It probably is better to explicitly stipulate this in the contract, to avoid any misunderstandings or protracted legal battles.
> Finally, although the First Assignment records both that Mr Dichand and Dr Spaziante were to receive one US dollar as consideration for the assignment of the PCT Applications and further records that they both acknowledged receipt of the dollar, it was never paid by HTI. Mr Edenborough argued that as a consequence the contract was void for lack of consideration. I think the consequence is that Mr Dichand and Dr Spaziante may or may not have a claim against HTI for an outstanding debt of 50 cents each.
I'd certainly check with a lawyer though - it's been a long time since I studied it ( English law), but my understanding is that not paying is a breach of contract, and it doesn't necessarily make it void for lack of consideration.
ie, the fact that the contract included consideration makes the contract valid.
however if one side is in breach i think it's fair for the other side to go ahead and breach their responsibility also. in a case like this, anyway.
Depending on how payment in the contract was stipulated, you could also refuse partial payments. If it did go to court, I don't think a judge would find that an offer of $1 counts as a good faith effort on behalf of your client.
We don't negotiate on that clause, even under threat of losing very large contracts. IP ownership is the only real leverage contract developers have to get paid.
Firstly, the term "work for hire" refers to a quite specific situation where the copyright for work you create is not held by you as an individual but by the company employing you. It does not apply to contract work except for a very limited set of circumstances, such as work done for motion pictures in the USA.
Secondly, it is difficult to understand how exactly the client could come to hold any rights over code that they didn't pay for. If you have a contract saying "I'll do X if you pay me $Y" and they don't pay you $Y, you don't have to do X. Even if the contract had some kind of farcical "we still own everything even if we don't pay" language, that's about as meaningful as a clause promising that leprechauns are real. A contract is an agreement in which there must be consideration (ie, something of value) for both sides. What value is there in doing work for free?
If it meets the criteria for a work-for-hire, the contracting party is the creator from the beginning for copyright law purposes (this is significant for reasons other than those under discussion; copyright transfers can reversed by the legal creator during a legally-specified window that occurs a few decades after the transfer, but a work-for-hire can't be recovered this way by the actual creator, since they aren't the legal creator), and owns the copyright unless specific contract terms specify otherwise.
On the other hand, if the work is created by an independent contractor or freelancer, the work may be considered a work for hire only if all of the following conditions are met:
- the work must come within one of the nine limited categories of works listed in the definition above, namely (1) a contribution to a collective work, (2) a part of a motion picture or other audiovisual work, (3) a translation, (4) a supplementary work, (5) a compilation, (6) an instructional text, (7) a test, (8) answer material for a test, (9) an atlas;
- the work must be specially ordered or commissioned;
- there must be a written agreement between the parties specifying that the work is a work made for hire by use of the phrase "work for hire" or "work made for hire."
It doesn't seem that software written by one person meets any of the nine criteria above. (A "collective work" seems to refer to something like a magazine that contains the writings of several authors.)
But you can put anything in a contract, so whose to say.
To be a work for hire, a work must either be by an employee within the scope of their employment, or if by a contractor must meet three conditions:
1. it must be specially ordered or commissioned,
2. the written agreement with the contractor must explicitly say it will be a work for hire, and
3. it must fall into one of nine specific categories of works: (1) a contribution to a collective work, (2) a part of a motion picture or other audiovisual work, (3) a translation, (4) a supplementary work, (5) a compilation, (6) an instructional text, (7) a test, (8) answer material for a test, (9) an atlas.
Generally software fails on that third point. With software the copyright generally belongs to the contractor.
The employer can put something in the contract that requires the contractor to assign the copyright to the employer, but if the employer than breaks or cancels the contract the contractor has no need to do that.
Note: whether or not the person is an employee or contractor is determined by the common law of agency rather than by what the parties call their relationship.
That said, it's smart to explicitly write it in the contract; I believe a typical formulation is that the developer owns the copyright until payment, when it transfers to the client.
Nice timing, in that I just wrote about this exact topic a few days ago at: https://nickjanetakis.com/blog/protecting-your-code-and-ip-w...