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Hack4Detroit's indemnification clause (backupfreak.com)
139 points by nanch on June 13, 2015 | hide | past | web | favorite | 43 comments

I've been in these situations a few times. I have a few different approaches depending on the person and company asking:

(1) Say, "My employer prohibits me from signing any legal documents related to intellectual creations. You'll have to run it past their legal team. It'll take 1-2 weeks." That's mostly true(!) depending on the provisions of your employment agreement, and it's usually enough to get them to back down.

(2) Go to the signature page and write in legible penmanship: "I do not agree to these terms" (and that is all). Often the administering party has no leeway and just needs to be able to say, "I saw them write something."

If all else fails: You have to be willing to walk away. And if you do decide to sign: Retain a copy!

Anyway, that's pretty shady and should not be tolerated.

Transfer of IP is not reasonable, as you should still own what you have created.

Granting a perpetual and royalty-free license is very common as can be seen in the Apache Individual Contributor License Agreement: https://www.apache.org/licenses/icla.txt

The Apache ICLA states that you still own the copyright of the software and can do what you want with it, they only license it from you and can then use it for the purposes stated in the agreement. It does require you to mention all the patents that you might infringe on, but only if you are aware of them. Otherwise you're pretty much in the clear.

I wouldn't have signed the document mentioned in the article, I think you made the right move.

Ah, that's very interesting, and much simpler! That seems better for both parties. I'll update the post to reflect this.

Thanks for your affirmation, I was feeling like a dummy being the only one that decided not to sign.

You had to pay $20 and then you find the tranfer of IP to the city reasonable? I understand these things aren't cheap to run, but there's no shortage of sponsors looking to get involved for various reasons.

Paying to make software for someone else seems entirely unreasonable and in bad taste in the organizers part.

The contract was bad. It was very bad that they never revealed it until you got there. It was really bad that a Party tried to persuade you into signing the document knowing you don't understand it (and they probably don't either).

Under these circumstances, it would be appropriate to submit an invoice for a refund of the registration fee (which I assume was pre-paid), reimbursement for your travel costs, and time paid for the amount wasted on reading their contract.

I don't think bickering over registration fee would be a reasonable thing to do. It just promotes the overall litigious atmosphere. The next thing we will see in such contracts is something like 'under no circumstances are participant's costs associated with event refundable, including but not limited to registration fees, travel costs, bla bla bla.' Or maybe it is already there. Much better make the whole thing public like the OP did.

I disagree. The way I see it, they stole $20 by crafting a completely one-sided contract designed to prevent reasonable people from participating in the event, and then foisted it upon participants at the last minute.

Surely that was bad behavior on their part. The question is how to prevent this type of behavior in the future? I think the OP achieved more to this end by making bad behavior public than by mitigating his personal damage. Maybe it is false dichotomy but maybe not (the reason for these contracts is organizing entity trying to cover its ass).

I don't think you understand why this is unacceptable, as evidenced by what you propose "they" will "do next".

> The next thing we will see in such contracts is something like 'under no circumstances are participant's costs associated with event refundable, including but not limited to registration fees, travel costs, bla bla bla.'

This misses the point entirely.

Presenting a contract after the purchase is not acceptable, period. You do not have to agree to anything after the point of sale, and the vendor cannot make the use of your purchase conditional on any such agreement. If they expect any contract to be valid in court it must be presented before sale, full stop.

For more information please see First Sale Doctrine.

> just promotes the overall litigious atmosphere

Fair enough. But this contract and the whole registration procedure itself promotes litigious atmosphere in the first place, so my opinion is it would be not only "reasonable" (it would probably be easier to forgive that $20 and travel costs) — it would be the right thing to do.

For that to work, the contract would have to be agreed upon prior to participant's registration and travel to the event.

Something like this happened in St. Louis. The community protested, and they ended up canceling the hackathon.

Details here: https://www.philipithomas.com/stl-hackathon-canceled-after-s...

... as it should be...

