Software distribution contract

[bambisimus]

Hello,
I'm sorry for a longer letter, but my situation is pretty messed up.

I'm a programmer ( the Programmer ) of a software ( the Software ). Several years ago, I signed a contract ( the Contract ) with a company ( the Company ) based in California for distribution rights for the Software. The Company got the exclusive right to sell the Software worldwide, and I got a symbolic lump sum, and the right to R% royalties from each transaction regarding the Software ( including selling ).

A year later, but before the Software was released, the Company was acquired by another company ( the Other Company ).

The Software was released under the Other Company's brand name, and I was paid $S dollars for N released copies of the Software.

A couple of years later, the Company bought itself back from the Other Company. The Other Company remained the right to sell all remaining copies of the Software. And shortly after, the Other Company went in bankruptcy.

I continued to develop the Software ( the Next Version ), but I wrote it from the scratch as if it was a completely new application.

Finally, the Next Version of the Software was released, this time by the Company.

After three months, when I was supposed to be paid ( quarterly ), I asked the Company for my royalties. I was told that I will be paid in a short while, and that I have to wait. The Contract says that it is terminated if I don't get my share 60 days after I deliver a notice of delinquency to the Company.

Nine months after the Next Version was released, and I still haven't got paid, I finally asked the Company to terminate the Contract. I was told that they ( the Company ) just found out ( few days ago ) that the accountants at the Other Company made a mistake by paying me all $S, but they didn't really sell all N copies of the Software, but much less, so that I was overpaid by a larger sum of money. Therefore, the Company claims that the Contract is still not terminated and that I owe them the amount of money that I was overpaid for.

Questions:
1. Since the Other Company reserved the rights to sell all remaining copies of the first version of the Software, what rights does the Company have to hold me responsible for the overpayment, and not paying me for the Next Version that they are selling ?

2. Can I be held responsible here for an error that I didn't do ? That is, it was not me who authorised my payment in the first place.

3. Wasn't the contract terminated automatically 5 months after the Next Version was released and I still wasn't paid ?

4. If I signed the Contract with the Company, was it legal for the Other Company to take over the Contract after acquisition of the Company, and sell the Software ?

Help, please! Thanks.

 

[counsel]

This is a complicated matter which requires that you consult an attorney. However, some general answers follow:

"1. Since the Other Company reserved the rights to sell all remaining copies of the first version of the Software, what rights does the Company have to hold me responsible for the overpayment, and not paying me for the Next Version that they are selling ?"

It depends on what the documents say related to the purchase between Company and Other Company. If Company assumed the rights of Other Company, then Company may have contractual rights in relation to you.

Next Version may be a separate issue. Did the original Contract cover new versions? New versions from scratch? An attorney would need to review the aforementioned contracts.

Additionally, it is very possible that Company has to pay you for Next Version. But if they assumed Other Company's rights regarding the Software, then they may be able to offset the amount owed for the Next Version by the amount of overpayment for the Software.

"2. Can I be held responsible here for an error that I didn't do ? That is, it was not me who authorised my payment in the first place."

That depends. Again, overpayments may be used as a setoff (see answer to question #1).

"3. Wasn't the contract terminated automatically 5 months after the Next Version was released and I still wasn't paid ?"

Yes, assuming that Next Version was covered by the same Contract. If not, the new contract for the Next Version (whether written or oral) needs to be analyzed.

"4. If I signed the Contract with the Company, was it legal for the Other Company to take over the Contract after acquisition of the Company, and sell the Software ?"

Yes, if the Other Company assigned rights back to Company before it filed for bankruptcy protection OR if Company purchased those assets during bankruptcy.

Otherwise, maybe not.

 

[bambisimus]

Thank you for your quick reply.


>Did the original Contract cover new versions?

Yes, the Contract covers the Software and all of it's present and future versions.


>"3. Wasn't the contract terminated automatically 5 months after the Next
>Version was released and I still wasn't paid ?"
>Yes, assuming that Next Version was covered by the same Contract. If not,
>the new contract for the Next Version (whether written or oral) needs to be
>analyzed.

Actually, this is the most important question for me. Yes, the Contract covers both versions of the Software. So, 5 months after the Next Version was released ( 1st quarter + 60 days ), I still wasn't paid, and at that time the Company didn't have the information and the argument that I was overpaid for the 1st version of the Software. So at this point, the Contract was terminated, right ?

4 months after that ( 9 months after the Next Version was released ), the Company said that they have recently learned that I was overpaid for the 1st version, and therefore they don't owe me my royalties for the Next Version, and finally that the Contract is still valid. Is there any chance that they have a right to make this claim ?

What if they had the information of overpayment 5 months after the Next Version was released, but just didn't provide it to me for some reason ? In other words, if they lied to me.

This is the big issue for me, because if the Contract is still valid, and according to it, the Company still has the right to continue to develop and sell my software. And of course, not paying me for the work that I have done.