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Why would excluding his deadbeat client from using the code put him in an unflattering light?

PS: I once got stiffed for $6500, so I put up a "client hasn't paid" notice on the (demo) website for my code. I later learned that the guy I was accusing of non-payment was very likely a stolen identity. Some guy from Eastern Europe was using many fake identities and scamming lots of developers. So I ended up:

1) out $6500

2) feeling dumb for getting cheated in the first place

3) feeling bad for having pseudo-publicly excoriated a likely innocent

I wish in retrospect that I had taken the higher ground, open-sourced the code and just moved on.

Because it reeks a bit of airing dirty laundry, similar to the guy who added a "my client John Smith hasn't paid his bill, so I'm uploading this message to his website which I still control, in order to publicly shame him" which we saw a few months back.

Don't get me wrong- I think he's totally within his rights to (publicly) exclude him from the license. And as a developer who's been stiffed before, I sympathize. I think the restraint he's shown so far in that README is noble, and I hope he gets some good PR (and thus new clients) out of this.

Right now he can claim the moral high ground, even if he is kind of being a jerk about it: "I didn't get paid, but I gave them access to their work anyway! (I just gave it to some other people, too.)"

If you added the proposed restriction, you demonstrate that you will take revenge on deadbeat clients by trying to give their competitors a leg up.

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