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Ask HN: How to retain IP as a software contractor

14 points by confiscate 11y ago

I am sure a lot of folks ran into this scenario before, but searching for an answer online seemed hard due to all the noise, so hoping to see if anyone has personal experience on this Q1. If you were a software contractor working for a company on contract (say, to write a web site in html/js/css), by default, the IP is owned by the contractor/author unless there's a written agreement to transfer ownership. Is this correct? Q2. If you were the said contractor, and you wanted to retain ownership of your work after the contract is over, does that mean all you have to do is not sign any written transfer agreements? Would it be worth it to have some kind of extra written agreement to make it clear you as the contractor still retain IP after the contract ends? Q3. From the company's point of view, it would be preferable to own the IP of the contractor. Under what circumstances, in the usual case, do they let the software contractor retain the IP? Seems like a lot to give up, given all the time/money the company already spent to set up the contract job, look for contractors etc. Does this usually lead to a significant reduction in, say, price of the contract? What would usually convince companies to give up IP to contractors, or not care about IP after the contract ends? Q4. If you were the said contractor, after the contract, can you retain 100% ownership of the IP, and then provide a "for eternity" licence to the company, such that both you and the company can use the code at the end of the contract, but the company would own any modifications it makes after the contract, and you would own modifications you make. Essentially have the ownership be divided when the code gets "forked" when the contract terminates. Is this possible? Is there a canonical term for this type of arrangement? Thanks

jeffmould 11y ago
First things first, IANAL. Assuming you are talking about building a website for a client as a contractor, and the IP you refer to is the code behind the website: Q1: Most development contracts I have seen usually lay out that the code is owned by the developer until final payment, or some other final agreed upon milestone is reached, at which time the ownership transfers to the customer. Q2: While not signing a "transfer agreement" sounds simple in theory, you are going to be hard pressed to convince a customer to not take ownership of a website or other application you were hired to develop for them. Why would I hire you to build a website for me and then not want ownership of said code? This is exactly why this question is asked by potential investors and exists on directly on applications for programs like YC, "Was any of your code written by someone who is not one of your founders? If so, how can you safely use it? (Open source is ok of course.)" Q3: Why as the contractor would you want to retain the IP? Are you looking to resell to other companies? One option would be to build it for them under contract and then come up with a lease or maintenance contract upon completion of development. This may allow you to retain the IP while continuing to bill them. I think to answer your questions though it really depends on what you are developing for the customer. If you are building a website for a company or building a specific application than I can't see a reason the company would want you to own the IP when you are done development. They hired you to develop it for them to own. Based on your questions it sounds like a company asked you to develop something and you think it is a good idea and want to keep it for yourself so you can resell it to other clients. If this is the case, it sounds like a shady way to approach it. You may be better suited to build the software and have the customer as your first client. But tell them that is your intention from the get go. Another option would be to attempt to work out an arrangement with them where you build it and they sell it, splitting revenues.
- confiscate 11y ago
  Thanks for the advice. Yes all these questions are aimed at finding a way to clarify intentions/expectations for both sides from the get go, before the contract starts.
  - jeffmould 11y ago
    No problem. I would say that if the application is being used internally by the customer (i.e. an accounting program or intranet site) you are going to have an easier time. If the application is a product/service they are selling to their customer, is a source of revenue, or is the marketing tool (i.e. their website) you are going to fight an uphill battle to convince them to let you keep the IP. Regardless, I would be clear from the get go and if you are looking to retain ownership I would make sure it is spelled out clearly who owns what. You may even consider a nuclear type option where they have a buyout right down the road if you do retain ownership. Either way, I would consult an attorney before signing anything.
MichaelCrawford 11y ago
You cannot lose your copyright other than by your signed agreement. But look out for the term "work for hire". That specifies the company owns your work. If you are a regular employee then the company owns your work. In the US the determination of whether you are a consultant or employee is determined by the "twenty factors", also known as the "twntry questions".
ilaksh 11y ago
The contracts I have seen pretty much all say 'work for hire' and assign the IP to the client who is paying. Actually sometimes they try to go further and say they own everything you do while contracted with them. Most of my jobs have essentially been startups where I was the tech co-founder, except not recognized as such, rather hired as a cheap code monkey. Those gigs are just much easier to get. Sucky and mostly a waste of time, but pays for food and rent. Anyway I don't think anyone will share ownership of IP unless they are clueless or looking for a co-founder.
gesman 11y ago
Specify in an agreement that: - it is not work for hire - you own IP - client gets non-exclusive license to use IP without rights to sub-license, sell or transfer the license. I was pretty successful to actually ask client if he wants to own IP or not. No - ok! Yes - ok - for the double price of engagement. Everyone is happy.
- confiscate 11y ago
  that's very helpful gesman. Thank you

