Independent Consultant: Ownership

ouestque
ouestque used Ask the Experts™
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When you guys design something for someone else, do you own it or do your clients own it. For my current client, which I'm weaving out, I designed something that generated massive profits for their company. Afterwards, she came to me and said, "I own this. This is mine." There are no contracts between us...

In your contracts with your clients, do you have an ownership clause? Do your clients own everything you make or do you own it?
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There is ALOT of gray area in this topic.

Here is how I will interpret this and I am not speaking as a legal subject matter expert.

Under the Copyright Act, inventions and discoveries made by an employee belong to the employer if they are made within the scope of employment. In the event of a dispute over ownership of the intellectual property, the case may turn on whether the invention or discovery was made within the scope of one’s employment. In general, however, employers are usually in a better position when they define the relationship as employer-employee as far as ownership of intellectual property is concerned.

When the worker is an independent contractor, by contrast, intellectual property created by the contractor or consultant will not automatically be owned by the employer. This is true even if the idea, invention, or expression is made within the scope of the contractor’s engagement or on the worksite of the employer. In some cases, independent contractors may gain rights to intellectual property or rights of a co-author.

Employers can solve this problem by defining their relationship with an independent contractor in a written agreement. Often, the most important feature of an independent contractor agreement will be a grant back of intellectual property rights. But the issue will also turn on how the worksite is set up, the hours during which the independent contractor worked, and whether the intellectual property was created within the scope of the contractor’s engagement.

Business owners should take this lesson to heart when negotiating with consultants for research and development, creation of software, or other development of proprietary ideas and expressions. A well-defined non-disclosure agreement, as well as a later agreement to grant intellectual property rights should also be considered to solidify the employer’s rights.

reference:  https://www.hg.org/legal-articles/who-owns-the-intellectual-property-developed-by-an-independent-contractor-7502
If you were indeed an independent contractor and hired as an independent contractor for this company, then if I were in your shoes and no NDA's were signed or Intellectual property documents were signed, then I would reach out to a local lawfirm and get their take. It could be that company could owe you for the use of that Intellectual property as long as they are using it.
Lee W, MVPTechnology and Business Process Advisor
Most Valuable Expert 2013
Commented:
You absolutely need to speak to an attorney and not a forum.

In general, I am of the OPINION that if you get paid to write code, the end result belongs to the person/entity who paid you.  If you get paid for the end result based on the amount you choose to charge, then you own it.  

ALWAYS create an agreement with a client.  ALWAYS. This is NOT AN OPTION, IT'S A REQUIREMENT.  You've probably figured that out now, but my agreements with clients state that the intellectual property (IP) I create for the client will be equally owned by me and them with the exception that I will not, for a period of time, use the business specific code on the behalf of others in the client's industry.

For example, I create a bunch of functions for operating a series of timers for a sprinkler company, I will not use that code on behalf of their competitors for 5 years (assuming the opportunity ever arises).   If the client objects, we negotiate.  MAYBE I will grant them sole ownership at a higher rate.  Or maybe I'll give them the option to buy the IP outright.  But no matter what, it's ALL SPELLED OUT ON PAPER!
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Commented:
If they paid you to design it. Then they have a strong claim that it is thiers as you most likely would not have done it (and marketed it) on your own.
@Lee,

I somewhat agree with what you are saying. There is NOT DOUBT that it needs to be spelled out on contract or on paper, however in this case it was not and no contracts are signed by either party. That being the case, there could in this instance be a strong claim for the designer of this IP.

in either case, this needs to go before a lawyer in your state to interpret the "state" laws in accordance with IP and the rules and regulations surrounding IP in your state .
David FavorFractional CTO
Distinguished Expert 2018
Commented:
1) Get Legal Shield coverage. This way if someone sues you, you can bankrupt person/company suing you.

Search EE for how to accomplish this.

2) At this point, there is so much public domain information, I simply refuse to sign any contract.

3) If you signed no contract, then the other person has no claim to your work product.

And... see #1, because anyone can sue you... anytime for anything, regardless if how suit is settled. Whoever can go the longest + drive up the cost to the other party wins. Period. No consideration of guilt or innocence. This is why smart people have Legal Shield coverage.

Tip: My wife + I sit down + have a good laugh every time we get sued, because there's a very good chance the person who just sued use will loose every penny they ever made or ever will make.

Author

Commented:
Here is what is interesting. They didn't come to me with an idea and ask me to make it. Instead, their request was very general, "Fix issues my staff are having". As a result, I designed something that fixed their issues and increased profit.

Author

Commented:
Thank You!

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