Can I, as a contractor, take IP with me to a new company? I am currently working part-time as an independent contractor, software developer, in the United States for a startup my friend founded. I saw it mostly as helping a friend, so we never formalized the agreement (i.e. I have not signed any statement of work or otherwise agreements with the startup), however I am clearly paid with the startup's money. Over the last few months the startup has been having troubles with one of the three founders, and long story short, my friend and one other founder are deciding to leave the company and create a competitor business on their own. The three current founders have equal equity and voting rights, so technically the two leaving could instead push out the third partner, but they are worried that partner would torpedo the company's reputation if they did so they would prefer to just quietly start fresh. So on to the question, my friend would like to take the code I have written with them to their new company. I understand if I were an employee, all my work would inherently be the IP of the original company, however because I am a contractor - and notably have not signed any formal agreements to the current company, could we have any legal claim that I independently own my code and get to chose who I allow to use it? One idea I had was, since I have not yet signed any agreement with the current company, we could enter into a licensing agreement that clearly indicates I own the code and they are simply licensing it from me. At which point the new company could also license my code from me. However I'm not sure if it's legal to enter such an agreement at this stage, given the intent is clearly to take the IP with them. Another consideration I had was that since the two founders have majority voting, and could technically vote / sign whatever they wanted without the third founder's agreement, they could just make the decision before leaving to give me ownership of the code (e.g. &quot;sell&quot; it to me for $1). But here again I'm not sure if that's legal, given they would be clearly acting against the best interest of their current company and could probably be sued by external shareholders. Are there any legal options we can take to move the IP I've developed to the new company? And would I be putting myself at legal risk by agreeing to any of this (e.g. if the founders decided f- it and to just take the code, is it illegal for me to keep working on it)?
Is this work for hire? There is an arguable case to be made that you are an employee for copyright law purposes and, if so, the copyright belongs to the company. The closer an employment relationship comes to regular, salaried employment, the more likely it is that a work created within the scope of that employment will be a work made for hire. But because no precise standard exists for determining whether a work is made for hire under part 1 of the definition in section 101 of the copyright law, consultation with a lawyer may be advisable. Second, if you do own the copyright, there is clearly an implied licence with the company to allow them to use it. It is arguable that the licence is exclusive since the software is bespoke and made specifically for the company. Can you sign an agreement now Yes, but … It is clear that the purpose of signing the agreement is to screw the company over (with the compliance of 2 of the directors). That’s a contract entered into in bad faith and possibly for an illegal purpose and would likely be found invalid. You need to understand that the company is a distinct legal entity from its owners and it has its own rights. People make the mistake of thinking the owners are the company: they aren’t. The two rebel founders are on dangerous legal ground. Assuming they are the directors of the company, they have a fiduciary duty to act in the best interests of the company. That is, they must put the company’s interests ahead of their own. It is clearly not in the company’s interest to have a rival business start so they cannot plan to do that while they are directors - they need to resign first. You are not so much at risk - as an employee/contractor your duty is to follow the directions of the company (the company - not a faction within the company). However, if you aid the other two in what might be a crime, you could be in trouble.
The software is "work for hire" and the copyright is owned by the client, not you. This is the default rule when copyrightable work is done on this basis in the absence of an agreement to the contrary. To not be "work for hire" you would have had to have a written agreement to the contrary or would have had to written the software before you were engaged by the client and then sold it to the client as an off the shelf finished product. [After further research I have determined that the language above is not accurate.] While you didn't have a written agreement, you did have an agreement reached without committing it to a final written form signed by both parties that is sufficient to cover all of the material terms of the contract and that is a binding and fully performed agreement. UPDATE: The "work for hire" issue is a bit more complex than I initially stated. Here is an American Bar Association summary of the issue in the independent contractor context (there is also a plausible argument that while the parties characterized you as an independent contractor for tax purposes that you were in fact of de facto temporary employee in which case it would automatically be work for hire, but I'll put that issue aside and take it at face value): Under the Copyright Act (17 U.S.C. §§ 101 et seq.), a work is a “work made for hire” only if: (1) it is prepared by an employee within the scope of his employment; or (2) it is specially ordered or commissioned from an independent contractor pursuant to a written agreement and the work falls within one of nine statutorily defined categories. . . . For works created by independent contractors, only the following types of works are eligible to be “works made for hire”: a contribution to a “collective work” (a work, such as a periodical issue, anthology, or encyclopedia, in which a number of contributions, constituting separate and independent works in themselves, are assembled into a collective whole); a part of a motion picture or other audiovisual work; a translation; a “supplementary work” (a work prepared for publication as a secondary adjunct to a work by another author for the purpose of introducing, concluding, illustrating, explaining, revising, commenting upon, or assisting in the use of the other work, such as forewords, afterwords, pictorial illustrations, maps, charts, tables, editorial notes, musical arrangements, answer material for tests, bibliographies, appendixes, and indexes); a “compilation” (a work formed by the collection and assembling of preexisting materials or of data that are selected, coordinated, or arranged in such a way that the resulting work as