Who owns this code??? 3

[glks89]

I have been a Tek Tips member for a while now, but this is an anonymous handle.

I work for a fairly small software development company. We have a large customer who had previously contracted us to maintain a pretty neat application that had originally been developed internally. For the last year, they have contracted us to develop this application in a new technology. Quite a bit has been changed, but quite a bit is the same, as well. The customer would love to eventually license this to other companies in the same business, helping them to recoup the costs of development, and our company would receive the additional work of doing the customizations.

My boss, the owner of my company, is planning to make some cosmetic changes to this app and sell it to some of our other clients, who do not have any relationship to our customer. He does not plan to tell our customer or give them any of the profits. He has mentioned that I shouldn't really talk about what we are doing with this app, and our company won't be advertising it, just offering it to existing and prospective customers.

I am the sole developer on this application. Obviously, he is planning to have me do the work. This could be a very good thing for the application, and it is a tool that could help a lot of customers, but I have strong suspicions that this is not legal and is violating our relationship with our current customer.

My initial reaction is to tell him I won't work on it. But is there any way that this could be allowed? He says that it is because it has been substantially changed from the original product. But even so, if we were contracted, don't they still own it? I realize that every contract is different, but what would a standard contract say about this situation? I don't want to take such a strong stand and risk my job if it's perfectly ethical and legal, but I sure don't want to do anything to violate our customer, either! The fact that he's keeping it quiet doesn't necessarily mean that he is violating anything in the contract, but it sure doesn't make me feel too good about this!

Should I see a lawyer before I talk to him? Should I ask to see a copy of the contract (with confidential bits blacked out, of course) before I consent to doing this? And is it enough to say that I don't feel comfortable doing this and would prefer that someone else be assigned? Or do I have to bite the bullet and say "this is wrong, and I refuse to take any part in it?" If anyone has any advice, it would be much appreciated.

 

[OhioBill]

Call your lawyer and explain what's going on then see what your legal liabilities are. If what your company is proposing to do is completely legal, then the rest is up to you.

 

[MakeItSo]

The customer would love to eventually license this to other companies ...
...My boss ... is planning to make some cosmetic changes to this app and sell it to some of our other clients

Sounds like trying to double-earn from this app, whereas the second way (selling the app) seems illegal to me.

Plus: Your boss is trying hoodwink your customer! I find that reprobate. The customer could very well consider this as fraud, too.

Should I see a lawyer before I talk to him?

Don't forget he's your boss. He might think you try to hoodwink him on this if you consulted a lawyer first.
I'd openly talk to him and present my view of the things and ask for his opinion on it.
If he doesn't give in and you still think it illegal, you can still consult a lawyer on this.

Good luck,
MakeItSo

 

[jsteph]

Plain and simple: Your client owns the app. Period.

Just because your boss can steal it without the use of a gun or knife doesn't make it not theft. It's theft, pure and simple. The client owns the app, any work you do to upgrade or change platforms is still owned by the client--unless they have a very non-standard contract that gives up ownership of any work you do that they pay you for.

That would be like you paying a carpenter to build a bookcase in your house and then the carpenter rents shelf space on it to your neighbors because he built it. Does that sound fair?
--jsteph

 

[jsteph]

...and I think the key point that I forgot to emphasize--
Just because your boss can steal it without a gun or knife and steal it while the owner still keeps his copy doesn't make it not theft. That's the key here as with ripping a CD via the old Napster or Kazaa--the actual product is infinitely reproduceable, so the 'victim' is not as clearly hurt in the immediate sense that his software is gone because it's not--he still has his copy--but he clearly want's to make extra revenue by selling it and your boss is stealing that revenue.

Your boss could, and should, tell the client that he has prospective customers for that app and he would be willing to negotiate a finders fee. Now, he can certainly negotiate a high fee, since realistically these customers would probably never have known about your client and therefore your client would not have gotten that revenue anyway--and you'd also get the support contract. But nevertheless--you (and hopefully your boss) would sleep better if you went this route.
--jsteph

 

[pmonett]

Indeed, I cannot help but agreeing with jsteph.

What we have here is a situation where a client pays for outsourced resources for an internal application, and the outsourcing company wants to take the app paid for by the customer and sell it to other customers.

