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Software copyrights and licensing options

How to distribute source code while retaining my rights?

8:51 pm on Mar 13, 2010 (gmt 0)

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My company has built a business around a custom CMS plug in that we wrote ourselves. We invested more than one person-year in coding for this project.

Besides using the software ourselves, we also make it available as SAAS. While we've talked to several potential customers, there are no solid contracts yet. Since we've only used it internally until now, we haven't registered our copyright or really explored any possibility for patenting its features.

We were approached by a (presumably larger) company that would like to host the software on their own servers, and that potentially has the in-house capability to further customize and develop the application. Their intended use as stated would probably not cause a conflict of interest.

However, our application consists of code that is compiled at run time. Installing it on another server would require us to hand over the sources, and the initial publication would trigger the need for copyright registration.

What are the different aspects that I should consider in dealing with this opportunity? We have an NDA that we will ask them to sign prior to talking about specifics, but I'm concerned about what could happen once the code is transferred. One of the ideas I'm considering is to offer them to purchase it outright. What other options are there?
11:10 am on Mar 14, 2010 (gmt 0)

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Copyright is something you have automatically, you don't have to register your software for it, although it may be useful if a conflict arises in the future. Patents on software are not recognized outside the US, and it would be doubtful that your system has such unique features that the benefits of a patent application for these features would outweigh the costs and time line involved. But if you think there are patentable features, be prepared to put some serious money aside and expect the process to take some to several years.

You didn't mention which programming or scripting language is involved. Some languages have the ability of precompiling with certain tools, and then encrypt, lock or license these precompiled parts.

As it is a CMS plugin, would it be possible to run the core code on your own servers with only an interface directly plugging in to the main system? This may involve some overhead and time delays, but you will still have the source codes on your system.
7:20 pm on Mar 14, 2010 (gmt 0)

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I was referring to the registration of copyright, which appears to be a requirement [www4.law.cornell.edu] to get an injunction or to sue for statutory damages. Let's just assume that the code utilizes a certain methodology that would possibly allow it to be patented (based on the actual study of existing patents in this particular field).

The source code is compiled (if needed) each time the application server (CMS is a simplification) starts. Your idea to encrypt or precompile some part of the program may work if I rewrite it in another language, I'll have to investigate if/how this can be done for the OS that they might be using. I've seen it done with a commercially licensed database adapter for this CMS.

Using some sort of WSDL/SOAP interface and running the core code on my server would not change the fact that they're still dependent on us in order to run their app. I have a strong feeling that this is one of the primary reasons for them to want to host the code.

My dilemma is that we have been unable to sell the use of this plugin (lack of resources/experience, too advanced or specific, market conditions, whatever) and that now somebody shows up who is fully aware of its potential. My understanding so far is that they are considering use of the plugin within their organization, not wishing to develop it as a commercial application or service. The implementation that we run ourselves as a glorified testcase shows reason to believe that the SAAS service has potential to take off.

I posted this in "business issues" because I think that under the right circumstances, an agreement with a larger company could provide a source of funding and enough visibility to jumpstart the SAAS business. My hope is that someone here has already gone through a similar decision making process and would want to share their insights.

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