Who Owns Source Code When a Company Folds?

pipeb0mb asks: "A few years ago, I worked for Chilliware, Inc. as the 'Technical Development Manager'. Some of you may remember us for the software iceSculptor, Mohawk and Mentor. Chilliware folded rather quickly and harshly back in May of 2001 due to money issues. Within days of the first layoff, everyone was gone, from the CEO and VP's to the receptionist. Now, years later, I've been digging through some old CDs, and am reminded that I still have the final production source code for the products we released in the retail channel. I've attempted to contact several folks over the past couple of years to gather information about the software and who owns it now. To no avail though. Either I get an 'I don't know' or 'No one' from the dis-interested parties. I feel like these programs are my children that never got a fair shot. I hate to see so much work wasted and lost to the ages. So, Slashdot: What do I do with this source code? It's a great deal of well commented and well written code, performed by over 100 developers in a former Soviet Republic (who formerly worked with Boomerang Software). Where do my binary children go now?" As things are now, if a company folds, the code is buried and forgotten unless someone buys the rights to it, before the source code is lost. This issue was discussed a long time ago and there didn't seem to be much in the way of answers. Have 3 years made any difference?

Were their assets bought?

[Stone316]

Most likely i'd say their assets were bought by someone, if the software was any good that is. I'm sure there are alot of companies out there keeping their eye's open for bargins.

Check old news releases from competitors, etc.

You will need to check the BK court records

[alen]

When a company goes BK, the creditors own everything and either divide the spoils or it gets liquidated at auction. Most likely someone bought the rights to the software for pennies on the dollar. You will need to check the records at the federal or state BK court where the action was filed. Since there may be service fees involved to search online, you may have to visit the court and search yourself.

Retain an IP lawyer?

[Bravo_Two_Zero]

I'm not suggesting this is cost-effective, but maybe it would pay to consult with an intellectual property lawyer? It's a cop-out answer, I know. But assets are normally liquidated from dead companies by the last holder of the company. Maybe it's a trivial venture to purchase the rights (via a foundation, new or existing) to the now-deceased company from the former owners? Someone has to still be holding the bag... even a VC.

ask the owners

[UnderAttack]

Well, if a company seizes to exist, either due to bancrupcy, or it is just disolved, all assets are usually sold off. The source code was likely part of this. Now it may happen, that nobody bought it, and it got abandonded for anyone to pick up. But to make sure, you need to check with whoever took care of the company.

Not you

[Malc]

Although you worked on it, you never owned the copyright. What makes you think you'd own it now, or that there isn't somebody out there with a legitimate claim to it? Use it at your own risk.

Re:Not you

[perrin]

Although you worked on it, you never owned the copyright. What makes you think you'd own it now, or that there isn't somebody out there with a legitimate claim to it? Use it at your own risk.

That varies from country to country. While the general concepts of copyright are agreed upon in international conventions and agreements, the national implementations have significant differences. Always consult a lawyer from the country in question.

Re:Really and truly abandoned?

[Xerithane]

Let's say for argument's sake that the source code really and truly didn't get included in the liquidation, and wasn't included in some blanket "..and all other assets of value or works produced thereof.." statement.


This contradicts itself a bit. Since software authored by members of a corporate entity is automatically copyrighted by that entity it becomes an asset. Instantly. Just because they don't know about it, doesn't mean it isn't there. Just because they don't know, doesn't mean it's not theirs.

Does ANYBODY own it at that point? Is it considered public domain? Can it be re-copyrighted?

If the company simply stops operation, than yes. It will revert back to the original author (I believe, I'm not 100% sure on this) -- if there are any creditors or any other interested party that has control of the assets it will always belong to them.

But no, if something goes into the public domain you can't re-copyright it. You can do a dirty-room re-write of it, and copyright that but the public domain will stay in the public domain.

I'd guess that most liquidations do include a statement like that above, just to prevent stuff from slipping through the cracks -- name all the nameable stuff, and then have a catch-all for everything else.

They don't even name the nameable stuff. What happens (usually) is creditors for company XYZ hire liquidation firm ABC, and the liquidation firm values everything then tells the creditors the assessed value and they get to split up the money or the equivalent in goods (if they want them.)

This stuff has been going on for way too long for there to be things falling through the cracks. I'm sitting on tons of source code that is owned by a liquidation firm that has no clue what the hell they have.

Re:creditors and dead code

[Ogerman]

There are basically three options you have.

How about:

4. Convince them to assign the rights collectively to the old development team, under an open license. This way, both the old developers and the general public will benefit. That's what any respectable company would do.. (of course, ideally, said company would not have produced proprietary code to begin with and this wouldn't have been an issue)

Re: Ask a Lawyer

[hazem]

Actually, there is some benefit to asking for this kind of advice - but not to determine the course of action. Rather, for getting an idea of what's possible before seeing your lawyer.

If I were to get divorced (I'm not even married), I'd be talking to my divorced friends to find out what I can expect on the legal front - not because they're legal experts, but because they have experience dealing with my situation. They might be able to help steer me away from bad advice, or help me know what questions I need to ask.

I definitely wouldn't "ask Slashdot" when I've been caught with 40g of cocaine and a 12 year old prostitute in my car. But it is perfectly germane and sensible to ask a bunch of coders about their experience and advice in a situation dealing with writing software and the legal ownership of that software.

Check that law there.

[siskbc]

They either deal with him fairly, or they get zilch. All he must do is "lose" the disks.

That's a one-way ticket to jail. If he has those disks unknowingly, it's a potential oversight. However, if he 1) finds them, and 2) contacts the rightful owner, he's obligated to return them immediately. I suspect they'll record the conversation, and no judge/jury on earth will go for the old "I lost them" routine. Well, maybe the OJ jury.

