There are a lot of freelance and consulting programmers out there who work for domestic as well as international clients. The code that you as an employee write pretty much belongs to the company you are employed with unless you worked as a consultant or a freelancer on a particular project (that had different rules of engagement). Then comes the ambiguity over ownership especially if you happen to work on a project for a company based out of India, where things may not be spelt out as clearly as night and day. There are quite a lot of such scenarios one needs to be aware of, and it doesn’t matter whether you are the company or the consultant.
Learn from these cases
The most famous case of code owner rights would be that of Microsoft and SCP (Seattle Computer Products). Neither company did anything wrong but this should tell you the importance of software licensing. Microsoft bought 86-DOS from SCP back in 1980 for $25,000 to which Microsoft had the right to sell it to someone else for unlimited use. This “someone else” was IBM who got 86-DOS for $80,000 and began shipping it out on the PC. Microsoft believed that they could make the code standard for all computers that used the 8086 or 8088 processor. Now, $80,000 was a pretty low fee for such a software license, and for such a low price Microsoft negotiated with IBM to be able to keep on selling the software to other manufacturers as well. It didn’t take long for Windows to be the staple OS on almost every computer manufactured since then. This landmark deal is inarguably called the most important one in computing history.
There’s a big difference between licensing or sales of software
What we need you to focus on is the fact that two sales happened here. One between SCP and Microsoft while the other was between Microsoft and IBM. If the folks over at SCP had the foresight to see the potential in their software, we’d see the logos of both companies now.
To avoid litigation, it’s important to thrash out the legalities on who owns what piece of code before working on a software project
Unfortunately, SCP didn’t last long given the cut-throat PC market that emerged soon after. Back here in India, there was a case recently where Gemalto had contracted Pine Labs for creating software in 2004. In the contract that was signed, Pine Labs assigned all copyright to Gemalto but Pine Labs came back in 2009 to contest that right. Were they wrong to do so after assigning the rights over to Gemalto? Absolutely not, Gemalto had forgotten to include the time period of the assignment in the contract and under Indian Copyright Law:
• 19(5) If the period of assignment is not stated, it shall be deemed to be five years from the date of assignment.
• 19 (6) If the territorial extent of assignment of the rights is not specified, it shall be presumed to extend within India. That means the copyright for the code reverted back to Pine Labs after five years and they were now the rightful owners.
Sale or License?
Vernor vs Autodesk shed some light over the First Sale doctrine in the USA. Basically, if you sell software it becomes the property of the customer and they can do what they want as long as they aren’t creating copies and in turn infringing piracy laws. Here in India, a similar tussle happened over textbooks where low-priced Indian Editions were being resold back to students in the USA by a firm in Delhi. Needless to say, the First Sale doctrine didn’t apply here as well. In the case of Microsoft Windows, before installing the software, Microsoft makes it mandatory for users to sign and accept its EULA (End User License Agreement), which isn’t a sales receipt but a legal document that speaks about how you’re entitled to a single license of Windows, and the ownership of Windows’ code is still owned by Microsoft. Therefore, legally, ‘sale’ and ‘licensing’ are two completely different concepts, even though they may sound extremely similar to the common, ill-advice programmer.
