Ideal EULA for Custom Software?

Tiger4 asks: ""End User License Agreements (EULA) for custom developed software present a nasty problem for both developers and the customer. What rights does should the developer grant to the user, and what rights should be retained by the developer to capitalize on their effort? Similarly, the customer, who is paying for the work, wants all the rights possible to maximize their investment, but probably only needs a small subset of them, such as maintenance and upgrades. The developer probably wants to be able to re-use and resell chunks of the code; the customer doesn't want single source lock-in, so they want re-use and alteration rights too. The Open Source licenses don't solve all ills, because some processes and data may be trade secrets, or at least closely held in an industry. So what terms should definitely be in a EULA, to provide both maximum flexibility and protection for both developers and customers?"

Ask a lawyer

[j1mmy (43634)]

sheesh.

Re:Ask a lawyer

[Ohreally_factor (593551)]

Exactly. And if you're developing custom software, at least some, if not most, of the issues will be spelled out in the contract. You might or might not want a license agreement of some sort, but it depends on the contract you negotiate.

A EULA is for when it's not custom work, when you are not negotiating anything, but selling or distributing your code to an unknown (at the time of the transaction) party.

Again, as the OP stated, ask a lawyer, not slashdot.

Re:Ask a lawyer

[cpt kangarooski (3773)]

I agree.

None

[Bogtha (906264)]

what rights should be retained by the developer to capitalize on their effort?

None whatsoever, the client should retain the copyright. The developers have already capitalised on their effort by being paid. Rephrased, the question is more like "What's the most profitable way to avoid giving the client what they paid us to create?"

Similarly, the customer, who is paying for the work, wants all the rights possible to maximize their investment, but probably only needs a small subset of them, such as maintenance and upgrades.

And what if they want to sell licenses to others to offset the cost they incurred?

The bottom line is if somebody pays you to create something to their specifications, then it's a work-for-hire, and they should get the copyright. If you want to re-sell the work that they've already paid you for, then you should pay them for a license.

Addendum

[Bogtha (906264)]

Obviously you need to talk to a lawyer too. Open-source licenses aren't EULAs, and you don't seem to be talking about EULAs anyway, but contracts put in place before work begins. They don't need any EULA to install or use your software, at least in the USA (you didn't mention what country you are in, which 99% of the time means USA).

DMCA gives EULAs teeth

[tepples (727027)]

They don't need any EULA to install or use your software, at least in the USA

You're referring to 17 USC 117 [bitlaw.com], correct? In practice, section 117 has been superseded by section 1201 [bitlaw.com], which allows a copyright owner to attach arbitrary restrictions to the decryption of the encrypted install package.

Re:None

[Ohreally_factor (593551)]

You've brought up an excellent point, but it's not always so black and white. Ownership of the copyright can (and should be be) subject to the negotiations of the contract before any work begins. If the agreement is work for hire, then you are absolutely right. But what if the project reuses code to which you already hold copyright? See, it can get a little ambigious, which is why it's important to examine all possible angles during negotiation and then spell it out in the contract.

I might be assuming too much, but it sounds like the OOP, Tiger,

1) Doesn't know what the hell he is talking about;

2) Thinks he can backdoor some rights into the software after-the-fact with a EULA.

Re:None

[Bogtha (906264)]

But what if the project reuses code to which you already hold copyright?

That's no different to if the code required any other proprietary library. Such a dependency would either be described ahead of time with appropriate licensing terms, or it would be avoided.

If you were told that you could have the project completed for $X cost with a dependency on proprietary libfoo-1.5 available at $Y cost, or have the project completed for $Z cost with no dependencies, would it really matter whether libfoo w

Re:None

[Ohreally_factor (593551)]

I think we're basically in agreement in substance. It (should) be spelled out in the contract before any work begins. Although you didn't say it explicitly, yes, the vast number of such contracts are work for hire, with no special rights reserved by the contract worker, so for the most part you are right.

Re:None

[belmolis (702863)]

You're confusing one way things can be arranged with how they must be. Yes, one arrangement is the work-for-hire arrangement in which all rights are acquired by the employer and the developer gets nothing but his salary or the fee agreed for writing the software. That is the default arrangment when the developer is a regular employee. However, the question evidently refers to the situation in which the developer is not a regular employ but is contracted by someone to write some software. In this situation

Re:None

[Bogtha (906264)]

Don't get me wrong, I didn't mean to imply that this was the default state of affairs legally. I'm just saying that if you are hired to produce a specific tool, then it's pretty sleazy to lock it away and claim that it's yours even after you've been paid for it, and demand the organisation who paid for it ask you for permission to use it. That's so upside-down it's unbelievable that anybody would agree to it, and yet it happens all the time.

Re:None

[Arker (91948)]

Well the sleaziness is in the apparent desire to strip the customers rights.

I find nothing at all sleazy about the developer wanting to retain his copyright and the ability to reuse the code, as long as he doesn't attempt to cheat the customer to do it. It's hard to imagine why a client would ever need copyright for an in-house app, as long as they have a permissive license, and any needs for secrecy/confidentiality are spelled out ahead of time.

