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    Consultancy Agreements - Ownership and Intellectual Property Rights (IPR)

    itraining

      Hi Everyone

       

      This post is most relevant to the Australian audience but readers from other places around the World might like to chip in.

       

      I am looking at building a scheduling database for The University of Queensland (UQ) in Brisbane (Australia).

      Since 2003 I have built a few a database systems at UQ and from 2008 - 2012 I was a full-time employee (as it happens, I resigned last week).

       

      The legal department has been busy and they require the "Consultancy Letter (Standard for Receipt of Services) Legal Office.docx" document to be signed (see attachment).

       

      Appendix 2 outlines the IPR conditions under Section 2 "Ownership":

      2.1 The title to and ownership of all IPR in all Contract Material and the Deliverables vests upon its creation in UQ. The Consultant hereby assigns the IPR in all Contract Material and the Deliverables to UQ

      2.2 The title to and ownership of all IPR in the Pre-existing Material remains vested in the party who provides such Pre-existing Material. The Consultant hereby grants a perpetual, irrevocable and worldwide licence (including the right to grant sub-licences) to UQ of all IPR in the Pre-existing Material to the extent it is incorporated in the Contract Material and/or the Deliverables for the purposes of UQ’s use, reproduction, adaptation and exploitation of the Contract Material and the Deliverables.

       

      Question:

      (1) In this instance of building a database, is it actually legal for UQ claim all IP rights? In Australia, I thought the law was pretty clear that the author/creator retains all IPR automatically.

      (2) If you have encountered this issue before, how did you resolve it?

       

      Thanks in advance

       

       

       

      Michael Richards

      Brisbane (Australia)

        • 1. Re: Consultancy Agreements - Ownership and Intellectual Property Rights (IPR)
          LyndsayHowarth

          HI Michael,

           

          I've seen a number of these documents and I would never sign them... but...

           

          You cannot grant all the licences to pre-existing code because you can't grant any licences to the code in FileMaker app.

           

          Your asset is your IP... You create something for someone and it is that instance of your IP that you are selling not your future lively hood. I mean they can't dig out the prior learning from your brain and demand you never use it again and they are of course benefiting from the prior learning you got elsewhere.

           

          I am pretty satisfied by a great deal of research (a few years old now) that when you consult and licence your IP you own it unless you sign an agreement to the contrary.

          IF, HOWEVER, you created the work while you were an employee... then whoever you work for owns the products (keeping in mind that they also cannot own FMIs code and that you take the knowledge when you leave).

           

          What you are really risking is that someone could reuse what you did without you gaining financial benefit... or finding out your tricks etc. I've certainly lost jobs over this issue and seen less than scrupulous developers put forward my work as their own. Hey... I've seen many clients tell me they created a database from scratch themselves when it is a blatant use of the starter solutions.

           

          You can be hurt badly by signing something that restricts you from building similar things for other clients. You can never agree to that.

           

          Check out this page: http://www.copyright.org.au/find-an-answer/

           

           

          HTH

           

          - Lyndsay

          1 of 1 people found this helpful
          • 2. Re: Consultancy Agreements - Ownership and Intellectual Property Rights (IPR)
            itraining

            Hi Lyndsay

             

            Thanks for the prompt reply at this early hour of the morning.

             

            The "unless you sign an agreement to contrary" is a bit of a worry.

            I was kind of hoping the "author/creator always owns the work" would hold even if the agreement had been signed.

             

            I wonder how nasty it could get in the future if I did create something similar for another client?

            In a previous legal stoush over this type of issue, my lawyer took the view that if you change a bit of the database, so they are no longer identical, you can basically prove it is a new database. The fact that the Main Menu was a diffferent colour with the navigation buttons arranged differently was evidence enough for him.

             

            I will sleep on it. In the meantime, hopefully some additional people can comment based on their experience.

            • 3. Re: Consultancy Agreements - Ownership and Intellectual Property Rights (IPR)
              BobGossom

              Michael,

               

              I suspect Lyndsay's quite correct that you can sign away your rights, and the language you quoted clearly appears to do that.

               

              Your laywer may also be correct that it is easy to change something and re-claim ownership. But the real trick to the law is not to get in a dispute in the first place. Keep in mind that you are disparate players, the Un. probably has staff lawyers. Fling a law suit is probably negligible to them; but disproportionately costly for you to respond to.

