Assignment of Intellectual Property Rights

Gambler

Hey all,

I've been working on a project for a customer over the last couple of months and at the beginning there was a discussion about and NDA and non-circumvention agreement which I am more than happy to sign up to. Today they sent over the contracts and attached with the NDA there was also a contract for assignment of Intellectual Property rights which basically says that I agree to hand over all source code, IP rights, know how etc. etc. etc. to the customer.

This was never discussed at any stage and my initial reaction is to tell them to go take a running jump. My understanding based on this document is that all the new ways of doing things that I came up with during this project would now belong to them and I would be unable to use them again in other projects unless I got their permission?

The program we have written has general use in other products that my company sells and is a part of our overall business. In practice we have been creating an additional suite of product tools that could be made use of in other areas of our business and we priced the job as such.

So I guess my main question is, what's other peoples thoughts on this? Do I tell them I amn't going to sign the document? Or do I say to them I'll sign the document but it's going to cost them.. What sort of factors should I take into consideration when coming up with a price if I do decide to assign the IP to them?

Sparks

Being asked to sign away your IP without it having been a prior point of discussion like you describe triggers just about all of the red flashing alarm lights in my head. Sign those away and they can sell on the project you just built for them to any other potential customer in that vertical, they can open-source it without attributing you, they can patent it, etc, etc.

Wouldn't touch it with a barge pole.

leahcim

Its completly understandable why a company would require this.

If they didn't own the intellectual property what would stop you from approaching their compeditors and selling the solution to them as well.

After all they are paying you to do the work.

My understanding based on this document is that all the new ways of doing things that I came up with during this project would now belong to them and I would be unable to use them again in other projects unless I got their permission

This is something that would be very difficult for them to do. Technically the IP includes all ideas, source code etc, but in reality ideas are difficult to protect. Anybody who changes job is usually hired because the new employer thinks they have learned things in previous work that may be usefull.

Sparks Comment: Sign those away and they can sell on the project you just built for them to any other potential customer

Its not like he did the work for free. They paid for the work to be done. He did the development work but it is most likely that they contributed their ideas (i.e. their IP). Most contracts to develop bespoke software do not include a business plan on how the company is going to make money from the project. Thats their own business.

It seems that both of you were at fault for not having a good enough contract drawn up. You could probably negotiate a compromise where you agree to relinquish all IP derived from their industry specific knowledge and you hold onto generic software development techniques and libaries you may have developed.

Your bargaining power depends on how much money they have left to pay.

fcrossen

Sparks is right.

I would guess that your pricing model and possibly your work practices and code would have been different if this had been signaled as a requirement at the outset. To change a contract at the end of a job is a pretty cheeky request.

If you have used any GPL software (and perhaps any other OSS software) there may be a legal impediment to handing over IP rights.

Gambler

Just to be clear, they are buying a product. This product is actually a kind of PLC that contains custom programming I have done to get the PLC to do some clever new things that have never been done with it before to my knowledge.

What they requested from us was for an area that they have no industrial knowledge of and we provided all of the original IP. There was no section of the program where they said to us we want it to do this in this situation and that in that situation.

All code is 100% original so there are no GPL issues, and they have been given a price for a PLC, not for the custom development that went into the PLC to get it to do what we need it to do.

Sparks

Gambler wrote: »

Just to be clear, they are buying a product. This product is actually a kind of PLC that contains custom programming I have done to get the PLC to do some clever new things that have never been done with it before to my knowledge.

What they requested from us was for an area that they have no industrial knowledge of and we provided all of the original IP. There was no section of the program where they said to us we want it to do this in this situation and that in that situation.

All code is 100% original so there are no GPL issues, and they have been given a price for a PLC, not for the custom development that went into the PLC to get it to do what we need it to do.

In which case I'd tell them to take a running jump. Leahcim is incorrect in that you weren't paid to do the work and hand over the IP. If you were, that'd be in the original contract and you'd have charged a hell of a lot more.

As it stands, it sounds like you have a patentable product you could sell not only to them, but also to several other clients, and they're asking you to give that patent and that future business to them for free. That's beyond cheeky and right over by the border into unethical.

In fact, I'd hazard a guess that the line between "physical product" (eg. apples) and "software licence" (eg. your copy of Microsoft Word) is being blurred a bit here, either inadvertently or deliberately.

