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Timothy D. Smith
Timothy D. Smith, Attorney
Category: Legal
Satisfied Customers: 2009
Experience:  10 years practicing IP law and general litigation
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I have a client who is moving on to using new technology, and

Resolved Question:

I have a client who is moving on to using new technology, and has requested the source code provided by my company for several applications. I have never been asked for the source code, and do not currently have a legal contract with this client. What are my options? If I release the code, how do I protect myself from future responsibility for these applications and is there usually a fee that a client is to pay for the source code? We have been paid for our time to develop the applications, so this is not an issue. A new company will be taking on the future work, and we will not be part of the development. I must provide a letter to release the code, but I also want to ensure we can use the code ourselves in the future as well. Please advise asap.
Submitted: 5 years ago via LawDepot.
Category: Legal
Expert:  Timothy D. Smith replied 5 years ago.
Customer

 

I hope this message finds you well. To directly address the issue, the source code is indeed intellectual property of you and your company and you should require a fee for its use. Decide what an appropriate fee would be based on the market and work to develope this intellectual property and ask this fee for use.

 

The handling of this arrangement should be done in a small contract that does a few things:

 

  1. It should address the source code as directly as possible in its identification
  2. It should of course address the parties to the contract
  3. It should address the financial aspects, i.e., money paid for use of the source code.
  4. It should prevent the purchaser from using the code outside of their own work.
  5. It should release you, as you stated, from any and all legal liability that shall result from the purchaser's use of the code.
  6. It should specify that you are still able to use the code as you may need without any incumberences.
  7. It should specify that the company destroy the code at the end of their use.

The contract does not have to be big, just needs to address the essential aspects as detailed above.

 

I hope this helps and best wishes.

Customer: replied 5 years ago.
Just to confirm - I am within my full rights to request a fee for the source code even though we have been paid for our time to develop the applications over the last couple of years. (I felt this was the case, however my client feels differently. They already broke a letter of agreement with me last year, so I have been cautious regarding our property and relationship with them ever since then.)

Thank-you!
Expert:  Timothy D. Smith replied 5 years ago.

You absolutely have the right to charge for the source code unless the specs and initial contract specified otherwise. Moreover, the company should expect to be charged for the use of the source code. Intellectual property is high dollar stuff, especially in your area of expertise and you should protect it with diligence and be compensated accordingly.

 

 

Customer: replied 5 years ago.
Much appreciated. Before I accept, any chance you (or someone you can direct me to asap) might draft a letter for me for an additional charge? It would save me time which I would appreciate. I would fill in the blanks re. the intellectual property fee once I figure out what that should be based on the market
Expert:  Timothy D. Smith replied 5 years ago.

Here is a template. You should sign and date as well as the individuals and have it notarized.

 

To Whom It May Concern:

 

This letter is to signify the mutual agreement between ____________(Hereinafter "seller" and _____________ (hereinafter "purchaser") to release ________________source code as developed through a contractual work relationship that has now expired. The terms and conditions for the transfer of the __________________ source code are as follows:

 

  • A one time fee of $_______ for the use of the ________ source code is herein understood and agreed to by the parties herein.
  • The source code cannot be utilized, sold or distributed by the purchaser outside of their normal business practices. The purchaser is not permitted to license, assign or dissimenate the source code to third parties.
  • It is understood and agreed that seller can utilize the source code, yet will not in any way infringe upon the use of the source code by the purchaser.
  • The seller will not be held liable for any liabilities of the purchaser with reference to the source code or its future use. The purchaser herein agrees to defend and hold harmless the seller for any litigation expenses associated with the source code if suit arises with a third party.
  • The purchaser shall destroy the source code after its use is completed.
  • This agreement shall be the only agreement between the parties with reference to the source code ___________ and shall supersede any and all other previous agreements.
  • This agreement shall be governed by the laws of the state of ____________ (your home state).
  • If any single aspect of this contract is held to be invalid, the remainder of the contract will still remain in effect.

 

__________________________ Date______________

Seller

 

 

 

__________________________ Date ______________

Purchaser

 

Timothy D. Smith, Attorney
Category: Legal
Satisfied Customers: 2009
Experience: 10 years practicing IP law and general litigation
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