4 ms·

This is one of the reason consulting clients are paranoid about IP assignment clauses. I've signed MSAs where the language about the IP assignment was as long

by patio11 12y ago

This is one of the reason consulting clients are paranoid about IP assignment clauses. I've signed MSAs where the language about the IP assignment was as long as all other contractual terms and the NDA combined. That was historically one of the points of highest friction at my consultancy during contract negotiation, because every lawyer had a different idea of how to totally derisk the IP assignment for the client, many of which were not compatible with me signing them and then continuing to run a consultancy or software company. (Hypothetical example: If I'm doing A/B testing for you, I am of course amenable to giving you copyright to code/copy/reports delivered to you, but I'm not going to give you exclusive rights over "all procedures and knowhow used in the production of the deliverables.") Word to the wise: when you have your lawyer draft your standard contract, ask them "Hey can we have IP assignment happen only after SoW's associated invoices have been paid in full?" That's a valuable lever to have to encourage clients operating in good faith to prioritize getting your invoices paid expeditiously.

cperciva 12y ago
I once had a client present me with an NDA which stated that their Intellectual Property included "all knowhow related to the project", and then a few paragraphs later that they had "the right to seize all Intellectual Property" upon termination of the contract. When I asked if they intended this to include brain surgery, they agreed to amend it to only seizing documents.
- mgkimsal 12y ago
  I really really really don't think most clients want all my intellectual property. Even I don't want it all...
- GrinningFool 12y ago
  It seems like the needed change there was not to alter the scope of what they would seize, but the scope of their definition of Intellectual Property. It's a little unclear from your post - is that what you got modified?
  - cperciva 12y ago
    Their definition of "Intellectual Property" didn't change, but it didn't matter given the ways in which the term was used.
mathattack 12y ago
all procedures and knowhow used in the production of the deliverables. Can this possibly be enforceable? I've seen two extremes from prior employers: "Sign everything away because nobody will sue a consulting employee" and "Be belligerent in the contract process to point of risking not getting the deal done." For better or worse, the more "well run" firm overall was the most lenient in agreements around what consultants could and couldn't do. Somehow people still wound up spending 10 years servicing clients in the same industry despite non-competes. I think they just assumed it wasn't worth chasing folks over.
EGreg 12y ago
patio - that's very good advice! From my own experience, I would also suggest in actual negotiations with clients to bring up the example of Wordpress and blogs. By making a blog for you using Wordpress, you don't come to own the Wordpress platform. This underscores the economics to a client based on a real life example. The consultancy should have its own reusable "platform" (which it refers to in its standard contracts) which can include the knowhow, software and whatever else. The client is offered a worldwide, royalty-free, unlimited license to the platform, app and all its source code. If they balk, then you do copyright assignment, but of the app only, never the platform. That way it's presented cleanly to the client in terms they can hang their hat on -- platform and app.
paulsutter 12y ago
Well run companies would not allow for IP assignment to happen only after invoices were paid. A minor payment dispute could then hold up an investment round or M&A transaction, and that's completely out of proportion to the issue you're trying to address. The diligence lawyers /really do/ read every contract they have in the file. I've never in my life had trouble collecting an invoice. Once I resorted to a collections lawyer[1], and the company paid by wire within two days (it was a six figure invoice). Knowing your rights and leverage is more important than demanding unusual clauses in contracts (and Patrick, I say that with all due respect as a friend). Another point: Reputable companies have a lot to lose by shafting contractors. This is the real reason it pays to work with reputable customers. [1] For the curious, the lawyer threatened to put a lien against the company, and they suddenly realized that they really did owe me the money. Feel free to email me with any questions.
- pja 12y ago
  A minor payment dispute could then hold up an investment round or M&A transaction, and that's completely out of proportion to the issue you're trying to address. If it's minor payment dispute, they they can just pay the invoice and get on with the M+A transaction. Personally, I can't see why the client should expect to own work done at their request if they haven't paid.
- Argorak 12y ago
  > Well run companies would not allow for IP assignment to happen only after invoices were paid. A minor payment dispute could then hold up an investment round or M&A transaction, and that's completely out of proportion to the issue you're trying to address. The diligence lawyers /really do/ read every contract they have in the file. On the other hand, that's exactly the reason you want to have IP assignment clauses in contracts with startups - it gives a lot of incentive to the client to fully pay the invoice in case of a firesale. I have seen cases where a company went bankrupt, but at the same time sold the software to another company held by the same people, cheating freelancers out of their money. That cannot happen in this case, as the IP assignment blocks the sale unless the buyer agrees on paying out the contractors. As a contractor, that's your only lever in that case. Your case only works if the client is actually solvent.
jschulenklopper 12y ago
> "Hey can we have IP assignment happen only after SoW's associated invoices have been paid in full?" Normally: yes. For more explanation on this, see Mike Monteiro's great presentation during a CreativeMornings event: http://vimeo.com/22053820 http://vimeo.com/22053820. Most of us will recognize the talk by the title alone: "F*ck You. Pay Me."
- yangmeyer 12y ago
  The best thing about this "assign after payment in full" clause: It makes potential disputes about unpaid invoices a copyright infringement issue. And crucially, legal costs for copyright cases in the US are paid by the infringing party. (IANA lawyer, but I learned this from one while contracting.)
  - Argorak 12y ago
    The most important part is that it avoids many cases where the client tries to "ship off" the software. (e.g. by selling it to another party for a penny and going bankrupt itself) This is in some cases fraudulent in itself, but being able to block the sale is a much clearer case.
- ehurrell 12y ago
  This is exactly what I was going to post, it's an excellent talk. As Mike says a good contract is good for both the client and the worker, as it ensure everyone is on the same page. It only takes being burned for trusting people once to realize a good contract can be a lifesaver.

