How can a customer or employer obtain rights to software that was created on their order or instructions?
An important stage in the software development process is the registration of rights to it. Software rights are often disputed. The parties to the conflict are the software creators and those who want to own and manage the object for their own purposes. To reduce the risks of such situations, it is necessary to correctly formalize labor and other legal relations with the authors of the software.
My name is Yuri Gorbachev. I run the patent bureau “Lirate”. In this article, I will tell you what steps to take to secure your rights to software when working with a freelancer, a full-time employee, or a contractor.
How to obtain software rights from the author?
Situation:
You need software, but you don’t plan to create it yourself.
You have 3 options:
Contact a freelancer.
Assign a task to a staff member.
Find a company that does development.
In any case, you need exclusive rights to the software in order to use and dispose of the object in the future. If you do not become the copyright holder, conflicts and disputes may arise that will result in the loss of the software.
Registration of rights plays a key role in ensuring security for both parties – the developer and the customer. It is important for the software creator to secure the copyright, receive remuneration for his work and use his labor as profitably as possible.
Let us consider the specifics of formalizing legal relations in each case.
Collaboration with freelancers
Freelancers are freelance specialists who, as a rule, work remotely, in other words, they are freelance performers. There are no employment relationships between the customer and the freelancer, the work is performed under a contract for an author's order or within the framework of other agreements.
Remember that concluding a written agreement with a freelancer is a key moment in protecting your rights to the developed software. In some cases, if the project is developed on the basis of third-party technologies or frameworks, additional licenses or permits may be required. The freelancer must obtain permission from the copyright holders and draw up the necessary documents.
The order for software creation is executed through the author's order agreement. Include in it a clause that all rights to the created software are transferred to the customer after the project is completed and the freelancer's services are paid. Make sure that the agreement is signed by both parties and contains a detailed description of the software product being created.
The contract allows you to clearly establish the amount of payment for the work performed, the moment of acceptance of the result, the responsibility of the performer for the use of other people's materials in his own work.
If the software you need has already been created by a freelancer, then the transfer of rights must be formalized through a license or alienation agreement. These agreements allow you to partially or fully obtain the rights to use.
The license agreement stipulates that the recipient will use the software within the established limits: time, territory, etc.
The license can be:
Exclusive. The copyright holder transfers the rights to only one recipient.
Simple. The copyright holder can transfer the rights to an unlimited number of recipients.
The alienation agreement assumes the transfer of rights forever. The author completely loses the ability to use the object and dispose of it.
When working with freelancers, keep in mind that sometimes such specialists delegate their tasks to other people. Check with the contractor how he plans to complete the work: whether third parties will be involved.
If so, you need to make sure that the real author has transferred the rights of use and disposal to the freelancer you are working with. When there are people who can be considered co-authors, it is important to obtain exclusive rights from them as well.
For security purposes, I recommend including a clause in the contract stating that the performer is responsible for using the results of someone else's creativity and is ready to pay compensation and reimburse damages in the event of litigation.
So, when working with a freelancer, you need to follow this plan:
Create an agreement that contains all the necessary terms of cooperation, including a provision on the transfer of exclusive rights from the contractor to the customer.
Attach to the contract the technical specifications, which specify in detail all the requirements for the results of the contractor's activities.
Upon acceptance of the work, sign the acceptance certificate and pay the author for the work in accordance with the contract.
Keep payment documents that confirm that the payment has been received by the freelancer.
It is advisable to draw up a contract for each specific task separately. Do not use templates from the Internet, since software creation in each case occurs with its own characteristics.
Interaction with full-time employees
A full-time employee is a specialist who is officially listed on the company's payroll. The employer must have an employment relationship with him or her under an employment contract.
In the case of software development by a full-time employee, the situation with software rights is more transparent. Usually, the copyright for the software automatically passes to the employer. However, this requires proper paperwork and certain conditions.
Include the responsibility for developing software in the employment contract and job description.
To create uniform rules, draw up a regulation on the creation of a work for hire or an internal policy and familiarize employees with it.
For each task, draw up a separate technical assignment and familiarize your employees with it by signature.
Prepare an order for the creation of a service work, which will confirm that it was you who initiated this process.
When accepting the results of an employee's work, sign the acceptance certificate or report on the work performed.