               

              It seems to me that you should either create a rider to this agreement retaining rights to your work, or sign it in good faith knowing that the work you do for them doesn't belong to you and you'll have to "recreate" it for other clients. FMP programming is so generic, this isn't too hard to do. What you really gain from a project isn't the exact coding, but the business logic and interface solutions.

               

              Their ability to resell the work without you is a straw horse. Every client thinks "their" solution will be universally useful, without realizing that the difference between a custom prorgram and a commercial one is huge, not to mention that running a University and a software distribution company are entirely different things. However, if they will accept a rider, you could suggest the "reverse," of this concept: Grant them participation in any spin-off you create. If they insist on the right to resell it, this could still be a good thing for you - who better to help them with this than the original developer? This could lead to extensive additonal work for you. Losing ownership participation could be a bitter pill, but are you really positioned to become a software distributor yourself? Lot's of downstream billing could make the pill sweeter. You could potentially re-negotiate this, too, as a quid pro quo for your continued participation?

               

              I suspect this will be and "all or nothing" discussion. Either they will not consider a rider or alternative agreement at all, or they will ask you to write it and won't care about much except their unrestricted license to use it within their system.

               

              Bob Gossom

              1 of 1 people found this helpful
              • 4. Re: Consultancy Agreements - Ownership and Intellectual Property Rights (IPR)
                Vaughan

                It's worth remembering that Universities are experts in IP: they know what they are doing, and they know the terms under which they want to do business.

                 

                The wording you quoted sounds normal and pretty reasonable. Basically, any work you do for them becomes theirs and they want to be able to do anything with it without needing your permission or requiring the payment of royalties.

                 

                You can also get clients to agree to your terms too. I usually include a clause that acknowledges that my development work will use code from previous projects, and code developed during this project may be used in future projects for other clients without notice or the payment of royalties. This can be phrased in a way that their allows their requirements for IP ownership and your requirement to be able to resuse code to co-exist.

                 

                They most probably would not want you developing a solution for them and then making it available to other clients. If you want the option to do that then include a clause to that effect in your terms. I usually phrase it "either party can sell this software to other clients without notice or payment" so they think they are getting benefit too.

                 

                They can also reject your terms too.

                 

                EDIT: I just realised that Bob already posted the same advice as me.

                • 5. Re: Consultancy Agreements - Ownership and Intellectual Property Rights (IPR)
                  Malcolm

                  Question:

                   

                  (1) In this instance of building a database, is it actually legal for UQ claim all IP rights? In Australia, I thought the law was pretty clear that the author/creator retains all IPR automatically.

                   

                   

                  Michael,

                   

                  Don't ask dummies like us, speak with a lawyer who does software and IP. They know what your rights are and what sort of price you can expect to get in return for them.

                   

                  In plain english those clauses say: UQ want to be able to use the software in any way at all, including, a world wide licence to sell or licence it to others and to profit from it without having to pay you another cent.

                   

                  You may be happy to forgo world-wide rights in return for an extra fee which is above and beyond the cost of your labour. If so, you have to determine what amount to charge for giving them such an extensive and generous licence. A good lawyer will provide you with all the details.

                   

                  Malcolm

                  • 6. Re: Consultancy Agreements - Ownership and Intellectual Property Rights (IPR)
                    datastride

                    Micahel,

                     

                    I agree with Bob that practical considerations will probably outweigh the Univ's need to own the IP. They will have been down this road before ...

                     

                    Here is the language I use im my consulting agreements. I would note that this has been acceptable to even other, larger consulting groups who bring me in to help with their internal projects. One such group told me that this approach is substantially the same that they use with their very large corporate and govenrment clients.

                     

                    Note that I only grant a no-cost license to the base code when a client hires me for a substantial customization effort. I use other language for clients that want to pruchase my base code and modify it themselves.

                     

                    Ownership of Software

                    In order to reduce the development cost and the time required for your project, I plan to use a substantial body of software that I have developed over the past few years as the foundation for the work I will do to create a customized application for you. (I call this software the One Part Harmony FrameWork.) I own the copyright to this software, having developed it for my own use and for other clients under similar terms as outlined herein. I won’t charge you for using any or all of this extensive body of existing software, but I will charge you for all the work I do to consult with you on your specific needs; to modify, extend, and customize this existing software to meet your requirements; to train you, your team, and/or your customers to utilize the application I develop; and to otherwise work with you to integrate the solution into your operations.

