Dai Davis leads the software copyright masterclass
When a company employs an external contractor to develop
software for it, the copyright owner is the contractor unless you
agree otherwise at the start of a contract.
So what can you do if you don't own the copyright, and the
contractor starts licensing other companies to use the software,
perhaps at a fraction of the development price you paid? First of
all, the contractor is within their rights. The issue you have to
deal with is whether to persuade the contractor to give up those
rights. My experience is that contractors can always be persuaded -
for a price.
Certainly, the earlier you raise the issue, the easier and
cheaper it will be to own the software. But is it sensible for your
company to own the software? Often, it is cheaper to focus not on
the ownership of the software but on its exploitation. You could,
for example, get the contractor to agree to a lock-out period
during which no third parties can be licensed, or agree a royalty
payment to you for each licence granted. Most contractors will be
amenable to these suggestions.
Now for the other big problem: a contractor charging you extra
for using the software in different circumstances - on a bigger
computer, say. You can protect yourself here by ensuring the
original licence sets out such charges. You could also reserve the
right to transfer the licence to an outsourcer, free of charge.
Again, the earlier, you ask for licence extensions, the easier it
will be to get them.
Dai Davies is a solicitor and consultant at law firm Nabarro
Nathanson