Reading time: 4 minutes

If you are a software developer, you are probably worried about protecting your intellectual property (IP) rights when developing software for your clients. You may often find yourself retaining and recycling slabs of code for your clients. This code may have IP rights attached to it that you should be aware of in order to make the most out of its commercial value.

When approaching this problem, consider your needs when drafting appropriate limitations on assignable IP under the development agreement. Once you have clearly defined and divided your IP rights within the development agreement, you will be able to proceed with peace of mind knowing that your intellectual property rights are protected.

Types of IP Rights in Software Development

Patent law can protect software in some circumstances. Patents offer the strongest protection, for software so you should consider whether your software is patentable. If it is, this is just one of the ways you can protect your IP. In addition, physical devices or hardware can sometimes be patented. 

Another way you can protect your software is copyright law. Software is recognised as a literary work. Unlike patents or trade marks, you do not need to register copyright in Australia. This is not the same in other countries like the US, however, so if you intend on expanding overseas you should look at registering your copyright in each applicable country.

For registered IP like patents, defining and dividing your rights can be simplified. Copyright, on the other hand, is harder to define and consequently harder to protect. You should try to be vigilant and as clear as possible when drafting your Development Agreement so that none of your IP rights slip through unprotected.  

IP Ownership in Development Agreements

If you are developing software that a client will use, generally you will own the IP attached to your software. Your client will own any and all IP generated as a result of your software.

For example, someone using Adobe to produce digital art does not need to worry about Adobe claiming ownership of their work.

You can also transfer or licence out IP ownership, similar to physical property. You can:

  • assign IP in full or partially to another business or individual; and
  • licence IP under specific terms and conditions of use.

As a software developer, clearly defining whether the IP protection in the work is assigned or licenced to the client will help you avoid disputes over ownership later on.

Complications

Not all IP ownership is this straightforward. Sometimes the components used to create software are more complex and the line between ownership can be blurred. If the code you use to create the software is complex, you should insert a clause in your development agreement that stipulates when the client can use this code.

For example, this could be in a potential patent application for an invention.

What is the Difference Between ‘New IP’ and ‘Developer IP’?

New IP refers to any code that specifically relates to your client’s business emerging from the development of the software. Developer IP instead refers to background IP or the code that you have recycled and reused through the development of new software for your clients.

Your client owns all they need to in terms of the development agreement and in terms of protecting their own interests. Similarly, you are able to continue using the code that you have developed with your new client without infringing on the IP rights of your previous clients.

Key Takeaways

It is always better to know your IP rights before you enter an agreement with anyone else intending to use your product or services. The clearer these rights are, the more effective and painless your development agreement will be. IP rights can come in different forms. Some are registerable and some not. It is important to know: 

  • exactly what IP right you are trying to protect; and 
  • that the development agreement defines them sufficiently. 

You should make sure that there is a clear separation between your IP rights and your clients’ in any development agreement. If you have any questions about software IP rights, contact LegalVision’s IT lawyers on 1300 544 755 or fill out the form on this page.

Webinars

Raising Capital: Getting Investment Ready

Tuesday 6 April | 12:00 - 12:45pm

Online
Are you a founder or business owner looking to raise capital? Attend this webinar to learn the strategies to prepare your business for investment.
Register Now

The COVID-19 Vaccine Rollout: Considerations for Employers

Thursday 22 April | 11:00 - 11:45am

Online
Are you a business owner or employer? Attend this webinar to learn about what you need to know about the COVID-19 vaccine rollout.
Register Now

About LegalVision: LegalVision is a tech-driven, full-service commercial law firm that uses technology to deliver a faster, better quality and more cost-effective client experience.

The majority of our clients are LVConnect members. By becoming a member, you can stay ahead of legal issues while staying on top of costs. From just $119 per week, get all your contracts sorted, trade marks registered and questions answered by experienced business lawyers.

Learn more about LVConnect

Need Legal Help? Get a Free Fixed-Fee Quote

If you would like to receive a free fixed-fee quote or get in touch with our team, fill out the form below.

  • 2020 Excellence in Technology & Innovation – Finalist – Australasian Law Awards 2020 Excellence in Technology & Innovation Finalist – Australasian Law Awards
  • 2020 Employer of Choice – Winner – Australasian Lawyer 2020 Employer of Choice Winner – Australasian Lawyer
  • 2020 Fastest Growing Law Firm - Financial Times APAC 500 2020 Fastest Growing Law Firm - Financial Times APAC 500
  • 2020 AFR Fast 100 List - Australian Financial Review 2020 AFR Fast 100 List - Australian Financial Review
  • 2020 Law Firm of the Year Finalist - Australasian Law Awards 2020 Law Firm of the Year Finalist - Australasian Law Awards
  • Most Innovative Law Firm - 2019 Australasian Lawyer 2019 Most Innovative Firm - Australasian Lawyer