CUSTOM SOFTWARE RIGHTS IN NEW SOFTWARE LEGAL BOOK

January 1994 -- As software is written, somebody owns the copyright. If a
custom software developer is working for a client without a signed
agreement covering ownership, the developer probably owns the copyright.
If there is a written agreement, that agreement will usually cover who
owns the software copyright.

According to Paul S. Hoffman, author of The Software Legal Book, "The
problem is that today no one knows just how far copyright goes in
protecting such things as file structures, screens, methodology, and
program organization. As a result, custom software contracts should
provide for an allocation of rights regardless of which party ends up
'owning' the copyright." In noting that software contract negotiations
often get hung up on ownership and rights questions, he says that "The
contract goal is to cover software rights so that both parties can
continue in their respective businesses without undue fear of being
hassled by the other party."

The software developer that isn't careful can find that pre-existing code,
tools, specialized knowledge and techniques have been transferred to the
customer. The customer that is not careful can end up with the developer
owning the code with the customer having only a rather fuzzy license for
internal use.

If copyright ownership is to go to the employer, the outside developer will
want to make sure that enough rights are retained to allow the developer
to continue providing consulting services to others - perhaps even to
others for similar applications in the same line of business as the
current client. Even if a developer considers the particular code to be
"throw away code" that the developer would never use again, the problem
remains that any future similar application will include code that looks a
lot like the current code!

Mr. Hoffman notes that there are some general rules of thumb:

* Developer Pre-existing Code. Ownership should be retained in the
developer of any developer pre-existing code - the customer being granted
a license: 

- for all internal customer purposes, or 
- to use and authorize others to use, or 
- to use and authorize others to use the pre-existing code 
  as embedded in the Software.

* Customer Ownership. Most customers feel that if they pay for something
they should own it. The problem with software is that copyright ownership
covers nonliteral code aspects of the software in such a way that it will
hurt the developers "life after contract". Appropriate allocation may
often be accomplished by retaining rights in the developer: 

- to any ideas, concepts and techniques, or 
- to any ideas,  concepts and techniques and code portions 
  of general utility, or 
- by simply granting customer ownership to the Software 
  "to the extent unique to customer".

* Tools of Analysis. Where negotiations are likely to get hung up on
proprietary rights, it is worth looking at the proposed Software to see if
it can be broken into identified parts. For example, there may be: 

- parts unique and confidential to the client - such as a
  customer database interface 
- supported developer standard code - such as a standard package
- parts involving possible or definite embedded use of 
  pre-existing developer code 
- portions where the parties can agree that either party can do
  what they will with it - such as code of general utility. 

If the code can be broken into such portions, the contract provision has to
be very carefully drawn to ensure the appropriate bundle of rights in each
party for each portion.

The author of The Software Legal Book, Paul S. Hoffman, is an actively
practicing software lawyer and CDP with more than twenty five years of
experience with software related contracts.

In addition to covering custom software rights with text, clause examples,
analysis tools, and forms, The Software Legal Book 1994 edition covers all
major aspects of software ownership and contracting. The 1994 edition is
now available from Shafer Books, Inc., Croton-on-Hudson, NY.

Initially published in 1981 as the first book devoted to software ownership
and contracting, the annually updated two volume looseleaf set provides a
practical guide to software ownership and contracting - including "do's"
and "don'ts", tools for analyzing ownership, checklists, sample clauses
and sample agreements.

The Software Legal Book's "how to" approach to handling software ownership
and contracting problems makes it different from most other computer law
and forms books. Written by an actively practicing software contract
lawyer, coverage includes: ownership of copyright in software
modifications; what software copyright protects; tools for analyzing
'rights' situations and determining who has the right to license; and form
language examples for allocating custom software rights between parties.
Also covered are: employee agreements; "work for hire"; "joint works";
"derivative works"; international software protection; bundled system
contracts; disclosure agreements; software distribution agreements; and
handling software contracts in buying or selling businesses. A
comprehensive separately tabbed index provides easy access to text
discussion and sample clauses.

The appendix includes software-relevant portions of the copyright law and
regulations and the Uniform Trade Secret Act, international copyright
treaty tables, the Uniform Commercial Code, the 1988 bankruptcy law
changes and the 1991 European Software Directive. Forms provided range
from employee agreements to agreements for disclosure, custom software
development, beta test, software distribution, teaming, and source code
escrow. All form examples include some explanation or context information.
As an option, selected forms are available on 3.5" disk in WordPerfect
format.

The 1994 book may be ordered from Shafer Books, Inc., P.O. Box 40,
Croton-on-Hudson, NY 10520-0040 [phone 914-271-6919 or fax 914-271-6193]
at a cost of US$185.00 (US$225.00 with Forms on Disk) plus shipping, 10%
discount on prepaid orders.

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