Who owns the rights to custom code or software?
Recently I was asked by a client to make copies of custom coding so the client could resell the script to others. This situation invariably leads to the question of who owns the rights to custom code? Does this client have the right to resell the code my team developed?
Below is a repost of an article by Advanced Horizons, Inc. that answers this question and makes the case for why my client does not have the right to sell the code we created for him…
Several clients have asked the question, “Who owns the custom software modifications?” To ensure an accurate answer to this question we went to the experts, John Crossan with the firm of Chapman and Cutler. His firm specializes in intellectual property law, which covers copyrights and patents. John was kind enough to provide the explanation.
We have worked with clients on the basis that custom development would, by default, belong to the client. This is not true. Our guess is that most developers don’t assign rights to the customer and don’t tell the customers that they don’t have any rights. We think the response from most clients would have been the opposite of the correct answer.
If you are having any custom work performed, protect yourself.
by John Crossan, Chapman and Cutler- Chicago
When you buy a copy of commercial game software for a few dollars, or commercial business software for several hundred dollars, you do not expect to get the right to make or sell additional copies or to modify the source code of the software for your own use. Indeed, the “shrink-wrap” license you agree to when you open the package prohibits you from making or selling copies, etc.
When you pay thousands or tens of thousands of dollars to a developer for custom software specifically for your business, do you expect to own all of the important rights in that program? You may not; unless you do some “magic” in working with the developer, you will get no rights except to use whatever copies you buy, the same as with off the shelf commercial software.
Under U.S. law, copyright in software belongs to the author of a work personally unless he/she is an employee hired to write such software. Copyright in the software belongs to his/her employer, even if the employer in turn is hired by you. As a sponsor of custom software you can obtain full copyright in your work only in one of two ways;
- (a) by hiring the individual developer on your payroll as an employee under your supervision and with employee benefits (at least Social Security deductions) and not as an independent contractor, or
- (b) by having copyright in the software assigned to you in writing by the developer (or the employer) when it is completed.
Copyright includes important rights: to make multiple copies (beyond an archival set), to port or translate, rewrite, debug, and otherwise modify the source code, and to sell copies or rights to others. If you want to be sure you have those rights in your own custom software, you must own or license the copyright in it.
If the developer is not your employee and you get no assignment or other sufficient rights, certain acts you may do will violate the developer’s copyright. The developer may allow or overlook your acts at first, but such violations may not always be allowed. If business relations sour, change (for instance, the developer is bought out), or are broken off, you may find that you have very few of the important rights in what you paid to develop.
A developer of course may be reluctant to assign to you copyright in your custom software, for instance they may use your program parts that they developed for (or even took from) others or parts that they want to use again for others. If requiring full copyright assignment may block a desirable agreement, then an assignment of copyright on the new parts and a license to any stock parts, or the like, may be worked out on the particular facts of your software.
Address these issues at the outset of creation of custom software, or you will likely have few rights when the job is finished.
My client can sell copies of the the software we developed for him, but only with our permission which explicitly give him that right.
Who owns the rights to custom code (or a custom website theme or template) is something that all code developers, and the clients who hire them, need to be aware of.