14 points by confiscate 11y ago

jeffmould 11y ago

First things first, IANAL. Assuming you are talking about building a website for a client as a contractor, and the IP you refer to is the code behind the website: Q1: Most development contracts I have seen usually lay out that the code is owned by the developer until final payment, or some other final agreed upon milestone is reached, at which time the ownership transfers to the customer. Q2: While not signing a "transfer agreement" sounds simple in theory, you are going to be hard pressed to convince a customer to not take ownership of a website or other application you were hired to develop for them. Why would I hire you to build a website for me and then not want ownership of said code? This is exactly why this question is asked by potential investors and exists on directly on applications for programs like YC, "Was any of your code written by someone who is not one of your founders? If so, how can you safely use it? (Open source is ok of course.)" Q3: Why as the contractor would you want to retain the IP? Are you looking to resell to other companies? One option would be to build it for them under contract and then come up with a lease or maintenance contract upon completion of development. This may allow you to retain the IP while continuing to bill them. I think to answer your questions though it really depends on what you are developing for the customer. If you are building a website for a company or building a specific application than I can't see a reason the company would want you to own the IP when you are done development. They hired you to develop it for them to own. Based on your questions it sounds like a company asked you to develop something and you think it is a good idea and want to keep it for yourself so you can resell it to other clients. If this is the case, it sounds like a shady way to approach it. You may be better suited to build the software and have the customer as your first client. But tell them that is your intention from the get go. Another option would be to attempt to work out an arrangement with them where you build it and they sell it, splitting revenues.

confiscate 11y ago
Thanks for the advice. Yes all these questions are aimed at finding a way to clarify intentions/expectations for both sides from the get go, before the contract starts.
- jeffmould 11y ago
  No problem. I would say that if the application is being used internally by the customer (i.e. an accounting program or intranet site) you are going to have an easier time. If the application is a product/service they are selling to their customer, is a source of revenue, or is the marketing tool (i.e. their website) you are going to fight an uphill battle to convince them to let you keep the IP. Regardless, I would be clear from the get go and if you are looking to retain ownership I would make sure it is spelled out clearly who owns what. You may even consider a nuclear type option where they have a buyout right down the road if you do retain ownership. Either way, I would consult an attorney before signing anything.

MichaelCrawford 11y ago

You cannot lose your copyright other than by your signed agreement. But look out for the term "work for hire". That specifies the company owns your work. If you are a regular employee then the company owns your work. In the US the determination of whether you are a consultant or employee is determined by the "twenty factors", also known as the "twntry questions".

ilaksh 11y ago

The contracts I have seen pretty much all say 'work for hire' and assign the IP to the client who is paying. Actually sometimes they try to go further and say they own everything you do while contracted with them. Most of my jobs have essentially been startups where I was the tech co-founder, except not recognized as such, rather hired as a cheap code monkey. Those gigs are just much easier to get. Sucky and mostly a waste of time, but pays for food and rent. Anyway I don't think anyone will share ownership of IP unless they are clueless or looking for a co-founder.

gesman 11y ago

Specify in an agreement that: - it is not work for hire - you own IP - client gets non-exclusive license to use IP without rights to sub-license, sell or transfer the license. I was pretty successful to actually ask client if he wants to own IP or not. No - ok! Yes - ok - for the double price of engagement. Everyone is happy.

confiscate 11y ago
that's very helpful gesman. Thank you