a whole constitutes an original work of authorship); an “instructional text” (a literary, pictorial, or graphic work prepared for publication and with the purpose of use in systematic instructional activities); a test; answer material for a test; or an atlas. This software is clearly specially ordered or commissioned from an independent contractor. I suspect that if you looked at the course of dealings including the client's specification of what work needed to be done (probably in part by email or in some other written form) that it would meet the requirement of a written agreement even though there wasn't a document called a contract signed by both parties. But, this still begs the question of whether it falls in one of the nine statutory categories. This American Bar Association source says that custom software doesn't qualify. The list above does not include many types of works that businesses frequently hire outside personnel to create, such as websites, logos, advertisements, photography, and custom software. For works that do fall within the defined categories, the business must have a written agreement from the author expressly stating that the work is made for hire for it to qualify as such. Although the agreement and course of dealings between a business and an independent contractor may give rise to an implied license for the business to use the works created by the contractor, it is highly preferable to avoid relying on an implied license. Any business that engages a non-employee to create a work and intends to own the copyright to such work should have a written agreement with the author expressly stating that the work is made for hire (if it falls within one of the eligible categories). If the work is not eligible to be a work made for hire, and for good measure even if it is, the written agreement should include a provision assigning the copyrights to the business. An example of such a provision is: “To the extent that the Work Product is not recognized as a ‘work made for hire’ as a matter of law, the Contractor hereby assigns to the Company any and all copyrights in and to the Work Product.” By including such a copyright assignment clause, a business will be able to obtain the copyrights it expects, even if the work does not qualify as a “work made for hire.” The copyright office's official publication on the subject provides a statutory citation (17 USC 101), and doesn't contradict the ABA presentation, although it is less detailed and specific on the legal issues. This section of the United States Code is a series of definitions. The relevant one states: A “work made for hire” is— (1) a work prepared by an employee within the scope of his or her employment; or (2) a work specially ordered or commissioned for use as a contribution to a collective work, as a part of a motion picture or other audiovisual work, as a translation, as a supplementary work, as a compilation, as an instructional text, as a test, as answer material for a test, or as an atlas, if the parties expressly agree in a written instrument signed by them that the work shall be considered a work made for hire. For the purpose of the foregoing sentence, a “supplementary work” is a work prepared for publication as a secondary adjunct to a work by another author for the purpose of introducing, concluding, illustrating, explaining, revising, commenting upon, or assisting in the use of the other work, such as forewords, afterwords, pictorial illustrations, maps, charts, tables, editorial notes, musical arrangements, answer material for tests, bibliographies, appendixes, and indexes, and an “instructional text” is a literary, pictorial, or graphic work prepared for publication and with the purpose of use in systematic instructional activities. In determining whether any work is eligible to be considered a work made for hire under paragraph (2), neither the amendment contained in section 1011(d) of the Intellectual Property and Communications Omnibus Reform Act of 1999, as enacted by section 1000(a)(9) of Public Law 106-113, nor the deletion of the words added by that amendment— (A) shall be considered or otherwise given any legal significance, or (B) shall be interpreted to indicate congressional approval or disapproval of, or acquiescence in, any judicial determination, by the courts or the Copyright Office. Paragraph (2) shall be interpreted as if both section 2(a)(1) of the Work Made for Hire and Copyright Corrections Act of 2000 and section 1011(d) of the Intellectual Property and Communications Omnibus Reform Act of 1999, as enacted by section 1000(a)(9) of Public Law 106-113, were never enacted, and without regard to any inaction or awareness by the Congress at any time of any judicial determinations.
This could be a problem if the consultancy agreement contains a provision that assigns to the client any copyright in any code created by the consultant. That is why there should be no such provision. In the absence of such a provision, the consultant owns the copyright in the code, so it would be impossible for the consultant to infringe that copyright. Even so, copyright protects a particular expression of an idea, not the idea itself. The idea of an "analyze data" class containing a "read data" function is not itself subject to copyright protection. It could potentially be patentable as a "process," but it would fail to meet the criterion of novelty. It would also fail to meet the criterion of non-obviousness. On the other hand, a software developer cannot (without permission) copy source code that is protected by copyright simply by changing the names. Changing the names would constitute the creation of a derivative work, and the right to create derivative works is also protected by copyright.
It's legal to sell your program if it doesn't infringe any law or anyone else's intellectual property. Examples of things that can get you into trouble: statutes: Some countries have export laws that forbid you to distribute certain types of encryption without proper export controls. patents: If you use a design or invention that is under patent protection you could be liable for infringing patent rights. trademark: If you improperly use a trademarked name you could be subject to damages. licensing: If you violate a license to which you have agreed you can be sued for damages. copyright: If you appear to have copied something without license you can be liable for damages. Just because: If someone wants to sue you, they can. Since there's no way to guarantee your business won't run into liability from infringement &ndash; or from some other failure &ndash; people normally conduct business through entities like LLCs that shield them from personal liability. Depending on their concerns and finances, they may also: Buy liability insurance Consult professionals like IP lawyers to: review their business and products in advance to look for and address glaring infringements, and/or correctly protect their IP using the tools mentioned above.
