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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

What Will Become of the Baumeister Assets?

Moglia Associates, the assignee for the benefit of creditors in the Baumeister case, is selling these Baumeister assets, according to a notice filed on April 13 (pdf):

  • all proprietary source codes
  • CAD drawings
  • schematics
  • client lists
  • customized job tracking system
  • etc.

I spoke with Moglia’s Barry Davis, who is representing the creditors in the Baumeister case.

He says that the CAD drawings and schematics are in fact owned by the end user – as spelled out in Baumeister’s initial invoices. The winning bidder, though, is welcomed to any copies that may be on hand.

“But Crestron codes, it [customer’s invoice] is silent about that.”

Moglia has already received an offer of $55,000 for the assets (pdf).

The auction ends Friday, April 17 at 2:00 p.m.

I have no idea who placed the initial bid, but I hope it’s a dealer who intends to do the right thing – that is, offer the code to Baumeister clients free of charge whether they use this particular dealer or not … and then suggest why the client should do business with the newcomer.

Industry Best Practices

I sent a draft of this story to some of the most respected integrators in the industry to make sure I wasn’t totally out of whack with reality.

I am, of course, still wacky, but apparently not on this issue.

What a Surprise!

“We have had to explain to them [take-over clients] that re-building these programs from scratch will cost them thousands of dollars in programming hours. “
- Greg Simmons, Eagle Sentry

As long as the bill has been paid in full our clients own the code. ... And yes some clients for whatever reasons are just done with us and want the code so they can try someone else and as I said as long as their account is current we give them the code even if we know they are going to a competitor.
- Jeff Hoover, Audio Advisors, West Palm Beach, Fla.

We have dealt with this problem recently with two customers. We have had to explain to them that re-building these programs from scratch will cost them thousands of dollars in programming hours. These two homeowners had no idea that they did not have the code. It is a great topic that has to be addressed. As more companies are vanishing the problem is growing. I don’t care what you call the property. It should be the paying customer’s property.
- Greg Simmons, Eagle Sentry, Las Vegas

Engineered Environments has always been of the belief that if the client pays for the programming, they own the programming. Anyone that offers anything less is doing a disservice to their client, the industry and ultimately themselves.
- Randy Stearns, Engineered Environments, Alameda, Calif.

Any client that doesn’t want us to service them deserves the code (unless they still owe us money).
- Bill Maronet, ETC, West Palm Beach, Fla.

When the client pays for a product, they own it whether it is a DVD player or code. Do what is right for the customer. That is the golden rule. It is also the professional thing to do.
- Dennis Sage, Dennis Sage Home Entertainment, Phoenix

I agree with you that the practice of locking down source code is hurting our industry tremendously. I believe that in all cases the end user owns the code when they paid for its development through programming labor fees as part of an installed system.
- Kevin Mikelonis, Process Dealer Services Group, Paso Robles, Calif.

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.
- Dave Haddad, Vidacom, Chicago

What to Tell Consumers

I am, as always, an advocate for the custom electronics channel, but I can’t keep this dirty little secret from the readers of Electronic House, our sister publication for consumers.

Many of them are likely to read this story.

In the comments below, please share your advice to consumers on this matter.

If you completely disagree with my sentiments, go ahead, state your case below.

www.cepro.com/code



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  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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