me.”

That’s just wrong.

Legally, maybe not. Ethically, I believe so.

Legally, who DOES Own the Code?

The attorneys assigned to the Baumeister case, Chicago-based Law Office of Deborah K. Ebner, determined that indeed the Baumeister code was the rightful property of the integrator (there’s a surprise).

Apparently, the clients who complained (e.g., sued) got their goods.

“We’ve spoken at length to everyone who has voiced objections,” attorney Deborah Ebner told CE Pro.

Cases with all of the plaintiffs have been settled, she said.

What about the company that buys the so-called intellectual property. Should they fear lawsuits from disgruntled clients who believe they own the goods?

Ebner assures us that her firm, along with the Baumeister assignee Moglia Advisors, would never put potential buyers in such a position.

A Louisiana attorney calls such claims, “pure nonsense.”

Currently he is suing an integrator (not Baumeister) who refused to provide source code for a system that was badly botched.

He says, “The buyer [of the Baumeister code] may not be able to be sued for improperly installed systems or things such as that, but there is nothing they can do whatsoever to stop lawsuits from disgruntled clients … demanding code.”

But it’s Really Not about Legal

Many integrators like to turn this discussion into one about contracts, getting everything in writing. Yes, of course that needs to be done but it still misses the point.

If you include an item in the contract that secures your ownership of the source code, you may be protected in the courts, but it’s still bad form.

Customers don’t know about this stuff. They don’t understand how integral the source code is to the workings of their entire home.

They’re going to skip right over that line item in the contract and then thoroughly despise their integrator – and the industry as a whole—when the dealer locks their doors with the client’s vital software inside.

“They [customers] don’t have a clue that they even need this,” Haddad says. “And why would they?”

Even the wisest of clients don’t know what they’re in for—doctors, lawyers, techies, scholars ...

Integrators go out of business all the time. It’s a fact, and it’s sad. But one very simple thing they can do is to make provisions so that someone else can take over their clients’ projects as painlessly as possible.


  About the Author

Julie Jacobson is founding editor of CE Pro, the leading media brand for the home-technology channel. She has covered the smart-home industry since 1994, long before there was much of an Internet, let alone an Internet of things. Currently she studies, speaks, writes and rabble-rouses in the areas of home automation, security, networked A/V, wellness-related technology, biophilic design, and the business of home technology. Julie majored in Economics at the University of Michigan, spent a year abroad at Cambridge University, and earned an MBA from the University of Texas at Austin. She is a recipient of the annual CTA TechHome Leadership Award, and a CEDIA Fellows honoree. A washed-up Ultimate Frisbee player, Julie currently resides in San Antonio, Texas and sometimes St. Paul, Minn. Follow on Twitter: @juliejacobson Email Julie at julie.jacobson@emeraldexpo.com

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