Ownership Rights when Writing a Web Application

[Metzed]

I'm writing a web application for a client and trying to get my head around ownership. One of the questions raised was if a competitor of my client rings me up and asks me to develop a similar application for them, what will I do?

Can anyone help me here and touch on what I need to be aware of. I'm not completely sure of what the answer should be. I've been reading about IPR, but none the wiser really!

[LifeinAsia]

get my head around ownership

You and your client should have a written contract specifying this issue explicitly. Then there should be no misunderstanding or ambiguity over the issue.

If it's not in the contract (or there is no contract), then that issue needs to be addressed right away. :)

If your client wants a no-compete clause, he should add it into the contract. If your client wants full ownership of the application (i.e., preventing you form re-using the code on any other project), he should add that into the contract as well (that should correspond to a higher payment to you as well).

[Metzed]

Is there a common theme to most software development agreements in this situation? How would most people answer this question?

One of the questions raised was if a competitor of my client rings me up and asks me to develop a similar application for them, what will I do?

[LifeinAsia]

How would most people answer this question?

I can't speak for most people- a lot depends on the industry, relationship with existing client, scope of project, amount of money involved, etc.

Again, it depends on if there is a non-compete clause in the contract. If not, then there's little reason not to work with the second client. Unless the first client is still an on-going client- then you have to decide if it's worth the risk of upsetting and losing the first client. But it also has to do with how similar the applications would be.

There are lots of examples in many industries where people take on new clients who are in competition with existing clients.

[Fortune Hunter]

If your client wants a no-compete clause, he should add it into the contract. If your client wants full ownership of the application (i.e., preventing you form re-using the code on any other project), he should add that into the contract as well (that should correspond to a higher payment to you as well).

I completely agree with Asia on this and have faced this issue personally, but I also learned from hard won experience that I would try really, really, hard to not let yourself get pinned down by a non-compete. These agreements can really kill your business over time as you start getting pinned down by them and find there are entire industries you can't work in for a year or more. Even if you get a higher fee up front for agreeing to this term you may find that you would have gotten a lot more revenue by building this application for other firms instead of selling it to only one firm for a higher fee.

You may want to explore licensing as solution. You essentially own the license and you allow the client to have a non-exclusive license to this application as part of the project fee. This shouldn't be an unreasonable request, after all Microsoft didn't sell Windows to one company, instead the exact same application is used by everyone who has a non-exclusive use to the software including direct competitors to each other.

Personally, I would check out the Nolo guide on web and software development. I used this guide years ago and found it had a great document in there that explained in legal terms that the client might own the web site and application, but code, software, etc. were considered "tools of the trade" and hence were not the ownership of the client.

While I am not a lawyer I took the legal meaning to being the equivalent of a contractor building a house and while the client owned the house he wasn't allowed to tell the contractor he couldn't use 2x4, nails, hammer, blue prints, etc. in the building of someone else's house even if it looked similar upon completion.

[aspdaddy]

Technically, if you do some custom development and charge for your time , once the client pays its theirs, unless a contract states otherwise.

If you don't like this then you need to protect your work from being copied and bill them for a non-exclusive licence to use the work instead of charging them to write it.

The reality is usually very different for projects of 5 figures or less

[caribguy]

Technically, if you do some custom development and charge for your time , once the client pays its theirs, unless a contract states otherwise.

That is pretty much the definition of "work for hire" - and the opposite is true when you work as a freelancer. The client receives a copy, and license to use. You retain full rights unless stipulated otherwise.

[aspdaddy]

If I pay you to build me a boat mold to my design, you cant turn up and use it make yourself a few boats because I own it, its mine, not yours.

You cant even copy it unless the licence states I paid only to use it and you can prove you made efforts to potect it - patent,copy protection, trademark etc.

Software is no different, there is plenty of case law to support this. Show me a case where they have ruled otherwise ?

A 'freelancer' has no legal definition or rights to retain any IPR unless a contract states so, its just a slang term meaning a one man band did the work as opposed to employees of a company.

The client receives a copy, and license to use.

Which freelancer sites work like this?

All the popular freelance sites I know are clearly the opposite to this, with terms like (eLance)

Provider agrees that upon receipt of payment from Buyer, any and all Work Product will be the sole and exclusive property of Buyer.

[caribguy]

You may be surprised...

[copyright.gov...]

[copyrightservice.co.uk...]

The reason eLance and other stipulate this in their
terms confirms what I noted above.

Edit: added link to UK Copyright Service

[Metzed]

The UK Copyright law that you link to doesn't cover software though does it?

[caribguy]

Juicy quotes:

3. Types of work protected
Literary: song lyrics, manuscripts, manuals, computer programs, commercial documents, leaflets, newsletters & articles etc.

5. Who owns a piece of work
[..]Freelance or commissioned work will usually belong to the author of the work, unless there is an agreement to the contrary, (i.e. in a contract for service).

[aspdaddy]

That's why freelancing sites exist and provide contracts, the same is true with contractors, I have contracts written pretty much the same way

I don't know any freelancing sites or contracting agencies that work the way you describe, issuing licences to clients, and I have used most of the big ones.

Most clients would just flatly refuse to do business with someone if they imposed *any* restrictions on the deliverables.

Copyright also only covers the source code, not the functionality or problem that's being solved, its of little use for other than 1 thing - combating piracy for product that relies on future Licence sales.

Other types of IPR such as 'ideas' are created by the client in the functional specification, protected by NDA, and not transferred to the supplier. This prevents the freelancer from exploiting any IPR