Create a separate agreement that will regulate the payment of remuneration for the creation of a work made for hire – the procedure and cost.
Record a separate payment of royalties in your accounting records and save the payment documents.
The employer must buy the rights to the work from the employee. For this purpose, a separate remuneration is paid – this is not part of the salary. It is in the interests of the employer to keep the documents that confirm the payment. A monthly payment can be assigned in the form of remuneration for the creation of official works.
If a conflict suddenly arises between the parties, the employer must prove in court that the object was created within the scope of work duties. This means that such a situation must be foreseen in advance. Keep all documents and evidence that the author worked on the object during working hours, on your equipment, and received remuneration.
The employer may also lose rights to the property in 3 cases:
If you have not used the software for 3 years.
If the rights to the property have not been transferred to other persons within a period of 3 years.
If you did not inform the author about keeping the work secret for 3 years.
If this happens, the rights to the object return to the author. The employer can from this moment receive them, for example, under an exclusive and simple license, taking into account the payment of royalties to the author.
The rights to the software may also remain with the author if this was recorded in a contract or separate agreement.
I talked about service works in more detail in the previous article:
Copyright for Works Made for Employees and Inventions: What the Author and Employer Need to Know
Cooperation with the developer company
The developer company acts as a link between the customer and the contractor. In fact, the contract for the execution of works is drawn up with a legal entity, but the works are performed either by full-time employees or freelancers attracted by the company.
In this case, you need to be especially careful. It is important that the author transfers exclusive rights to the performing company, and then they are transferred to you.
Ask the contractor to provide you with documents that are drawn up with the actual author or authors, if several people are working on the project.
Include a clause in the text of your agreement with the contractor stating that the contractor takes full responsibility for the use of someone else's intellectual property and guarantees that it owns the rights to all intellectual property.
Add a clause to the contract that specifies the basis on which exclusive rights were transferred from the actual author to the performer.
A contract for work, provision of services or a contract for custom development of a contract type can be concluded with the company. A contract for an author's order is not allowed in this case. Since it can only be concluded with the author of the work – an individual.
Remember! If you are concluding a contract with a company or an individual entrepreneur, then the author and the performer are most likely different entities.
Documents that need to be completed with the contractor:
An agreement that contains information about the transfer of exclusive rights and the grounds for obtaining them from the actual author, for example, under an author's commission agreement between the performing company and the freelancer.
Technical specifications that will allow identifying a specific object among others.
An acceptance certificate that reflects the transfer of exclusive rights.
Payment documents to confirm payment for the company's services.
It is advisable to save all intermediate drafts and materials that were created during the work process, especially if the project volume is impressive.
All of the above situations are characterized by the transfer of exclusive rights from the author to the customer, but this is often not enough for free use of the software. If it is important for the end copyright holder to use the software without specifying the authors or anonymously, or if he plans to make changes to the software, this must be specified in the agreement with the creator of the object. Otherwise, the customer will not be able to legally implement these opportunities.
Do I need to register the software?
The law does not establish an obligation to register software, but to get additional benefits, it is worth contacting Rospatent. When you have already received exclusive rights to software under a contract, you can independently submit an application to the patent office to obtain a certificate.
It will allow you to:
put the software on the company's balance sheet as an intangible asset;
increase the value of the company and make it more attractive to investors;
get into the register of domestic software of the Ministry of Digital Development.
I talked about registration in more detail in the article:
How and why to register software in Rospatent and the Ministry of Digital Development: real cases from practice
Sometimes software needs to be kept secret, then registration with Rospatent will not work for you, but you can make the software a trade secret.
To do this you need:
Specify in employment contracts and job descriptions of employees that the company has a commercial secrecy regime.
Specify in writing what information is considered a trade secret.
Create a regulation that establishes the procedure for handling confidential information.
Ensure control over compliance with the procedure for handling confidential data and accounting of persons who have access to it.
Apply the “Commercial Secret” stamp to media containing classified information.
Depending on the software features, other types of object protection can be envisaged, for example, patenting the program algorithm, APC, interface design, registering an icon or name as a trademark, depositing. Sometimes it makes sense to provide comprehensive protection.
By acting within the framework of the recommendations I have prepared, you will protect the intellectual property created at your request or instruction and minimize the risks of disputes.
Any questions? Write in the comments.
