Are you a developer looking to retain intellectual property – IP – rights when developing software for a client? This is a common scenario, as many software developers retain and recycle slabs of code for future clients. To achieve this, the IT lawyer needs to understand the needs of the software developer in drafting the appropriate limitations on assignable IP under the Development Agreement. Once the IP rights within the Development Agreement are appropriately divided, the parties can proceed to do business together knowing that each other’s particular IP interests are being protected.

There are a number of important legal considerations regarding IP that should be covered in any Development Agreement. These include:

  • What open-source software will be used in the development of the software (if any);
  • Any intellectual property that exists in the materials given by the client to the developer to use in developing the software;
  • Any IP that the developer wishes to retain, such as precedent code or background IP; and
  • Any IP that will belong to the client as a result of the new software.

IP ownership in Development Agreements

There are a couple of areas of IP that are usually undisputed and fairly straightforward in terms of ownership. These include:

  • Open-source software, which is not owned by the developer or the client (the main concern being who will be responsible for any bugs); and
  • The IP that was originally owned by the client. This will almost always remain the IP of the client, as the developer has no interest in owning these materials.

In general, the structure of the IP provisions provides that all IP generated as a result of the new software belongs to the client, but the IP used to create the software, i.e. precedent code, framework code etc, will remain the property of the developer.

When the code used to create the software is quite complex, it may be necessary for the IT lawyer to insert a clause that stipulates when a party can utilize this code in a potential patent application for an invention.

What is the difference between ‘New IP’ and ‘Developer IP’?

New IP is thought of as any code that specifically relates to the client’s business, which emerges from the development of the software. Developer IP, on the other hand, may refer to background IP (the IP in the code that is recycled and reused by the developer in his or her development of new software for different clients)

It is important to make this distinction, as not all the code within a software will necessarily relate directly to the client’s business, i.e. some (or even the large majority) may simply be incidental to the creation of the software. The idea is that the client owns all that they need to in terms of the Development Agreement and in terms and protecting their own interests. At the same time, the developer is able to continue using the code that he or she developed with new client without infringing on the IP rights of previous clients.

Conclusion

There should always be a clear separation of IP rights between developer and client in any Development Agreement. It is, therefore, extremely important that your IT lawyer define what IP will remain with the developer and what IP will become that of the client. To clarify any questions you may have regarding the drafting of a Development Agreement, contact LegalVision on 1300 544 755 and get in touch with one of our IT lawyers today.

 

Lachlan McKnight

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