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

This Problem Must be Exposed

The client who wrote to me originally, said, “I’d love to read an article by you guys about what customers should do (and how installers should prepare them) in the unfortunate scenario of a firm going out of business.”

So here it is.

I don’t suggest that programmers necessarily hand over all the code at the end of a paid-up job, although plenty of them do.

But there must be a way for the customer to gain access to the software in the event that the dealer goes out of business, or they simply don’t deliver.

There are software escrow services that store the code, and help the parties negotiate the terms and mediate any disputes. (See, for example, Iron Mountain).

I don’t care if the dealer gives the code away, sells it, or holds it in escrow, but they shouldn’t disappear with it altogether.

In one of the most controversial threads ever posted on, I posed the question about who owns the code when a project is completed. The post has generated 305 responses.

I said in the post that I would write a story for Electronic House (consumers), suggesting that they ask the “code question” up front. Then, I would recommend that they refuse to do business with a firm who won’t give away, sell, hold in escrow, or otherwise make arrangements to make code available for a customer who has paid in full.

The majority of respondents said that such advice would not be unreasonable.

Then there were others, like a dealer who calls himself Vincent Delpino.

He wrote, “A seasoned Crestron programmer has spent years developing modules and code and who are you to ‘educate’ people on something you don’t fully understand?”

Don’t Blame the Baumeisters of the World

Again, I have not yet heard Baumeister’s side of the story. My guess is that their shop was shut down unexpectedly and the code was locked up with it.

Once the bankers come in, a bankrupt company can’t touch a thing and the liquidators are free to sell the assets as they wish.

To insulate themselves from such an occurrence, integrators should make provisions to keep updated programs stored somewhere off-site and available to the customer if necessary.

Many integrators will gladly hand over the source code, schematics and other documentation when a project is complete and paid for, or if the customer asks for it. But that may be too late, as the Baumeister case has shown.

Don’t Blame the Manufacturer

This is a tricky one: Should manufacturers bear any of the responsibility when dealers leave their clients in the lurch?

I spoke with representatives from some of the key home control companies. Many of them provide some accommodation in their products to enable new dealers to tap into an existing system.

Others, like AMX and Crestron, let dealers control access to their own programming. That’s not necessarily a bad thing. Crestron and AMX dealers can spend hundreds of hours writing customized programs, and that doesn’t count the years of work they’ve put into their own software development.

They must ensure that their programs have some level of protection, and that the client pays for the work on schedule.

Many dealers suggest that AMX, Crestron and providers of similarly complex systems should get involved when homeowners are left stranded. The manufacturers, after all, are the ones whose reputations get damaged.

“We’ve spent years perfecting our Crestron programs and our user interfaces, but we still give the source code to the customer at the end of a job. If we’ve done our job well, the customer will never need it.” (Click to enlarge)
- Dave Haddad, Vidacom

The manufacturer’s involvement, however, is impractical. They cannot get bogged down in disputes between every dealer and their clients. Who are they to interpret whether or not a project has been paid for, the integrator did a good job, etc.?

Even so, Crestron’s Randy Klein is adamant that dealers give clients access to the final code. He says that Crestron has an entire “task force” dedicated to this issue.

“I would strongly suggest – sort of demand – that dealers take that code and allow end users to have it,” he says. “You have the professional responsibility to consumers, the industry, and the company.”

Dealers’ escaping with the code is “such a bad thing for the industry,” Klein says, but he doesn’t see the problem in the commercial space.

“Ten years ago, commercial was just as bad,” he says. “They’d hold customers hostage to get repeat business. What the commercial guys have done now is to use the source code as a service and ongoing support tool, rather than a blackmail tool.”

AMX did not respond to phone calls and emails concerning this subject.

With other vendors, the who-owns-the-code debate is not as problematic.

In Control4 systems, for example, any authorized Control4 dealer can take over an existing job with few problems.

“You’d come in, get access to the system, and once you’re on it, the entire functionality – the project – is resident on the master controller,” says Control4 president Glen Mella. “It’s not sitting on some integrator’s laptop somewhere that you can’t get to return your calls.”

Essentially, the new integrator (Control4-authorized) just needs a WEP key to access the home network.

Then again, Control4 and similar systems are not as complex as, say, Crestron and AMX projects.

  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

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