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I want to ask a question from an employer point of view. I know that you are not really lawyers and stuff but I think you might help.

I'm into negotiations with a freelancer (from India) to create a specific standalone application to do some file convertions. This is a program that I want to brand and resell.

I got a good offer from them because they have already created such software in the past. But I'm having two issues:

a) The program was previously made by them for another client of theirs, under unclear terms (or I haven't explicitly asked yet). From what they told me, they created the program for him for his private use. It seems that they still have copyright/ownership of the source code.

b) They still want to keep the copyright/ownership of the code. I don't really mind, but in reality, I want to know how this can or can't affect me in the future. For example, what if the sales go well and suddenly they decide they want a piece of profit because the code is theirs? Something like that.

Now another question: Is there a difference between the source code of a program and the compiled version of it? For example, I get the final product (as in an executable/installer) that I own and have the rights to, and they keep the rights for the underlying technology. Is this possible?

And lastly, what do you think is the best to approach this? I think that I can allow them to keep the copyright of the code but sign a resell rights agreement to me for the final product. Is this valid at all? Can it be done?

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I think the costs involved with researching your liablity on code with unclear ownership would be prohibitive to make sure you are legally covered. You will probably be better off contracting a company to create a new product to your specs that you can have clear ownership of. –  Chad Sep 15 '11 at 14:03
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2 Answers

To answer the simplest question first, there are no "rights to the underlying technology", unless someone holds a patent. All there is, most likely, is copyright.

To a first approximation, the source code of a program and the compiled version are the same work. One is created from the other by an automated process, so it's almost like a CD or a musical performance and a cassette of that same performance. Copyright ignores function and only cares what creative elements are present -- the same creative elements are present in both.

So long as they authored the work, and it wasn't legally considered a work for hire (which it probably isn't), they should be able to license the copyright to you, in addition to the implicit license the other client has. I would suggest insisting on an explicit license from them. Make sure it includes a representation from them that they have the right to issue that license.

If the potential dollar amounts involved are even moderately large, I'd suggest you get yourself a lawyer to write the license agreement for you. Make sure the license includes the specific rights you need -- modification, duplication, sub-licensing, sale.

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Agreed, as long as an irrevocable license is provided (which should be a condition of sending payment) there's nothing to worry about here. –  Tim Post Sep 15 '11 at 11:57
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a) The program was previously made by them for another client of theirs, under unclear terms (or I haven't explicitly asked yet). From what they told me, they created the program for him for his private use. It seems that they still have copyright/ownership of the source code.

You need to find out who owns the copyright of the code.

b) They still want to keep the copyright/ownership of the code. I don't really mind, but in reality, I want to know how this can or can't affect me in the future. For example, what if the sales go well and suddenly they decide they want a piece of profit because the code is theirs? Something like that.

You would have to make sure the license covers the fact, and grants you the right, to sell the program.

Now another question: Is there a difference between the source code of a program and the compiled version of it? For example, I get the final product (as in an executable/installer) that I own and have the rights to, and they keep the rights for the underlying technology. Is this possible?

You will never own the rights to the program you want created unless you purchase the copyright to the code. Since this company will still own the copyright, they are within their rights, to sell the code to anyone they want. You can patient the idea if its unique enough ( sounds like its not ) and trademark the name of your software if you wanted.

As long as they own the copyright, and unless your license gives you certain rights, they can if they want sell the code again ( unless your contract prevents this, which will add additional cost, because it makes it less attractive to spend their time doing it ).

And lastly, what do you think is the best to approach this? I think that I can allow them to keep the copyright of the code but sign a resell rights agreement to me for the final product. Is this valid at all? Can it be done?

I would purchase the copyright to the code, and anything else to the program, so they wouldn't be allowed to use the code in any future program. Of course this will happen with these types of companies, its just a simple fact, they are able to produce more code that way.

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