Rights of a software developer as an independent contractor

[liveforever]

What is the name of your state (only U.S. law)? TN

I've worked as an independent contractor for a company for several years now and during the course of my work with them I've developed a web application that's important to their business. I didn't realize until very recently that the copyright to this software belongs to me as an independent contractor despite the fact that the company has paid me to produce it. The only contract I have with them is a non-disclosure agreement that simply protects them from me sharing confidential details of their business that I have gained while working for them.

The web application is strictly customized for this one company. I don't think they've ever really considered copyright or ownership with regard to this web app. They probably assume, like I have, that the work they pay me for belongs to them. So my question is, how do I broach the subject with them without alarming them that I may try to take unfair advantage of the situation? And how do negotiate a fair license agreement or purchase price?

Do I in fact own this copyright? Is it really as simple as that? And what value does it have to me? Are there any other legal issues I should be aware of? I'm happy to continue working with this client as usual, but this copyright issue needs to be acknowledged and of course I want to be fairly compensated.

Thanks in advance!!!!

 

[quincy]

What is the name of your state (only U.S. law)? TN

I've worked as an independent contractor for a company for several years now and during the course of my work with them I've developed a web application that's important to their business. I didn't realize until very recently that the copyright to this software belongs to me as an independent contractor despite the fact that the company has paid me to produce it. The only contract I have with them is a non-disclosure agreement that simply protects them from me sharing confidential details of their business that I have gained while working for them.

The web application is strictly customized for this one company. I don't think they've ever really considered copyright or ownership with regard to this web app. They probably assume, like I have, that the work they pay me for belongs to them. So my question is, how do I broach the subject with them without alarming them that I may try to take unfair advantage of the situation? And how do negotiate a fair license agreement or purchase price?

Do I in fact own this copyright? Is it really as simple as that? And what value does it have to me? Are there any other legal issues I should be aware of? I'm happy to continue working with this client as usual, but this copyright issue needs to be acknowledged and of course I want to be fairly compensated.

Thanks in advance!!!!

Do you own the copyright in the web application? It is not easy to answer that question without a personal review of all facts of your employment relationship.

A court looks at more than just whether someone is an independent contractor and whether there is a work-made-for-hire contract signed which transfers rights in the created work to the employer. In fact, there are at least 11 different factors that are considered. I can go over these if you think this might help you.

I suggest that, before broaching the subject of copyright ownership of the app with the company, you have all of the facts of your employment (including your method of payment and its tax treatment) reviewed by an IP attorney in your area. This personal review is necessary to see what your legal rights are in the web application you created.

Once you know whether you own the copyrights in the web application or not, you can then decide what your next best course of action should be. For example, if it seems likely that you hold the copyrights in the application, the attorney can help you draft a non-exclusive license (where you retain all rights) or an exclusive license (where some or all rights are transferred to the company), and can help you determine fair compensation for the transfer of rights. How valuable you feel you are to the company can help you decide how best to approach the company.

Good luck.

 

[liveforever]

Do you own the copyright in the web application? It is not easy to answer that question without a personal review of all facts of your employment relationship.

A court looks at more than just whether someone is an independent contractor and whether there is a work-made-for-hire contract signed which transfers rights in the created work to the employer. In fact, there are at least 11 different factors that are considered. I can go over these if you think this might help you.

I suggest that, before broaching the subject of copyright ownership of the app with the company, you have all of the facts of your employment (including your method of payment and its tax treatment) reviewed by an IP attorney in your area. This personal review is necessary to see what your legal rights are in the web application you created.

Once you know whether you own the copyrights in the web application or not, you can then decide what your next best course of action should be. For example, if it seems likely that you hold the copyrights in the application, the attorney can help you draft a non-exclusive license (where you retain all rights) or an exclusive license (where some or all rights are transferred to the company), and can help you determine fair compensation for the transfer of rights. How valuable you feel you are to the company can help you decide how best to approach the company.

Good luck.

Thanks for your response!
I'm making arrangements to see an IP attorney soon so I hope to be able to settle the matter shortly after.

Everything I've read (and I realize my limited research is no substitute for real legal consultation) pretty much just says that as long as you aren't a direct employee of the company when the work of authorship is produced, and no agreement is made beforehand regarding rights or ownership, then the author retains the copyright.

My relationship with this company has only ever been as a vendor for my services which I track and bill on an hourly basis. The software that I've written is located on a server which I lease. Basically they described what they wanted initially, I created a version of that idea which has been continually updated into a much more complex application today than it was when it began.

As far as I know taxes aren't handled any differently than they would be for any other services like this. No special tax situation. What am I missing? I'm sincerely trying to learn more about copyright as it applies to freelance software development.

How does it change my relationship with this client if I own the copyright or if they do? When it comes right down to it, the software was developed for them and is tailored to their business.

Thanks so much for your feedback!

 

[quincy]

Thanks for your response!
I'm making arrangements to see an IP attorney soon so I hope to be able to settle the matter shortly after.

