Many start-up* businesses look to software development companies to deliver on the technology to help realise their ideas. In many instances, the software development company may have already developed software or parts of software that can be “re-used” for the start-ups project. This presents the question, how does intellectual property (IP) work with software development.
No Prior Intellectual Property Rights
In the instance where what is being developed has no prior intellectual property rights, then the answer is reasonably straight forward. Upon receiving full payment for the software development services that have been provided, the software development company will assign all of the IP rights to the start-up. Where it can be tricky, is if the software development company requests the right to use, or enhance, the software for future use. This is not out of the ordinary and common sense needs to prevail. In no instance should the start-up allow the software development company to use the IP with any business in the same or a similar industry.
Prior Technology Rights
In this instance, the software development company owns the prior technology rights for the software developed. This can include a component or small part of the software that forms part of the larger software or technology delivery. When this is the case, it is imperative that the start-up receives a perpetual (ongoing) right to use the software as part the project. The software development company will own the rights to the technology and are offering the use of the software (technology) to the start-up. The start-up will not own the software previously developed and are receiving the rights to use the intellectual property of the software.
The start-up will need to seek the permission of the software development company if it wants to assign any rights to any other person or business, which is crucial if the start-up business is being sold or invested into. Also, the rights to the IP that is being granted is only for its use in this particular project. The software development company is not granting the right to use the software or its IP in other projects without its permission.
It needs to be identified and agreed upon very early in a software development engagement any instances of prior technology being “re-used” for a new project. It is crucial to understand from the onset the ownership obligations of any intellectual property to negate future problems that will arise, particularly if success is realised with the new technology developed.
*I have used the term start-up but the application can be any business – large, SME or start-up
Please note, this does not constitute advice and you should consult your legal counsel for specific advice.
Black Belt Digital works with business to help detail and deliver on their technology needs. We work within the business providing a detailed technology roadmap based on use-case driven requirements. We engage with stakeholders and senior management to ensure the technology meets business objectives and can offer interim and short-term resources, together with technology planning expertise.