                     

                    I will continue to own the copyright to the design and code embodied in the One Part Harmony FrameWork, including enhancements I make thereto during the development of your application, and I will be free to use any or all of this software as a part of applications I develop for other clients in the future. It is my practice to update the applications of all of my active clients with any new or enhanced general-purpose code I develop for any one specific client, as very often a feature needed by one client today will have value to other clients in the future. This approach generally leads to cost savings for all my clients, because over time, the costs for certain portions of my development efforts are shared by a number of my clients. The foregoing notwithstanding, I commit to protect and keep confidential the details of all proprietary technology, processes, and workflow automation that are unique to your application. Furthermore, neither I, nor any subcontractors engaged by me on your behalf,  will add code, data structures, nor data that implement or support such proprietary processes and/or workflow automation into the custom applications for any organization that competes with your organization, or with any product or service your organization offers, without your prior written consent.

                     

                    Cross Licensing

                    I hereby grant you and your organization (collectively and individually) a non-exclusive, fully transferrable, and perpetual license to all design, code, and documentation components for the application I will develop for you, including any and all components derived from the One Part Harmony FrameWork and any and all components developed specifically for your project. I agree that you and your organization have all necessary rights to license any third party to use this application and/or to provide services to any third party based on this application. Furthermore, in the event that your organization acquires, is acquired by, merges with, sells substantially all its assets to, or purchases substantially all the assets of another organization or organizations, I specifically grant you and your organization the right to transfer all rights, title, and interest in and to the license granted herein to any successor organization.

                     

                    In exchange for the license outlined above that I have granted to you, you and your organization grant me a reciprocal non-exclusive, fully transferable, and perpetual license to use all of these same components in whatever projects I undertake for myself and for any other clients in the future, provided only that I, and any subcontractors engaged by me on your behalf, agree not to design or develop a substantially similar application for any third party that competes with your organization or with any product or service your organization offers, without your prior written consent.

                     

                    You, your organization, and any third-party licensees will, of course, own all of your respective proprietary and confidential data that is entered into the application I develop for you. You, your organization, and any third-party licensees are entitled to make any desired modifications and enhancements to the software I develop for you – including integration in any form with other software developed by me or any other developer whether or not I am employed to perform such additional development work.

                    • 7. Re: Consultancy Agreements - Ownership and Intellectual Property Rights (IPR)
                      LyndsayHowarth

                      i think the issue really is that Michael is being asked to tick a bureaucratic box. The Uni and the Qld Govt are subject to Australian law and as such they must adhere to the principles of the publications previously cited at http://www.copyright.org.au/find-an-answer/

                      They are the watch dog...

                       

                      Have a look at their site and see if you can get them to recommend a Brissy lawyer with some appropriate experience...

                       

                      - Lyndsay

                      • 8. Re: Consultancy Agreements - Ownership and Intellectual Property Rights (IPR)
                        jrenfrew

                        Morgan

                         

                        that's really helpful, thanks for posting that..

                        John

                        • 9. Re: Consultancy Agreements - Ownership and Intellectual Property Rights (IPR)
                          GordonShewach

                          U.S. IP law appears to be the same as Australian law regarding the developer owning the code unless he/she signs an agreement to the contrary. I faced the same situation negotiating a contract with the University of Michigan and refused to accept their clause granting them all ownership and put forth my own clause granting the university the perpetual license referenced several times above with me continuing to own all code. The person in the legal department, far removed from the department asking me to build them a database, accepted my terms.

                           

                          The scariest part of this issue to me is the possibility that I lose the right to reuse code if I signed away ownership rights. I hired an IP attorney a few months ago on a related matter and issued a post that may be useful:

                           

                          https://fmdev.filemaker.com/message/89109#89109

                           

                          Gordon Shewach

                          Desktop Services

                          Ann Arbor, MI

                          • 10. Re: Consultancy Agreements - Ownership and Intellectual Property Rights (IPR)
                            BeatriceBeaubien

                            Hi Michael,

                             

                            I have entered into development contracts with academic institutions and found their legal teams were fairly understanding in making sure the contract reflected the interests of both parties.

                             

                            I always started the process with showing them my contract, and each paragraph of the the new document was amended to each side's satisfaction. It is sometimes a lot of work but worth it. You have to be prepared to give reasons for contesting points like ownership of I.P. (versus licensing), but contracts are most effective if they take into account the reality of the collaboration and the legal services people I have dealt with generally understood that.