Everything I've read (and I realize my limited research is no substitute for real legal consultation) pretty much just says that as long as you aren't a direct employee of the company when the work of authorship is produced, and no agreement is made beforehand regarding rights or ownership, then the author retains the copyright.

I don't doubt that this is what you've read , but it is not quite accurate.

A court can determine that an employment relationship exists even when the creator of a work is not technically employed by the employer. This can make the copyright in a created work belong to the employer. Again we get into the different factors that will be looked at by a court should a dispute arise over copyright ownership.

Being a regular (direct) employee of a company where the created works are within the scope of the employee's employment, or creating works for an employer under a work for hire contract, only makes determining copyright ownership easier.

My relationship with this company has only ever been as a vendor for my services which I track and bill on an hourly basis. The software that I've written is located on a server which I lease. Basically they described what they wanted initially, I created a version of that idea which has been continually updated into a much more complex application today than it was when it began.

So you have an ongoing work relationship with this company, you have worked for the company for at least a few updatings of the application, and it is the company that determines when this updating needs to be done. In addition, you signed a nondisclosure agreement. Although the nondisclosure would have to be read, all of these are factors that can lean in favor of the employer owning the rights to the work. But it does not mean the company does hold the rights to the work - it just doesn't rule out the possibility that they do.

On the other hand, the fact that you used your own equipment to create the web application will lean toward the copyrights in the work belonging to you.

As far as I know taxes aren't handled any differently than they would be for any other services like this. No special tax situation. What am I missing? I'm sincerely trying to learn more about copyright as it applies to freelance software development.

Are you offered any benefits? Do you receive a W-2? You do not have to answer these questions here, but you should be prepared to show your attorney your pay stubs/receipts and your tax returns.

How does it change my relationship with this client if I own the copyright or if they do? When it comes right down to it, the software was developed for them and is tailored to their business.

I don't know if your relationship with the company will change at all. It might not. As you say, the software was developed for the company and tailored for use by the company and you would probably not be able to exercise any rights in the application even if it is determined you own the rights.

I cannot say from what you have posted so far if you hold the copyrights or not. I suspect that you do, but I do not know that you do.

If it is determined after the personal review by the IP attorney in your area that it is likely you hold the rights in the application, it will be how you handle this information and address the company that could change the relationship.

Good luck, liveforever.

 

[liveforever]

Thanks again Quincy, i really appreciate your input. It's been very informative.

I don't receive benefits from the company and the wages are reported on a 1099.

I guess I'm really trying to decide what i stand to gain from asserting copyright ownership. If I've got less than a very good probability of being the copyright owner, it may not be worth it to complicate an otherwise healthy working relationship.

There is another factor though that puts quit a spin on things. The company in question has lost some managers in the past couple of years. One went to work for a large competitor, and a couple of others started a new company that is also a direct competitor of this company. Both of these competitors have approached me about creating a version of this software for them. I declined in both cases due to the obvious conflict of interest.

The software that i created could be stripped of company specific data and rebranded for use by a competitor. However, I'm satisfied with my current working relationship, i have a strong sense of loyalty, and no intention of rocking this boat. But if my relationship with this company ever fell apart i have other places to turn.

I want to do my due diligence in making sure that I protect my own best interest. Hence my planned meeting with an ip attorney.

Any advice?

 

[quincy]

Thanks again Quincy, i really appreciate your input. It's been very informative.

I don't receive benefits from the company and the wages are reported on a 1099.

I guess I'm really trying to decide what i stand to gain from asserting copyright ownership. If I've got less than a very good probability of being the copyright owner, it may not be worth it to complicate an otherwise healthy working relationship.

There is another factor though that puts quit a spin on things. The company in question has lost some managers in the past couple of years. One went to work for a large competitor, and a couple of others started a new company that is also a direct competitor of this company. Both of these competitors have approached me about creating a version of this software for them. I declined in both cases due to the obvious conflict of interest.

The software that i created could be stripped of company specific data and rebranded for use by a competitor. However, I'm satisfied with my current working relationship, i have a strong sense of loyalty, and no intention of rocking this boat. But if my relationship with this company ever fell apart i have other places to turn.

I want to do my due diligence in making sure that I protect my own best interest. Hence my planned meeting with an ip attorney.

Any advice?

Any advice? Yup. Meet with the IP attorney.

What can happen if the company owns the rights in the application is that they can potentially copy the application and create versions for others based on the original. They would own these rights.

What can happen if you own the rights in the application is fuzzier. You have a nondisclosure agreement, for one thing, which complicates things. You could not duplicate the web application as is, although if you owned the copyrights in the web application you could potentially still create versions of it for others.

A review of your entire working relationship with the company and the terms under which the application was created will need to be personally reviewed to determine better who holds the rights.

Good luck with all of this.

 

[liveforever]

Much appreciated!

 

[quincy]

I am afraid what I said did not clarify matters much for you, liveforever, but thank you for appreciating what I posted anyway.