Ownership Rights In Custom-Developed Software 

It used to be the case that software ownership rights were straightforward and clear-cut up until recently. However, the rise in usage of open source codebase in proprietary software applications has necessitated the need to further sensitize businesses on software ownership rights and how to go about protecting it. 

According to OSSRA, 96% of codebases audited this year contain open-source components. To drive this home, this simply means legal enforcement becomes tough in case of a dispute where two parties lay claim to the same software. 

The integration of third-party libraries and frameworks in custom-developed softwares raises concern about the potential impact of a license coalition that could alter your software’s proprietary nature. 

Another reason why it is important to understand ownership rights in custom-developed software as an entrepreneur who’s thinking about outsourcing is simply for the truth that a vague contract may unknowingly lead to the loss of crucial rights.

When development is outsourced, it’s essential to precisely define who retains what rights, and as such in this article, I would help you go through some of the things you need to do to fully take ownership of your custom software starting with the clarification of basic terms. 

Understanding Software Ownership 

Software ownership refers to the rights and control an individual or organization has over a piece of written code. It is usually determined by local intellectual property laws including copyrights, patents, and licensing agreements. 

Generally speaking, when a software developer writes any code they retain the ownership or copyright of the software. The owner of the copyright can then license the copyright to others for use under certain terms and conditions or transfer ownership of this right to another person or company under a contract. 

When thinking about ownership of custom-developed software, you shouldn’t just think of code. Ownership rights cover designs, wireframes, documentation, diagrams, and every other asset created by your developer or software company for you during the duration of your engagement.  

That said, this article is meant to discuss certain complications in software ownership that include conflict that could arise from the Integration of third-party libraries and frameworks and help you navigate how to avoid them from the onset with specific steps to guarantee ironclad software contract with your agency especially if you’re outsourcing for the first time.

Ownership Vs. Licensing

Something else that needs to be said is that software ownership should not be confused with software licensing.  

Software ownership refers to holding the rights and control over a software product, while a license agreement only grants the right of usage to specific functionality to a user without transferring actual ownership.

Intellectual Property Laws 

As mentioned earlier, the copyright for any code written by a company or person is automatically theirs. This means that if your agency engages with outside contractors the copyright to their code will be owned by them, unless there is a written contract that states otherwise. 

What this necessitates with respect to you as a business owner is that you should ensure that your agency provides proof that they are indeed entitled to assign IP rights for all the software they developed. 

Although copyright law doesn’t prevent anyone from reverse engineering your software or replicating it with their own original code, continue reading to see what you can do to ensure you’re properly protected in the following sections. 

Outline Your IP Requirements From The Beginning

Typically, when a business reaches out to an agency, there’s usually a conversation about the requirement and the scope of the project and although cost and security are always high on the list of priorities for entrepreneurs —particularly first-timers, there’s hardly a thought on the ownership of the resulting software. It is almost always assumed to be the clients. However, this can be tricky. 

For starters, a good place to start is to ensure that you request your agency to your contract to properly spell out an outright transfer of the code base to you—the client, when all work is done, from your first contact. 

 Specifically, you want to make sure that the agency spells out that:

  • It has the authority to assign the IP rights and any contractors used will assign rights to the agency.
  • It will make sure that all third-party IP that may be used in the making of the software meets the terms assigned by their licenses and take full responsibility for the damages that may arise from such negligence. 

 Protect Your Software And Intellectual Property

You can further protect yourself by paying a legal team to review your overall contract but with emphasis on the IP clauses.  

Additionally, since documentation plays a crucial role in asserting ownership rights to your software, you’ll need to maintain a comprehensive record of the documents produced throughout the development process, including design documents, code repositories, version history, and so on. 

They serve as evidence of your ownership. In case of any legal disputes or infringement claims with your agency or anyone else, these documents will be instrumental in proving your rights.

That said, at Alabama, we typically specify our intent to transfer the rights to a software codebase to clients in our contract. Usually with us, clients are 💯% owners of their code and can change, transfer, and use the code however they please long after contract timeout. 

You can contact us directly today with the form below to request a free consultation session and get started.👇

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