

Ask HN: Selling IP rights to an iPhone app - ipquestions

Hi.  I have been a lurker at Hacker News for 6 months now.  This is the first time I have had to ask this kind of question to this community.  I respect the opinions and quality of responses of people who post here and I hope you guys can guide me in the right direction.  I am posting under a different account than usual because I wish to remain anonymous.<p>A very large company has expressed interest in purchasing my iPhone app which isn't even complete yet.  I just gave a working demo to the managers and directors of the company and they really liked it.<p>Talk of contractual agreements and IP rights immediately followed.  They also expressed interest for further ongoing contractual work to build iPhone apps for them and the various digital arms of their organisation.<p>I am confused about what to do and how to approach this.<p>I have a company which I set up some time ago for my iPhone apps.  My goal was to eventually transition from my full-time web developer role to being a full-time iPhone developer working for myself.<p>If I am able to negotiate a contract with this company to produce several more apps then this goal may be realised, as it could open the door to many other interested parties.<p>However my questions are:<p>1. Should I sell the IP rights to my software?<p>2. What are the disadvantages of selling the IP rights?<p>3. Why would they be after the IP of this software?<p>4. If I do decide to sell the IP rights, how much should I charge for it?  How is this calculated?<p>5. What is a good model for a working arrangement between my company and this other company?<p>6. It was suggested to me that I sell the IP rights, then have a contract stipulating the price of each feature they want built.  Is this a good idea?<p>Thanks Hacker News.<p>I would appreciate any guidance you can give me.  
Don't feel that you have to answer all the questions I have raised.  Any answer is better than no answers.
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dkokelley
_1\. Should I sell the IP rights to my software?_

If you don't do this then what would you do? Are you planning on selling the
app yourself once it's developed? If you were then you need to evaluate both
options and decide for yourself (or with more input from HN after more details
are given) which is the best choice.

 _2\. What are the disadvantages of selling the IP rights?_

You can't make your app again, for yourself or anyone else. You might not even
be able to use certain functions of code you've written for the app in any new
apps you wish to create, depending on how the contract is written. Get a good
lawyer for this.

 _3\. Why would they be after the IP of this software?_

To protect them from competition down the road. They want to make sure that
you don't re-sell your app (or future derivatives of said app) to other
companies while they are working on profiting with this app.

 _4\. If I do decide to sell the IP rights, how much should I charge for it?
How is this calculated?_

This really depends on what the app is, what it's worth to you, what it's
worth to them, and if an agreeable middle can be found. Try to guess how
valuable this app is to them based on what they sell, and how well this app
will add to their bottom line. There may also be lawyers that specialize in IP
pricing.

 _5\. What is a good model for a working arrangement between my company and
this other company?_

I would suggest having your company produce for their company as a client.
Don't let them buy you. Let them buy your product. They may try to reel you in
as a contractor or even employee. Just remember to operate with them as a
representative of your company. This keeps your options open down the road.

 _6\. It was suggested to me that I sell the IP rights, then have a contract
stipulating the price of each feature they want built. Is this a good idea?_

Well, the less ambiguity in a contract the better. I don't have any
information about your app or the company, so I can't judge them. I would
probably negotiate with them, saying: you can buy this unfinished app as is,
with no support, and then hire me as a consultant if you need help finishing
it, or you could buy this app with future developments built in to the
contract price. Make sure that it is cheaper for them to spend more now, than
to just buy the minimum.

Goodluck! I hope that helped!

~~~
ipquestions
Thanks for your informative reply!

1\. I was thinking there may be other avenues. Perhaps licensing? However I
believe this would mean lawyers would be needed to draft up the license and
ultimately would cost much more in time and effort. Also not sure if this is
an attractive option.

2\. I have written some libraries which I use in other apps - mainly the
backend, asynchronous networking code. I would like to use this in other apps
I develop in the future. I suppose this would mean a clause would have to be
introduced into the contract?

3\. Makes sense.

4\. Yes this is the kind of ambiguous answer I didn't want but knew I would
get! :) I find it extremely hard to determine the value of this app to them
and this is the question causing me the most stress. They have told me they
wish to distribute it for free on the App Store and that the benefit for them
is the large value-add for their clients. A director also dropped a figure in
casual conversation with me and mentioned that I may be able to ask for higher
than that. But where did he come up with that figure and how does he know I
can go higher, and how do I know how high I can go?

5\. What is the difference between my company producing for them as a client,
and my company being contracted by them? Or do you mean, do not become a
contractor as an individual, but rather deal with them through my company?

6\. Yes they seemed to like me charging per feature. A contractual agreement
seems to be the way to go.

~~~
gstar
Absolutely - I'd advise licensing if you can so that you own the code, and if
you'd like to retain the libraries you will have to anyway.

You'll absolutely need a lawyer.

Lawyers who deal with IP at this level are usually hard to find - where are
you located, maybe HN can help you find someone?

~~~
ipquestions
Cool. I am located in Sydney.

~~~
gstar
I can't personally help (London) - but you're in the right city for an IP
lawyer in .au anyway.

This is obvious, but do you know anyone who has done anything similar? Bit of
a mentor you could use to coach you through this?

Some other specific advice with lawyers: pester for a price up-front first -
you may have to ask their hourly rate 2 or 3 times, not to mention how many
hours they think they will charge. Don't be embarrassed - keep asking!

~~~
ipquestions
No I don't know of anyone who has been in a similar situation. This is why I
have turned to HN.

It looks like I will have to consult a lawyer. Thanks for your advice. :)