When that becomes public knowledge - and it will - your company and your boss is going to be in heap big trouble. Unless, and that is the catch, the contract signed by the client recognizes that your company has the right to sell the code.

I suspect that is not the case. It may not, however, be necessary to pull out all the stops and put yourself in trouble with your boss. After all, when the inevitable trial starts, your boss will not be able to shove the responsibility on your shoulders. You did do the development, as per your contract, but it's the boss that did the stealing. I seriously doubt any judge in his right mind will find lawful reasons for blaming a developer for thievery decided and acted upon by management.

That said, it may be time to look for options elsewhere. If your boss is capable of making such an enormously mistaken decision, the company has no chance of offering you a solid position anyway.

Pascal.

 

[glks89]

Is there something wrong with the double earning part? I guess I always considered that if it is the customer's program, and they wish to have us turn it into a product that can be licensed out, that is their decision.

If you can't tell, I am leaning strongly against working on this project at all. Part of my dilema is how to talk to him about it. We still haven't finished the original app. Part of me says to talk directly to my boss. The other part says to talk to my current PM. He has always been nothing less than excruciatingly honest, to the point where I am not sure that he knows that my boss is doing this, although he must. I have considered asking him about it since he would know more details of the contract and I may not have the whole story on my boss's plan. I would like to know the whole story before I talk to my boss so as not to risk my job over nothing, but I also don't want to cause a company wide stink over something that could be handled quietly.

I feel like there is no way out of this. Even if I refuse to code it, I am going to be asked to help train the new programmer, and he'll probably try to make me secondary support contact as well. It's not like he is going to drop the idea as he already has several customers lined up. This is looking like it could be one of our bigger products, and I don't want to spend the rest of my time there saying "sorry, I can't do that."

I love the bookshelf analogy, by the way. I think his logic on this is just incomprehensible. Just because someone asks us to change something, it doesn't mean it's ours now. It's like someone asking me to proof a paper, and then me posting it on the internet.

I guess I just wasn't sure if there was any way that it could be allowed. It's a confusing issue to me, because if we developed a really nice menu for one customer's app, I wouldn't really have qualms about saving the basic menu as a template and customizing it for other apps. But in this case, it is not elements or subroutines that we are talking about using, but rather the logic of the whole program, which I consider to be pretty innovative.

The other thing I have really been thinking about, is even if this was legal, if our customer were to find out, it is really me that takes all the fallout in a way, not the company. I am the one who has been working on this, who has been at all the meetings, and spent many months tweaking this thing for them. They aren't going to look at my boss and say "how could he do this," but at me. I would much rather them hear that the original developer refused to work on it, even if she did lose her job over it.

 

[Grenage]

He does not plan to tell our customer or give them any of the profits.

The above seems extremely dodgy. Personally I would talk the matter over with your boss as I doubt your company has the rights to sell the product on as its own.

As pmonett rightly points out it is unlikely you would personally receive any legal blame if you went ahead.

If you are unhappy with that situation and it is going to go ahead anyway it might be worth looking for an alternative job on the side.

 

[CajunCenturion]

Plain and simple: Your client owns the app. Period.

Probably true, but not necessarily. Unless otherwise contractually specified, the person who paid for the work owns the work. To answer this first question, you must review the terms and conditions of this project's contract, with respect to ownership, marketing rights, and/or intellectual property to answer the question. If there is nothing specific to these issues in the project contract, then step up and look at the general contract, if one exists, between your company and the client. If still nothing exists with respect to these three issues, then it's safe to assume that the client is the owner and controls these three aspects of the code.

You are probably quite correct in that you don’t know the whole story and before you take any action, internal or otherwise, you should get as many facts as possible. Do not allow your emotional reaction based on speculation to get the better of you.

To hopefully put your mind at ease, I doubt that anyone will hold you responsible, or blame you for this situation. You may be the author of the software, but you’re not the one guilty of any crime. Your company and/or your boss may be to blame, but not you.

Key question: Does the project PM work for your company or for the customer?

