Let’s say you are a software developer and a new client has just handed you a copy of their form agreement and in it you read the following:
Innovations resulting from Developer’s work for Client under this Agreement are the exclusive property of Client. “Innovations” includes any and all inventions, improvements, research, discoveries, copyrightable work, know-how, source code, formula, process and technical developments that Developer solely or jointly with others conceives or reduces to practice or creates during the term of this Agreement in the course of performing the Services. Developer hereby assigns to Client the entire right, title and interest to all Innovations and any intellectual property rights therein.
This language worries you and it should. What about your know-how and techniques that are contained in the Code you are writing and are to deliver under the agreement? Don’t you need to retain ownership of your own tools and methods? Also, how would you show when you came up with an idea — before or during the course of the engagement? If you sign this agreement, how do you legally continue in business writing code for other clients?
All good questions, and, yes, this contract needs some work. First, the definition of “Innovations” needs to have a carve-out for the “Developer’s Tools”. These tools will include pre-existing materials and knowledge of the Developer, as well as certain non-Client specific materials and knowledge developed during the course of the engagement. Secondly, the agreement will acknowledge that the Developer’s Tools belong to the Developer. Thirdly, the agreement should grant the Client a license to use the Developer’s Tools embedded in the Code, but only in connection with the use of the Code that the Client is hiring you to write.
So now you tell the Client that you reviewed the draft agreement and you think it needs another paragraph. And, to your surprise, he goes ballistic. “This is our form agreement. Everybody signs it. It was drafted by our attorneys who told us not to mess with it. Changing the agreement would be expensive in attorney time and require internal review and sign-off by a number of people. Don’t you want the job? Why are you causing trouble before we even get started?”
Relax, this is called negotiating. If the Client really thought he could not change the agreement he would say: “take it or leave it.” So, instead, you respond. “It’s only a paragraph. All it says is that I get to keep my tools. Further, you have a fully-paid license to use my tools wherever and whenever you use the Code. There is nothing to worry about. Your lawyers wrote a great agreement for you, but they did not write it to be fair. Call them and ask them if you don’t believe me. But only a lousy developer would sign that agreement. And lousy developers do lousy work. Is that what you want, a bad product?”
John A. Myer is a corporate and securities lawyer with Myer Law PLLC in Seattle, Washington. This posting does not constitute legal advice.
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