
The "Work For Hire" Doctrine Almost Never Works in Software Contracts - EGreg
http://www.metrocorpcounsel.com/articles/9954/work-hire-doctrine-almost-never-works-software-development-contracts
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patio11
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.

~~~
paulsutter
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.

~~~
Argorak
> 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.

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roberthahn
As with anything legal, whether this applies to you depends on where you are.
The article appears to be quoting from laws based on the State of California.
If you're not under their jurisdiction, it probably doesn't apply to you.

At the least, you should look up the work-for-hire laws in your jurisdiction.
Or, you know, work with a lawyer to learn your rights.

(edit: copy tweaks)

~~~
tzs
The copyright law aspects of the article apply everywhere in the United
States. The gist of the article is that you should use an assignment clause
instead of a work for hire clause. The work for hire clause is unnecessary.

The California law example was to illustrate that trying to be clever and
including both an assignment clause and a work for hire clause could actually
hurt you in some jurisdictions.

~~~
roberthahn
ah, thanks, that clarifies things a bit more for me.

That said, I'm writing from a Canadian perspective. And it's likely that our
laws are different in this regard. I'll be looking it up within the next day
or so.

EDIT: And I got curious enough to look it up quickly:
[http://www.gowlings.com/KnowledgeCentre/article.asp?pubID=22...](http://www.gowlings.com/KnowledgeCentre/article.asp?pubID=2231)

states that unlike the US, Canada doesn't have a work-for-hire provision, so
copyright remains with the employee or contractor. Which is similar in effect
to what's written in the OP. I'd want to corroborate that more before staking
my business on it, but at the very least my point about checking the laws in
your jurisdiction is important.

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ChuckMcM
One of the things that always amazes me is how intensely people pursue this
stuff. Which presumably means they are taking the position that you are going
to screw them the first chance you get. And the thing that amazes me is that
many employees don't take an equivalent stance regarding the company. Wouldn't
you think that if a company was that worried perhaps should worry you too?

Love patio11's advice about having the payout be dependent on the transfer of
IP, very nice and very appropriate.

~~~
wikwocket
If you see code that checks for every possible type of exception or input
error, do you think that code is secretly hoping that an exception occurs? Or
do you just think the programmer is trying to cover all the bases so he/she
can decide what happens when an error occurs?

Contracts are just the 'source code' that define agreements. There's nothing
wrong with very specific and precise language. Granted, since contracts are
tied to negotiation, some people can be over-aggressive, but mostly long
contracts just come from people who have gotten burned before, and have no
desire to be burned again.

------
mike_herrera
Can anyone explain why written code couldn't be considered "a compilation (an
original manner of selecting or arranging preexisting works)?" I would think
common sense would define most software as an arrangement of preexisting
works.

e.g. If I'm contracted to develop a web app it's an original arrangement of an
existing programming language.

~~~
gohrt
The language is tricky, but writing (a book, a program) (or drawing a picture)
isn't considered "arranging" words (or paint drops). The entirety of existence
is just a series of rearranging molecules, atoms, and quarks!

The attempted distinction is intuitive to me, but I for one can't think of the
words for it.

~~~
mike_herrera
Let's try a concrete example:

Jane was hired as a contractor to deliver a business process application in
C#. The contract to hire Jane was a work-for-hire contract without the
explicit copyright transferring language... /end of example.

I would presume that Jane's final work product is an arrangement of previous
work by Anders Hejlsberg (who lead the original C# development team) and other
employees of Microsoft. Is this not a sound line of reasoning?

~~~
Locke1689
Nah. If I build a bridge using Caterpillar equipment I haven't re-arranged
Caterpillar equipment into a bridge, I've just used tools.

Similarly, just because you write code in C# and then send it to code I wrote,
which translates it to CIL, that doesn't mean that any of your code is
actually an arrangement of my code. Your code just conformed to the required
input of my tool (the C# compiler).

~~~
mike_herrera
Aaaand it's a Roslyn member who replies-- just my luck. :) I'll cede this one.

------
k__
So, if I just go anywhere, write code, write a bill for it and get paid, the
whole copyright of the code belongs to me?

~~~
gonzo
if you submit patches to an open source project, you retain copyright on them
as well.

This is why many OS projects now have contributor license agreements.

~~~
dsymonds
I don't think a CLA typically assigns copyright. It only provides the project
with a license to use the contribution; the contributor still retains the
copyright.

~~~
ihnorton
> I don't think a CLA typically assigns copyright.

Be sure to read the fine print. The main point of the CLA for most corporate-
backed projects is to allow re-licensing under different terms (read:
proprietary). This does not require explicit copyright assignment.

On the other hand, the Free Software Foundation requires copyright assignment
to give the FSF standing to defend the copyright - to enforce the GPL.

> It only provides the project with a license to use the contribution

Most projects simply specify that any contributions must be made under the
same license as the existing code. The act of voluntary contribution is
considered (by most) as sufficient to establish assent to this, although many
projects take it a step further and require copyright statements in each file
header. For projects that never plan to re-license, this works fine.

~~~
rmc
> On the other hand, the Free Software Foundation requires copyright
> assignment to give the FSF standing to defend the copyright - to enforce the
> GPL.

One reason for this is in case someone uses GNU code without following the
GPL. With the FSF as copyright assignment, then the FSF can sue the
organisation breaking the GPL. Otherwise the individual programmers would have
to do it.

------
tzs
I wonder how Linux distributions fit in? They are typically compilations or
collective works, and so a work for hire agreement to write something for a
specific distribution does not seem to run into the problems the article
discusses.

~~~
M2Ys4U
This is because the terms of the license are sufficient for the kernel/distro
use. It's kinda the point about free software.

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zanny
Sounds like a good opportunity to develop FOSS code rather than limit it to
one company.

I don't get it, though. The business wants the software - they pay to have it
made. And then they also want rights to it. I really like how you have to make
copyright assignment explicit in the contract, because in general it is
ridiculous to write code and then lock it behind a vault door and treat it
like liquid gold when other people could benefit from it.

~~~
csense
> it is ridiculous to write code and then lock it behind a vault door and
> treat it like liquid gold when other people could benefit from it

This isn't "ridiculous". If other people could benefit from the code in
question, it seems like at least some of them might be willing to pay for it.
Why throw open your vault doors to the public for free when you can charge
admission and there are people who want what's inside badly enough to pay?

~~~
coderzach
Because the people who need contract development probably aren't the same
people who would sell software libraries.

Twitter, Facebook, et al, could probably make money off of all the stuff they
open source. But they don't, because it's not their business.

------
M2Ys4U
I'd love to see an analysis of these issues from an international perspective.

Copyright is enough of a quagmire in a single jurisdiction, but there are a
LOT of contracts that span multiple jurisdictions.

