Who owns your software?

Monday, June 03, 2013 - Philip White

One problem we encounter time and time again is the issue of bespoke software ownership. There are still a number of software development companies retaining intellectual property rights for bespoke software they have been commissioned to build. As opposed to transferring property rights, the software development company instead provides the client with some form of global licence.

Customers often assume the main issue in this situation is that the software development company will resell or reuse the software for commercial gain. This is not the problem. Indeed, even where property rights have been transferred, simply making minor changes to a software product makes legally asserting property rights very difficult. The major issue is maintainability, specifically, having access to the product’s source code and data. Without access to the source, all changes must go via the software development company. In such circumstances, development companies obtain unfair commercial leverage and circumvent market forces that would usually promote competition and regulate quality and pricing.

Audacia have worked on a number of intellectual property negotiations, usually arising from a decision by the company to change supplier. In many cases a legal approach is not suitable. Even where a legal claim of ownership exists, it doesn’t always guarantee a happy ending. We have encountered a number of “database failures resulting in the loss of data” issues after legal notices have been delivered to software development companies.

In summary, always check the terms and conditions before signing any contracts. These negotiations are usually less fraught at the beginning of commercial relationships as opposed to the end.

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