What are our rights regarding the software we write?

August 3, 2006 9:47 AM

My company is being paid to develop a software title for the "payer" to distribute. It is not a work for hire, so we own the copyright. The payer is not happy about this. What are our options?

The title is supposed to generate additional monthly revenue for our company. If we were to give the payer the rights to the work, we would not have any legal standing to receive additional monthly revenue. 3rd parties have been talking to the payer and have been uninterested in pursuing deals when they find out that the payer does not own the rights to the software, only a license to distribute. So what "rights" are we talking about here? Copyright? The right to distribute? Isn't a license to distribute the same thing?

Also, our lawyer is already involved, and thinks the only option is for us to retain the "rights". I am hoping to find some options to bring up to both him and the payer.

posted by anonymous to law & government (6 comments total)

3rd parties have been talking to the payer and have been uninterested in pursuing deals when they find out that the payer does not own the rights to the software, only a license to distribute.

Were representatives of your company present at any of the meetings with these third parties? If not, I would be skeptical of the way the payer is presenting the issue. But then I'm a suspicious bastard.
posted by PinkStainlessTail at 9:58 AM on August 3, 2006

1. Don't give up your copyrights unless the "payer" is willing to pay handsomely.

2. What kind of "deals" is the payer trying to close? You need to get a representative into those meetings.

It sounds like the agreement you have with the payer is for them to be able to sell the software title directly, not to sell to other distributors for resell. Are you willing to give up that right by signing an additional agreement with the payer? You should demand appropriate compensation / royalties for all sales.
posted by bshort at 10:03 AM on August 3, 2006

Grant or sell them an exclusive license for five years
posted by A189Nut at 10:24 AM on August 3, 2006

I'm not really sure the question here. While an uncomfortable situation you are doing what you had always intended to do with the contract.

He's more than welcome to buy out the work product from you for a price you can set but you seem well within your rights to continue as you are.

The trick is it sounds like he holds the intellectual property. So he can't sell the code without your permission and you can't sell it without his. However he does have the option of going to another development house and have them develop the same app (in my experience if someone wrote a piece of software once, doing it again is significantly easier). This is why at some point you will have to find a reasonable price at which you are willing to sell the work product.
posted by bitdamaged at 10:30 AM on August 3, 2006

I've been in a similar situation, both as the licensee and the licensor. The big stumbling block here is copyright. Without copyright, the licensee may not feel that continued development along a product roadmap beneficial to them is guaranteed. Or there may be issues related to the terms for distribution that the licensee is concerned about, such as the length of the contract and/or the possibility of future price increases. They are investing in sales and marketing for the product, so they need to be sure they can continue to profit from the product for a long time to come. Or there may be concerns related the ability to attract outside investment if they do not own the copyright to the software they sell.

I worked for a company that licensed sole US distribution rights for our product to another company which rebranded the product. After a number of years, my company determined it would be more profitable and prestigious to handle US distribution ourselves. We explained to the licensee that their options were to renew the distribution license at a far higher price and under our brand or lose the right to distribute our product entirely. The time and money spent by our former licensee to develop and maintain customers was effectively lost when we did not renew their distribution license. Your licensee would be wise not to allow the same thing happen to them. Likewise, you would be wise to license the product under terms that will be in your long-term best interest.

I would agree with your lawyer that you want to maintain copyright while finding a way to meet the licensees requirements.
posted by McGuillicuddy at 10:43 AM on August 3, 2006

If we were to give the payer the rights to the work, we would not have any legal standing to receive additional monthly revenue.

There are ways to structure a deal so that you in effect get something akin to a royalty stream. It is not at all clear exactly what you are looking for here. Is it the continuing revenue stream or is it control over the title? It certainly seems like the payer wants more control than they have now. How far along are you in development? Can they walk and hire someone else who might be more willing to cede control?
posted by caddis at 11:08 AM on August 3, 2006