There's a few good reasons that spring to mind. Firstly, it's possible that Tesla or Microsoft have been themselves licensed something where the license is not sub-licenseable. This would prevent them from subsequently licensing you, but a promise/pledge is not a license and they can go right ahead and make promises. Secondly, a license is broadly an agreement between two parties. A promise doesn't require formal acceptance whereas a license does. To answer your question regarding a covenant not to sue - that's something else entirely. A covenant not to sue is a legal agreement between parties where the party seeking damages agrees not to sue the party it has cause against, whilst still preserving the existence of the cause (and conditions may have been set that must be met for the covenant to stand). For example, Party A still maintains that Party B used work that was not licensed to Party B, but Party A has agreed not to sue on the matter, provided that Party B advertises the fact that the work was used.
Yes, this is a valid concern As written, every piece of IP you produce while employed belongs to the employer. This includes your hypothetical game. It also includes your weekly shopping lists, your Christmas card to your Great-Aunt Nellie, the … a-hm … private video you make of you and your significant other. As written this is overly broad and probably unenforceable. However, it’s always better to have clear and legally enforceable clauses in your agreements because unclear, arguably unenforceable ones lead to disputes. To be fair, the employer has probably lifted some (bad) boilerplate and hasn’t actually thought through what it means. Get it redrafted.
You'll want to read the actual licenses yourself and understand what is required. If you don't understand, then you'll want to consult an attorney. But neither of these licenses are all that complex in my opinion. MIT: Permission is hereby granted, free of charge, to any person obtaining a copy of this software and associated documentation files (the &quot;Software&quot;), to deal in the Software without restriction, including without limitation the rights to use, copy, modify, merge, publish, distribute, sublicense, and/or sell copies of the Software, and to permit persons to whom the Software is furnished to do so, subject to the following conditions: The above copyright notice and this permission notice shall be included in all copies or substantial portions of the Software. Apache 2.0: Redistribution. You may reproduce and distribute copies of the Work or Derivative Works thereof in any medium, with or without modifications, and in Source or Object form, provided that You meet the following conditions: (a) You must give any other recipients of the Work or Derivative Works a copy of this License; and (b) You must cause any modified files to carry prominent notices stating that You changed the files; and (c) You must retain, in the Source form of any Derivative Works that You distribute, all copyright, patent, trademark, and attribution notices from the Source form of the Work, excluding those notices that do not pertain to any part of the Derivative Works; and (d) If the Work includes a &quot;NOTICE&quot; text file as part of its distribution, then any Derivative Works that You distribute must include a readable copy of the attribution notices contained within such NOTICE file, excluding those notices that do not pertain to any part of the Derivative Works, in at least one of the following places: within a NOTICE text file distributed as part of the Derivative Works; within the Source form or documentation, if provided along with the Derivative Works; or, within a display generated by the Derivative Works, if and wherever such third-party notices normally appear. The contents of the NOTICE file are for informational purposes only and do not modify the License. You may add Your own attribution notices within Derivative Works that You distribute, alongside or as an addendum to the NOTICE text from the Work, provided that such additional attribution notices cannot be construed as modifying the License. Nowhere does either license require you to publish your application's source code, even if your application is directly based on the original code.
I've been wondering if it is possible to hire / create a company with someone who would open a restaurant in my place and manage it according to my guidelines. Yes, of course. You can do it just like you described: Create a company, hire employees, (let them) open the restaurant. You, as the owner of the company, could set up whatever guidelines you have in mind, and your employees would be bound by them (limited only by general laws, such as on health and safety). Some caveats, however: You will need money to set this up - for buying / renting space for the restaurant, for paying your employees, obtaining supplies, initial marketing etc. It may take a while until the restaurant earns money (if ever), and you'll need money in the mean time. Someone will need to manage, that is make decisions. You can do that yourself, but then you will work for the restaurant (which you write you do not want to do). Or you can hire someone to do it for you, but that will cost more (in salary), plus you will have to find someone you can trust. That's a tradeoff for you to make. I guess it'd be like an intellectual property. That depends, but usually there will be little in terms of intellectual property. If you have a unique idea for the restaurant, you could patent it, but there are many restrictions on what you can protect, and ways around it, plus this also costs money (a lot if you need a lawyer's advice). Apart from that, you can register a trademark for the restaurant, but that only protects the name / logo, not any ideas. Finally, some of your ideas might be considered trade secrets, but again the protection is limited. In general, there is no blanket "idea protection". If you have a good idea for a restaurant, in most cases other restaurants will be able to copy them, possibly with slight changes - take that into account.