Wow, this is out of control... so I make an app at the hackathon... the city of Detroit gets full rights then someone uses the app and dies or gets hurt and they sue the original programmer meanwhile, the city owns it and uses it 100%.

This is out of control!

"You are probably thinking about it too hard." That CIO who said that should be fired.

IANAL.. would this contract be enforceable? Because it seems the event org gets:

$20, exclusive IP ownership, indemnification, etc

and the participant gets:

to do work (and one person gets $5k, and two people get gift cards)

Where's the quid pro quo? Seems like there's no consideration for one side.

Edit: the contract says that providing a place to work (which will be done at their direction, supervision, and for their sole benefit) and the 3 prizes are the only things they'll provide. Is that enough for this to be considered a fair/enforceable contract?

That was the first thing I thought. Turning over IP and offering indemnification... for what exactly?

That indemnification clause is utterly ridiculous in this context. Our company works with a lot of governments, and indemnification clauses of this type are extremely common any time there is software involved. What's crazy about this circumstance is that the participants aren't contractors writing code for the city... Or are they? Based on the indemnification requirement, it seems that's how the city views it.

It appears un-enforcable to me (IANAL, but I do deal with this shit a lot). However, just because a contract can't be enforced doesn't mean it won't cause you trouble. I'd walk before I signed a contract like this at a hackathon. No "chance" at a prize is worth this kind of exposure.

They're also likely to have to refund the entry fee if you refuse to sign the contract: even if they did mention having a secondary contract in the sales contract, they didn't make a good-faith effort to provide reasonable terms (for the reasons mentioned above about legality and compensation), so they failed to uphold any part of their end of the contract and should refund the money; if they didn't mention the second contract in the one you made to pay them, then they absolute owe you a refund for refusing to do the work they promised in exchange for your money unless you agree to a unilateral modification of the terms -- they're probably liable for the losses you incurred by assuming they'd follow their end of the agreement, since a unilateral insistence on changing the terms of the agreement once execution has begun is not an attempt to uphold your side of it; finally, in the case that they want to claim the sale was pending your agreement to those terms, their continuing to hold pending funds now that the sale fell through is simple theft.

No matter how the city of Detroit wants to spin their terms contract, they owe the people who decline to sign it a refund on their entry fee.

The small size of the consideration is probably not a convincing argument in court. https://en.wikipedia.org/wiki/Peppercorn_%28legal%29 Fortunately there are other problems with this situation.

My lawyer friend echoes the same concern. A contract is two-way.

This is outrageous. I wouldn't be happy to sign anything, no matter how harmless after I agreed to participate (which means I already arrived to the place, not mentioning the fee), but OK, it's just me. But 8 page contract with liabilities? "You are probably thinking about it too hard."? At this point I would basically explode, so I can only applaud your calmness and restraint.

"...all IP is transferred to ownership of the City of Detroit (which I think is reasonable) and the City is granted a perpetual, royalty-free license to “use” any derivative software (which I think is unreasonable)"

I'm pretty sure the author reversed "reasonable" and "unreasonable" from what he intended.

Also, IANAL, but I'm also pretty sure this contract would not be enforceable because of the way it was presented. There would be a very strong argument that the participants were coerced into signing.

Actually, how I wrote it was how I intended it, but originally I didn't have an issue with the IP transfer, I was more concerned with liability.

As you and others have mentioned, it does make more sense to maintain IP ownership and grant a license to the City of Detroit. That'd be a hackathon I want to be in. :)

> I didn't have an issue with the IP transfer

That surprises me. IP transfer means you would no longer be able to use your own code without their permission. That would be a show-stopper for me.

> That surprises me. IP transfer means…

I guess this really highlights the problem with the whole bureaucracy in general, and that contract in particular. You know what "IP transfer" means. OP doesn't. And, I'm convinced, he doesn't have to. He is not a lawyer, he knows other things, that lawyers do no know. Cheers to you for knowing both lisp and law, but I really cannot judge OP for the fact he knows only lisp. I believe it's not him, who is guilty, but the system, where every harmless lisper can be forced into signing contract he doesn't understand because of the fact he wanted to do something good for the society (and paid 20 bucks for that, by the way).

