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Beware bespoke code copyright issue

Christian Annesley

Concern is spreading among IT managers that software firms are driving an ever-harder bargain over the ownership of any intellectual property created when they work with a user to tailor products for an industry-specific business process.

Lorna Brazell, a partner in the intellectual property department at law firm Bird & Bird, said there had been a rise in litigation around intellectual property, and user organisations were at risk of being caught out because, under English copyright law, the company that develops the code owns the copyright.

She said businesses should be careful to specify which intellectual property they want to retain when they sign development deals with suppliers. Failure to do so could result in the supplier gaining experience they could not find elsewhere, while users may find they are tied so closely to the software that they can get locked into a costly maintenance deal.

"In such an arrangement, customers may get the initial licence for free but then have to pay a hefty maintenance charge," Brazell warned.

Alexa Bona, research vice-president at analyst firm Gartner, said companies should try to get exclusive rights for 18 months and have a clause in the contract to preclude the supplier from selling to a direct competitor.

She also urged users to consider patenting their business processes to prevent enterprise software companies from incorporating them into their products.


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