by patio11 12y ago

cperciva 12y ago

I once had a client present me with an NDA which stated that their Intellectual Property included "all knowhow related to the project", and then a few paragraphs later that they had "the right to seize all Intellectual Property" upon termination of the contract. When I asked if they intended this to include brain surgery, they agreed to amend it to only seizing documents.

mgkimsal 12y ago
I really really really don't think most clients want all my intellectual property. Even I don't want it all...
GrinningFool 12y ago
It seems like the needed change there was not to alter the scope of what they would seize, but the scope of their definition of Intellectual Property. It's a little unclear from your post - is that what you got modified?
- cperciva 12y ago
  Their definition of "Intellectual Property" didn't change, but it didn't matter given the ways in which the term was used.

mathattack 12y ago

all procedures and knowhow used in the production of the deliverables. Can this possibly be enforceable? I've seen two extremes from prior employers: "Sign everything away because nobody will sue a consulting employee" and "Be belligerent in the contract process to point of risking not getting the deal done." For better or worse, the more "well run" firm overall was the most lenient in agreements around what consultants could and couldn't do. Somehow people still wound up spending 10 years servicing clients in the same industry despite non-competes. I think they just assumed it wasn't worth chasing folks over.

EGreg 12y ago

patio - that's very good advice! From my own experience, I would also suggest in actual negotiations with clients to bring up the example of Wordpress and blogs. By making a blog for you using Wordpress, you don't come to own the Wordpress platform. This underscores the economics to a client based on a real life example. The consultancy should have its own reusable "platform" (which it refers to in its standard contracts) which can include the knowhow, software and whatever else. The client is offered a worldwide, royalty-free, unlimited license to the platform, app and all its source code. If they balk, then you do copyright assignment, but of the app only, never the platform. That way it's presented cleanly to the client in terms they can hang their hat on -- platform and app.

paulsutter 12y ago

Well run companies would not allow for IP assignment to happen only after invoices were paid. A minor payment dispute could then hold up an investment round or M&A transaction, and that's completely out of proportion to the issue you're trying to address. The diligence lawyers /really do/ read every contract they have in the file. I've never in my life had trouble collecting an invoice. Once I resorted to a collections lawyer[1], and the company paid by wire within two days (it was a six figure invoice). Knowing your rights and leverage is more important than demanding unusual clauses in contracts (and Patrick, I say that with all due respect as a friend). Another point: Reputable companies have a lot to lose by shafting contractors. This is the real reason it pays to work with reputable customers. [1] For the curious, the lawyer threatened to put a lien against the company, and they suddenly realized that they really did owe me the money. Feel free to email me with any questions.

pja 12y ago
A minor payment dispute could then hold up an investment round or M&A transaction, and that's completely out of proportion to the issue you're trying to address. If it's minor payment dispute, they they can just pay the invoice and get on with the M+A transaction. Personally, I can't see why the client should expect to own work done at their request if they haven't paid.
Argorak 12y ago
> Well run companies would not allow for IP assignment to happen only after invoices were paid. A minor payment dispute could then hold up an investment round or M&A transaction, and that's completely out of proportion to the issue you're trying to address. The diligence lawyers /really do/ read every contract they have in the file. On the other hand, that's exactly the reason you want to have IP assignment clauses in contracts with startups - it gives a lot of incentive to the client to fully pay the invoice in case of a firesale. I have seen cases where a company went bankrupt, but at the same time sold the software to another company held by the same people, cheating freelancers out of their money. That cannot happen in this case, as the IP assignment blocks the sale unless the buyer agrees on paying out the contractors. As a contractor, that's your only lever in that case. Your case only works if the client is actually solvent.

jschulenklopper 12y ago

> "Hey can we have IP assignment happen only after SoW's associated invoices have been paid in full?" Normally: yes. For more explanation on this, see Mike Monteiro's great presentation during a CreativeMornings event: http://vimeo.com/22053820 http://vimeo.com/22053820. Most of us will recognize the talk by the title alone: "F*ck You. Pay Me."

yangmeyer 12y ago
The best thing about this "assign after payment in full" clause: It makes potential disputes about unpaid invoices a copyright infringement issue. And crucially, legal costs for copyright cases in the US are paid by the infringing party. (IANA lawyer, but I learned this from one while contracting.)
- Argorak 12y ago
  The most important part is that it avoids many cases where the client tries to "ship off" the software. (e.g. by selling it to another party for a penny and going bankrupt itself) This is in some cases fraudulent in itself, but being able to block the sale is a much clearer case.
ehurrell 12y ago
This is exactly what I was going to post, it's an excellent talk. As Mike says a good contract is good for both the client and the worker, as it ensure everyone is on the same page. It only takes being burned for trusting people once to realize a good contract can be a lifesaver.