> and paid 20 bucks for that, by the way

That's another reason this contract would probably be invalid: no consideration.


Yes, I suspect so, and it is pointed out in the comments several times already anyway. But this is another thing that some harmless lisper might not know, so he will discover it at some point that is much closer to the court, after spending quite a generous amount of money on the lawyer to defend him. And, considering how fucked up legal system is, it is not completely unlikely that he will actually need this defend, because Detroit's lawyers will be trying to prove that there actually was something in that contract for the OP, and it is "consideration enough".

And even if nothing bad will actually happen — which might be true in this case, but not in general — you can say that moral damage is already received. And nobody will ever pay him for that, because, guess what, he is a harmless lisper and not somebody, who tries to sue everybody he sees for the moral damage.

"Remove the perpetual, royalty-free license for derivative work from the contract."

I think you're right that author has his thinking switched here. I also observe that he didn't make a mistake in translating his thoughts to a blog post. But it's clear to me that the whole contract is a problem.

Granted I've only participated in 3 hackathons but the times I went I just walked in and found a cool thing to work on. I didn't have to sign anything or pay a cent.

Is this sort of legalese normal in the US for hackathons?

At university hackathons I have been to there's usually a short waiver covering liability and sometimes ownership. Nothing very extensive compared to many legal contracts these days, but I would say that given the rather litigious culture in the US these sorts of papers are justified. The one mentioned in this article definitely sounds more troubling, however.

Typically a release form is about it. This is someone trying to take advantage of innovators.

This sort of legalese and fear of any potential liability for anything is normal for everything in the US.

It's crazy.

I once was working freelance deals. I talked to a guy and the project he had sounded reasonable. As it, he wasn't claiming we were going to build a Facebook competitor. He had a good business opportunity with a solid opportunity for revenue. A 30 minute Skype and I agreed to start work at a certain rate.

He sent me a contract that stated I had to provide unlimited warranty on any software I wrote for 3 years after the date of the last payment. I kindly told him I was no longer interested. He told that was his 'standard contract' and had 'never looked at it anyways'. Six months later I was still getting emails from him about once a week asking me when I'd be able to begin work.

You had to pay a fee? To create things for free?

Hackathons are not free to run at any significant scale. (especially when prizes are involved)

Usually, the costs are covered by sponsors, and I can't find any indication that there were sponsors for this event.

EDIT: Comment is incorrect; there were sponsors, see child comment.

The event was sponsored. Local folks and some national brands like Comcast and 5-hour energy. Winner gets a $5k prize.

Here is the event detail. http://www.automationalley.com/Events/Calendar/Event-Detail....

And the organizers have deleted the event details here (10pm EST)

Sure but hiring developers is also not free, the price is just more evenly distributed.

Onerous contracts have long been common in the startup industry. My impression is that one of the things that has made YC successful is striving for a reputation for providing better terms for founders, but out in the wild places where reputation doesn't count and funding is turned from competitive to a competition where investment is the prize, it's amateur hour. $5000 isn't going to provide much runway for a startup, and funding just one team isn't going to make for a valuable portfolio. The contract is just a reflection of a failure to distinguish between barbershops and startups.

Of course you shouldn't sign. Walking out was the right thing to do.

I've always been very, very careful about reading contracts, and it's worked out quite well for me. There are online services I will not sign up for because the terms overreach.

Detroit CIO Beth Niblock has publicly acknowledged the issue with plans to do it differently in the future.


I participated in Automation Alley's #HackDPL last year (which was free) and in the last hour of the event, they sent out an email saying all submissions required a copy of the app's source code. Our team submitted ours since I was the only member of my team opposed to it, but it was a scummy move. Since this hackathon had a cover charge, I decided not to go. This doesn't surprise me and I hope Automation Alley gets it together.

And that is why the city of Detroit is going down the drain.

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