Seeking Someone to License the Heart of Your Company? 55
dcdukeu asks: "We're a small software company that is about to enter into an 'Acceptance Period' with a much larger company for the purpose of determining if they want to license the source code and intellectual property of our main product. This involves giving them our source code, whitepapers, and providing the technology transfer of how things work. Once they receive this they get 45 days to determine if they want to move forward and incur royalties plus payment minimums. What I want to know is if other people have dealt with this before and what would they recommend in terms of how we can turn our information over to them in a time sensitive way (e.g. after 45 days the documents they receive cannot be viewed any more). We are basically giving up everything we have and training them before they say 'yes' or 'no' as to whether or not they are going to move forward. Thoughts?" Unless there are numerous protections already in place to prevent the larger company from running with the information gleaned from this transfer, this so does not sound like a good idea. If you've been in a similar situation before, what suggestions would you have for dcdukeu?
ONLY if you have no choice... (Score:5, Informative)
If you must give them code, do it by providing actual *sealed* machines minus networking cards, and disk drives and usb ports (CD is ok, only if it is NOT writable). Seal up the box professionally with security seals that will show tampering. Place keyboad loggers and other spyware on it to watch and record what is done on this box. Go overboard and force the use of tempest-resistant fonts and lock down the system such that new software cannot be installed and add a *hardware* clock that will accurately mark off 45 days. On that day, have the system nuke the hard drive.
Re:Make it a hardware solution (Score:3, Informative)
Put the hood open, and *whoops*, looks like the CMOS battery got knocked out of place. No more BIOS protection.
Quick rescue floppy, and you've magically got root.
CMOS batteries die. Happens all the time. It would be pretty obvious that they screwed you, but you wouldn't have any grounds to seek damages.
really risky deal (Score:1, Informative)
And they can evaluate it for 45 days.
Why do they want to access your code/docs?
Possible reasons:
You'll have to protect your company from this. Specially because it's your main product and if you lose it your company can get out of this deal in a really bad shape.
Some sugestions that may come handy:
Get a laywer and make a written agreement that specifies what they can do with it [and specify what they can't:
and so on].
Put everything you can't think of in that contract and state that if they break any rule in it (AND don't buy your product), they have to pay you big time - (estimate the value as YOUR_PRODUCT_VALUE*350%) - this way they ain't gonna feel like stealing your code and they'll accept it if they are well intentioned.
This way, you are saffer and get a "little something" wich you can use to pay more laywers. If their layers are really good, increase the %.
There's no way you can guarantee that they can't copy it.
They can use a pen and a piece of paper to take notes about your code, docs, etc, etc or they can even memorize portions it, and you can't sue them for that, cuz you don't know if they have it in their minds - ok, bring the lie detection machine in.
They'll have to think something like "If we double cross these guys they'll take shitloads of money from us and it cost more than just paying for the code or paying our developers to develop a similar thing.".
What you can do is use several defense mechanisms in order to increase the deal's security.
It's a risky deal. Prepare yourself.
Get a Good Specialty Lawyer Then Don't Worry (Score:4, Informative)
'Acceptance Period' with a much larger company for the purpose of determining if they want to license the source code and intellectual property of our main product.
Contrary to the majority Slashdot opinion, I wouldn't worry too much about the deal. Get a good lawyer who does this sort of work exclusively and you will be just fine.
45 days isn't all that long either. We (a Fortune 500 company) often get hardware and software for months before we make up our mind. (More than once, we had Cisco gear on loan for so long the model has been discontinued or replaced before we got around to approving it for purchase.)
When viewing source, the company viewing it is almost always in the more dangerous position. Once they see your code, should they every come up with a similar application, they will have to jump through hoops to prove it isn't based on your code. That can be very expensive.
Usually when I do this sort of review I'm looking for clean, well-commented code and good overall documentation. I am not a programmer by trade so I'm generally not evaluating the code itself but the overall maintainability.
Buying code from a company as small as you seem is dangerous. Often times, there are only a couple programmers who really know the application. Should they get run over by a truck or leave the company, I want to make sure that the code is clean enough that someone else (either in your company or mine) can pick up the torch and keep my business running.
It's not enough to have an excellent product today. I want to know that the product can change with our needs. That's the real reason I want to see the code and documentation as well as the finished product.
In summary, get a good lawyer and relax. This is common practice and a lawyer who has done it before will keep you from getting screwed.
InitZero