                             

                            Best wishes,

                             

                            Beatrice Beaubien, PhD

                            i2eye, Toronto, Canada

                             

                            FileMaker Business Alliance

                            FileMaker 12 Certified Developer

                            Knowledge Translation Certified Professional

                            • 11. Re: Consultancy Agreements - Ownership and Intellectual Property Rights (IPR)
                              LyndsayHowarth

                              Malcolm wrote:

                              Don't ask dummies like us, speak with a lawyer who does software and IP. They know what your rights are and what sort of price you can expect to get in return for them.

                              Absolutely agree... Problem is that you have to find the right lawyer. IP law is a specialist area and needs a specialist.

                              You may be happy to forgo world-wide rights in return for an extra fee which is above and beyond the cost of your labour. If so, you have to determine what amount to charge for giving them such an extensive and generous licence. A good lawyer will provide you with all the details.

                              ... gotta be careful about the wording of what's agree to, and none of the UQ's wording is appropriate. I spent several hours with a certain clients lawyers years ago working on the wording of a suitable contract. Every time he thought he'd got the wording right I would refuse to sign because there was always an element which prevented me from doing what I do...

                               

                              Aside: Artists in AU get 5% royalites every time their work is resold.

                               

                              We are supposed to derive our benefit by building up layers and layers of skill, overlayed with a wealth of industry and worldly knowledge so that each development is better than the last and we own the way it was put together.

                              Ideally:

                              The client owns the contents and licenses THAT instance of the work. Should they want another instance... they need to pay more. If they want unlimited instances they pay a lot more. If they want to rebrand it to their own brand... they pay an enormous amount more. They can't stop you for working for other clients or even their opposition. They can't stop you from doing something similar for their competition. If they specify in detail a look & feel and/or a specific set of fields, they may have a case to prevent you making one exactly the same... but that would have to be in the written specs prior to job commencement.

                              • 12. Re: Consultancy Agreements - Ownership and Intellectual Property Rights (IPR)
                                MarcDolley

                                Over the past 16 or so years, we have built solutions for all three of the major universities in Brisbane, including UQ (and a few minor ones), and continue to do so. In that time, we have never once entered into a formal contractual agreement with any of them on any project. We have never once encountered a single problem.

                                 

                                So, my question is, what are your concerns regarding the contract in principle?

                                 

                                Do you believe that UQ will try to onsell your solution and deprive you of potential income? Our experience is that that is extremely unlikely, but if it does happen, it could work to your advantage. We built a solution for one university which they then sold to another university for a token amount. They then passed our details onto the second university who contacted us to make modifications to the original system. We actually made more money out of the second university than we did the first and continue to do so.

                                 

                                Are you concerned that UQ will prevent you from earning a living by developing solutions which incorporate the same functionality? That simply won't happen. Apart from the legal ramifications of doing so, you are dealing with people and as long as you maintain a good relationship with the client, there won't be a problem. I'm sure they will understand that you are in the business of developing database solutions and won't insist on checking everything you do to ensure it doesn't breach the contract.

                                 

                                Do you believe that the solution you build will be a 'saleable product'? It probably won't. In our experience, no two businesses, even in the same industry, do things the same way. There is nothing stopping you from advertising, in generic terms, that you have experience in a particular area or field. If someone contacts you and wants something similar, build it for them based on their specific requirements and charge them accordingly.

                                 

                                The bottom line is that you shouldn't turn down work purely because of 'what if's'. Build a good solution, increase you knowledgebase, look after the client and don't be paranoid about lawyers. We haven't consulted a lawyer once since we started in 1996 and have never had a problem.

                                 

                                *Flame suit on*

                                 

                                Regards

                                Marc

                                • 13. Re: Consultancy Agreements - Ownership and Intellectual Property Rights (IPR)
                                  Vaughan

                                  Well said Marc.

                                   

                                  I hope other skilled workers like electricians and plumbers don't start acting the same way. I'll need to sign an NDA before I can go under the house or in the ceiling cavity (in case I see their IP in the wiring or pipe work) and before I sell the house I'll either need to remove their work or pay them a royalty. When I try to get a different person to do more work I'll find the wiring and pipes are locked and I can only use them to make the modifications, or find they have gone out of business and I'll need to rip it all out and start again.

                                  • 14. Re: Consultancy Agreements - Ownership and Intellectual Property Rights (IPR)
                                    LyndsayHowarth

                                    I was hoping you would join the discussion...

                                    I know the Feds redid all their contracts last year or so back so I was surprised that UQ had one with such rigid wording.

                                    I think your comments about the what ifs are spot-on and cover 99% of cases but you wouldn't want it to be case #100 :-)

                                     

                                    - Lyndsay

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