If the PM works for your company, then by all means, talk to the PM and express your concerns. If not, then I would continue to do the job to the best of my ability, and try to find another job. At some point, but it’s hard to say exactly when, I would write a written letter to my boss along the lines of me not understanding the legal position that we are in with respect the aforementioned issues with the tone being one of asking your boss to teach you, so that you do not appear to be second-guessing him. That may still get the point across and at the same time provide you with documentation about these issues and your lack of complicity. Do not be surprised is the boss response is along the lines of “Don’t you worry about that, that’s not your job,” but that response in itself would be telling.

Good Luck
--------------
As a circle of light increases so does the circumference of darkness around it. - Albert Einstein

 

[drlex]

...you must review the terms and conditions of this project's contract, with respect to ownership, marketing rights, and/or intellectual property

Too right! I have an Architect friend who successfully sued a client when that client had build a second house from the original plans. The contract was a licence to build the one property; the client believed he had the right to use the plans as many times as required. AFAIK, this is standard terms in architectural practice. Bottom Line: see the small print.

Subliminal Thought for the Day:

 

[Dimandja]

I agree with CajunCenturion when he says "You are probably quite correct in that you don’t know the whole story and before you take any action, internal or otherwise, you should get as many facts as possible".

Although your boss' attitude is bordering on unethical, it may still not be illegal. Check the contracts and talk it out with your boss.

Since you are the developer, your boss will likely share his concerns and expectations with you. For example, how long does your boss think this will go on before your initial client learns of your commercial enterprise?

If your boss could line up clients, so could your initial customer. You have effectively become competitors, luring the same clients for essentially the same product. And some of those prospects will inevitably be approched by both. You cannot hide this affair for very long; it will come out sooner or later, and you'd better address the legal implications sooner than later - it could cost you by then.

Dimandja

 

[glks89]

Unfortunately, I sent out a note to my boss asking for a meeting before I read CajunCenturion's very good advice not to be impulsive. I am meeting him for lunch today, and I need to bring up some of my concerns then.

Despite the many reasons I have a problem with this, I think Dimandja has pointed out the most concrete issue, and I think I might take that approach. At the very least, I think I will express discomfort at working on these new projects while I am still working on the original until June! It's not even in production yet.

The more I ponder this, the more that I think that even if it is legal, I am just very uncomfortable with it. Even knowing that I am probably not in any legal danger no matter what I do does not make me feel better about it.

I will take CajunCenturian's advice of taking a tone of "teach me," rather than being confrontational. Any last minute advice would be much appreciated.

 

[glks89]

Oh yeah,

I don't really have access to the contracts without snooping anyways, so there is not a lot of research that I could have done prior to talking to him anyways. I would have to ask him to see the contract.

 

[MDXer]

From the US Copyright Office

§ 201. Ownership of copyright1
(a) Initial Ownership. — Copyright in a work protected under this title vests initially in the author or authors of the work. The authors of a joint work are coowner of copyright in the work.

(b) Works Made for Hire. — In the case of a work made for hire, the employer or other person for whom the work was prepared is considered the author for purposes of this title, and, unless the parties have expressly agreed otherwise in a written instrument signed by them, owns all of the rights comprised in the copyright.

(c) Contributions to Collective Works. — Copyright in each separate contribution to a collective work is distinct from copyright in the collective work as a whole, and vests initially in the author of the contribution. In the absence of an express transfer of the copyright or of any rights under it, the owner of copyright in the collective work is presumed to have acquired only the privilege of reproducing and distributing the contribution as part of that particular collective work, any revision of that collective work, and any later collective work in the same series.

From your description your situation falls into category B. I know from past experiences working with software vendors and Large consulting services, that issues such as this are always a point of contention when writing contracts. Some vendors have it written into their contracts that they own the intellectual property while others want the right to use but not own, and then some just don't care about it.

If your boss decides to press forward and the company who contracted you for the work finds out, then it could get real ugly for your company. In my opinion with todays IT job market reputation means a lot and something like this could kill a good reputation.

"Shoot Me! Shoot Me NOW!!!"
- Daffy Duck

 

[Kjonnnn]

It boils down to who is the inital OWNER of the code.

Was the code sold completely to your Customer?

Did your company contract to give the Customer "Exclusive" Rights to the code? Either the original version or the modified version?