It's time to call in Legal to look over the original contracts and so forth, btw, just in case you've not made the call already...

leahcim

Leahcim is incorrect in that you weren't paid to do the work and hand over the IP.

If you were, that'd be in the original contract.

That's the problem isn't it. It seems was no original contract (nothing solid anyway), just an NDA.

It sounds like you have a patentable product you could sell not only to them, but also to several other clients

Not if the IP is in dispute. If the OP gave the company he was working for any input (even meetings to discuss progress) into its development they would probably have a case that they have their IP vested in the project. Even if during these meetings the company paying for the product gave no good ideas or input, how do you prove they didn't.

BTW I doubt a barister would see what the company purchased from the OP as a product, it seems to me he was contracted to do work and the output of which is in dispute. He says they only paid for the product they say they paid for all the output (ideas, source code, tools created etc). There is a big difference between the two.

One of the questions that would likely be asked would any of this IP exist if the company did not pay the OP to create it.

In the absence of a strong contract it would be up to a court to decide.

Hopefully it won't get that far and you will be able to settle on a reasonable compromise.

NeverSayDie

OP, seeking professional legal advice on this one would be a good idea, and I'd strongly recommend you not rely on internet randomers such as myself for same. I would imagine (purely in a layperson speculation capacity) that there are various options here in terms of negotiation, licensing, and so on. A legal professional should be able to help develop a constructive approach for your particular situation, that will hopefully leave everybody recompensed, satisfied and un-litigated.

tricky D

Stick to your guns OP. Grant them a licence and no more. By default, you own the copyright on everything you create unless you sign it away - do not do that. This company seems to have a poor understanding of the differences between and nature of NDA, licencing and copyright.

Consult a solictor if push comes to shove.

fcrossen

tricky D wrote: »

By default, you own the copyright on everything you create unless you sign it away

http://www.cai.ie/faq/index.htm#3

leahcim

fcrossen wrote: »

http://www.cai.ie/faq/index.htm#3

Thats a very interesting faq.

One thing in it that surprised was the bit in bold see below

Copyright does not protect ideas, concepts, styles, techniques or information. For example, if you write an outline of your idea for a TV show, the outline itself will be protected by copyright. However, another person could write their own script using your general ideas without necessarily infringing copyright. The other person would only be infringing your copyright in the outline if they started copying enough of the way you had, for example, structured your plot.

I wonder what should you do if you had an idea worth protecting, I guess a patent would be whats required.

AnCatDubh

I'd guess that it would depend entirely on the basis of the original engagement and the contract or order for the goods/service.

IMHO, too late for them to be introducing something now particularly as significant as that.

In another role in life I tend to purchase software development services regularly. The IP is a condition of the engagement and hence the provider of the service knows exactly what they are getting into at the outset. If they are unable to release the IP then I respect their position but we aren't likely to do business. I would never have someone start into a project and mid way through, shift the goalposts and let them know that I now expect the IP. If its not stated at the start then my expectation, which I think is reasonable is that the IP remains with those developing the software.

I hope it works out for you.

NeverSayDie

leahcim wrote: »

I wonder what should you do if you had an idea worth protecting, I guess a patent would be whats required.

Seems to be a common misconception alright, re what copyright does and doesn't refer to. Patents (for inventions) and trademarks (for brand names and such like) would be two other common forms of intellectual property protection, see here for more info;
http://www.enterprise-ireland.com/ResearchInnovate/Research+Commercialisation/Intellectual+Property+Rights+%28IPR%29.htm

Trojan

AnCatDubh wrote: »

In another role in life I tend to purchase software development services regularly. The IP is a condition of the engagement and hence the provider of the service knows exactly what they are getting into at the outset. If they are unable to release the IP then I respect their position but we aren't likely to do business. I would never have someone start into a project and mid way through, shift the goalposts and let them know that I now expect the IP. If its not stated at the start then my expectation, which I think is reasonable is that the IP remains with those developing the software.

Same as this. I use T&C which is available to the contractor at the outset. I learned this lesson after hiring someone to build software which they then gave me a licence to re-use rather than re-sell as I intended. They were 100% correct, and I should have clarified this from the outset.

Talk to a solicitor.