As has been noted, these issues should be spelled out in the w

Re:None

[belmolis (702863)]

I agree that this is sleazy if it isn't up front. One situation in which it makes a lot of sense for someone to be hired to write a program but retain the rights to it is one in which the purchaser doesn't have a lot of money and the program is one which, perhaps with adaptation, will be useful to lots of people. In this case, it makes a lot of sense for the developer to charge a relatively modest fee for writing the program and granting the client a license for it, while retaining the ability to provide t

Re:None

[Holi (250190)]

If he's developing this is as something he wants, and preferably is working on for other clients, then he should be licensing this to his customer then he sholud maintan the copyright but expect to support this for the forseeable future. If he is designing software to their specification and for thier exclusive needs then to hand off the code with minimal support but plenty of documentation, then hell it's their problem and take your money and move on. Honestly the second will probably be the most profitabl

Re:None

[cpt kangarooski (3773)]

The two can agree that this is to be a work-for-hire but they need not, and it is not the default arrangment.

Well, really it's a bit more complicated than that. Sometimes you can agree that a work is a work made for hire, and sometimes you can't. I would suggest looking carefully at the definition of what is and isn't a work made for hire in 17 USC 101.

Re:None

[Ohreally_factor (593551)]

In this situation by default the developer owns the rights and what rights are to be transferred to the client must be negotiated. The two can agree that this is to be a work-for-hire but they need not, and it is not the default arrangment.

Are you sure about this? It was my understanding that the vast majority of work-for-hire contracts do not reserve copyrights for the developer. Contracts where the developer holds all the copyrights are more the exception than the rule.

Certainly, in each case it depends o

Re:None

[SpacePunk (17960)]

Tell this to photographers.

Re:None

[Bogtha (906264)]

I actually had photographers in mind when I wrote that. I think keeping copyright on photos you are hired to take is pretty sleazy too.

Re:None

[Jeff DeMaagd (2015)]

I agree on this point, I would never hire another photographer unless I owned the exclusive and complete rights to the pictures. But for software, the developer might bring in their own library that they made over the years to simplify often-coded tasks, and I don't think that should necessarily fall under complete customer ownership, but a subset that allows them to continue to use it for that software.

Re:None

[hazem (472289)]

None whatsoever, the client should retain the copyright. The developers have already capitalised on their effort by being paid. Rephrased, the question is more like "What's the most profitable way to avoid giving the client what they paid us to create?"

That's not necessarily the case. Suppose the developer has built a library of routines that are particularly suited to a common job, such as a database for doing a "balanced scorecard". I'm contracting with them now and they'd like to use their core library to make the project go faster with fewer bugs. Sure, I get rights to the code they produce, but they don't want to allow me to distribute their library code to others.

This is pretty much the situation I'm in right now. The agreement we have is that we are co-owners in the IP of the project. The basics are:
- neither of us can release the code to the outside world without approval from the other
- we can use the code without restriction in our corporation and our subsidiaries
- they can use the code in other projects with permission and as long as there is no connection or mention of us
- they cannot use us in any promotional material ("___ corp used us, and you should too")

It keeps us from going to into business against them, and it keeps them from taking our "trade secrets" to our competitors.

It works well for both of us because there is actually some co-development going on with the project.

The only question is copyright

[stinerman (812158)]

EULAs violate the doctrine of first sale. You can't license software any more than you can license a book. The GPL, BSD, and other such distribution agreements are not EULAs and are certainly fine.

Now, your only problem is to whom the copyright will go. The law says that a work for hire should go to the person who did the hiring. I don't agree with that, but its pretty much settled.

Agreed, don't use EULAs

[Rocketship Underpant (804162)]

In addition to what the parent said, they're insulting to your customers. Do you really want to be a bully?

Works for hire, EULAs

[Arker (91948)]

From 17 USC 101:

A "work made for hire" is--

(1) a work prepared by an employee within the scope of his or her employment; or


(2) a work specially ordered or commissioned for use as a contribution to a collective work, as a part of a motion picture or other audiovisual work, as a translation, as a supplementary work, as a compilation, as an instructional text, as a test, as answer material for a test, or as an atlas, if the parties expressly agree in a written instrument signed by them that the wor

Re:Works for hire, EULAs

[cpt kangarooski (3773)]

As to EULAs though, they would indeed have to be contracts to be binding, but they fail so many tests of a contract they can't be that.

What makes you think so? Generally courts uphold EULAs. Some courts don't, but the pro-EULA side is winning. I would suggest looking at the ProCD case, which is the leading pro-EULA case.

Several attempts have been made to pass special legislation to make them binding, and I'm vague on this but I think a few states have?

You're probably thinking of UCITA, which was enacted by

Negotiate it up front

[flooey (695860)]

This seems like exactly the sort of thing that should be negotiated when the contract with the client is made to develop the software in the first place. Tell the company what rights to the software you want when you're approached about the job, see what they want, and then proceed from there. There's no one right answer.