If the code was developed by your company (you), and you modified the code for your customer? Even if the Customer wants to sell / license the version your company created, your company still would own the rights to the original code to do as it pleased. What's important is were any exclusive rights contractually given.

 

[chiph]

But even so, if we were contracted, don't they still own it?

Not necessarily. It depends on what is in the contract (intellectual property rights section). If it was left out of the contract, your boss needs to find a new lawyer, as the IP rights are often the only asset of a software company.

You still may want to consult with your lawyer to see if you would have any personal liability for your boss' actions.

Chip H.


If you want to get the best response to a question, please check out FAQ222-2244 first

 

[SQLSister]

Since the contracting company developed the original code and has expressed an intention to sell it to others, I would be extremely surprised if they have not explicitly kept the software rights. However, stranger things have happened.

My advice to you is to document everything. Document the request to madify the code for other companies by your boss, you response, etc. If you can, so it through email or offical means. Otherwise, keep notes with dates, times and places of conversations. You may end up being sued for this and it will help to have a record of what you were asked to do and that you expressed a concern and what you were told in response.

I think the suggestion to consult a lawyer is a good one. Better to know before you get yourself in trouble.

I would suggest to you that in view of the orginal company's desire to sell the product themselves, that even if this isn't legal theft because of some loophole, the company you work for is certainly unethical. I would be looking for a way out of a company like that if I were you. It will not be the last time you will be expected to do something unethical or illegal and companies like this often end up bankrupt due to lawsuits and bad publicity. That's no way to lose a job either. Think of the low level Enron employees, they didn't do the illegal things, but they still lost their jobs.

 

[SemperFiDownUnda]

From the original post.

We have a large customer who had previously contracted us to maintain a pretty neat application that had originally been developed internally

Now this makes it pretty clear to me.

Said application was written internally by the client.
glks89's company has been contracted to maintain an exsisting system.

Initial copy write is owned by the client.
Hopefully when the client contracted glks89 they addressed IP but even if they didn't it defaults back to them.

glks89 might be able to use what they develop for other ventures but using the entire code base with

some cosmetic changes

is very suspect and even more so if the "cosmetic changes" are just that "cosmetic" and have no functional purpose.

One thing I would look at is how is your company structured. Is your boss the owner? Is there someone that is higher then him/her?

One thing I would do is document as much as you can. If you get targeted and loose your job I would use that information to your advantage.

1) Contact your lawer and get a wrongful dismissal case started
2) Contact your client (you best prospect might be going to work for them directly). If your current company acted in bad faith/broke the contract and fires you there will be no legal grounds for them to hold you to a non competative agreement that you may have signed.

You should get pretty big cudos points with your client for your high ethical standards which will put you in a good light sinse they probably still need the app finished, they can not trust the current contractor (your company).

If you feel at all suspect and your boss will not let you see the contract arrange it with the client.

I wish you luck today.


Hope I've been helpful,
Wayne Francis

If you want to get the best response to a question, please check out FAQ222-2244 first

 

[KornGeek]

To me, this is not a clear cut matter at all. Without seeing the contract, there is no way to speculate on this.

My company has often done projects where we take a customer's code and upgrade/modify it. In our contracts, it is spelled out that once we do the project, we own ALL rights to the code. The primary reason for this is that in new projects, we often borrow code from previous projects and don't want to have any copyright concerns. If a customer were to hesitate on this, we would most likely work out a special arrangement and contract for that customer.

We would be within our legal rights to turn around and license this software to others if we chose to do so, but would most likely not inform the original customer of this, nor would we share the profits with them. Although this would be perfectly legal, the ethics of the situation and the impact on our relationship with our customer are less clear cut.

We secure these rights to protect ourselves, and we don't abuse them. Your company may have similarly secured the rights to the software. However, if at the end of the day you are uncomfortable with this, you should let your boss know. If often heard it said that if you don't want someone to know about what you're doing (such as your customer in this case), then you probably shouldn't be doing it.

 

[MDXer]

In our contracts, it is spelled out that once we do the project, we own ALL rights to the code.

This is the unknown part in this particular situation. If you have IP rights then you are entitled to use them.

What makes this not clear cut is that the contents of the contract are unknown.

"Shoot Me! Shoot Me NOW!!!"
- Daffy Duck