Remember, his copy is legal under fair use (backup copies made while employed)

The hell! He doesn't have a license to anything he used as an employee. When he quits (or is fired, or laid off) his rights to use company property ceases. I've seen the fair use law, and it ain't that. If MS fires me, can I do whatever I want with a Windows CVS, like develop it into another product? Uh, no. That isn't fair use.

and the only thing the owners can do is compel him to destroy it. They can't compel him to give the code back - he doesn't have a relationship with them anymore.

Legally they sure as hell can. He has their property. Period. They can't threaten to fire him, but he can go to jail.

IAAPL (paralegal)

[hummassa]

But not in the US. Here (BR) every folding or closing company has its "successors", analogue to the inheritors of a physical person. The successors own the remaining assets and debts of the former company. This includes copyrights. So here, it's easy to trace the successors, and ask them to give you/sell you the copyrights. There is no "dangling" rights issue.

There is no code written...

[TheAwfulTruth]

... that cannot be re-written if the need for it truly exists.

Using or releaseing the code yourself as others have said is extremely risky. Maybe you'll get away with it, maybe you'll be sued back into the womb. Flip a coin.

On the other hand, if you truly wrote the code and the code itself was not patented AND you didn't sign a non-competition pact with your employer... Then spend a couple years (or however long it takes) and rewrite it. Make it better than before, start a source forge project around the idea. Then it will be yours, no question.

But remember you got paid by someone else to do that work, it's theirs, not yours, even if currently you don't know who "they" are.

Do the right thing and rewrite it.

The answer is 100% clear

[werdna]

and it is this: It depends.

I can fantasize all sorts of facts completely consistent with your story that would result in dramatically different answers. It just depends.

It depends on who owned the assets before the financial worries (determining clearance and ownership of any work is not always a trivial matter; who wrote the code, were they contractors or consultants, if contractors, what do the work for hire agreements say, how about other ip, what was it derived from, any third party incorporated codes, etc).

It depends on the structure of the company. Corporation, partnership, llp.

It depends how it shut down. Was it liquidated, with assets distributed? Bankruptcy.

It depends upon the agreements of everybody who worked on the software, and whether there were provisions that dealt with whatever eventualities occurred.

It depends upon the nation and, sometimes, the state in which these events occurred.

It depends.

Only a lawyer can ask the questions, determine all the issues and answer them, if an answer is available.

Anybody who pretends otherwise is lying to you.

Source Code Escrow Helps Prevent This

[billstewart]

A fairly common practice when big companies are buying business-critical software from other companies is to do "Source Code Escrow". Basically, some lawyer keeps copies in a safe, and if the author company goes bust or stops selling the product, the customer company gets access to the source code, and maybe gets some ownership rights to it (depending on how custom-built it is.)

That doesn't usually determine who has the right to sell and distribute the code (usually that either gets owned by whoever buys the remains of the company or else gets sold along with the chairs and espresso machine or whatever), but it at least protects the customer against being dependent on abandonware, and the escrow agreements can clarify that the customer has access to it for N years under whatever conditions.

Re:OP: The very first thing you do ...

[neverkevin]

7. Get sued for IP theft

Salvage

[cait56]

salvage (s?l?v?j)Pronunciation Key

n.

1.
a. The rescue of a ship, its crew, or its cargo from fire or
shipwreck.
b. The ship, crew, or cargo so rescued.
c. Compensation given to those who voluntarily aid in
such a rescue.
2.
a. The act of saving imperiled property from loss.
b. The property so saved.
3. Something saved from destruction or waste and put to
further use.

The concept of salvage is a long established part of
maritime law, because it was recognized that there
was no benefit to protecting ownership rights of
property that the rightful "owners" could not secure.
Allowing somebody else to rescue the property would
be a benefit to society as a whole that outweighed the
theoretical loss to the "rightful" property owner.

Some definition of "abandoned" software really needs
to be developed. The only thing that is different about
this type of "shipwreck" is that the losses are less
visible.

Creditors should have first claim, but when they have
no capacity or desire to do anything with the code
then there really should be a mechanism to allow
it to fall into the public domain.

Re:OP: The very first thing you do ...

[wideBlueSkies]

>>7. Get sued for IP theft

Get sued by who? That's the question eh?

wbs.

IP in source code belongs to the programmer

[jyg1234]

It doesn't matter if the company has gone belly up, the intellectual property (copyright) in the source code is owned by the person who created the code, not the company.

The original idea behind copyright in subject matter known as "works" (I'm in Australia, I know that this is the law in Australia and the UK, not too sure about the US, but should be similar) was that they are the creation of human intellect and thus the copyright which subsists in the work must be owned by a human, not a company.

The company can own copyright in subject matter know as "subject matter other than works" which can include the mode of production which can allow the company to bring an action against people to directly copy a CD on which a program is distributed but they can not do anything directly to anyone who copies source code because they do not OWN the source code.

As long as you are the programmer to produced the source code, you have every right to use it and distribute the programs which come from the source code. If you are not the sole owner of the copyright, you need the consent of the co-owners of the copyright and any profits which come from the use of the source code should be shared between the co-owners.

Re:OP: The very first thing you do ...

[WindowsTroll]

Contacting the CEO or VP may not be enough. Did the company have shareholders? If so, they own it. Did the company leave any debt? There may be a line of people trying to collect, any assets, including code, are theirs.

Re:IP in source code belongs to the programmer

[Tazzy531]

Chances are this will not hold up in US courts. In most places that you are employeed, you sign a contract giving up all claims that you may have on the IP of anything you develop on "company time." In paying you a salary, the company has fulfilled it's end of the contract. The IP and source code should then belong to the company.

Re:OP: The very first thing you do ...

[neverkevin]

By the person who owns the IP. Just because you can't find the owner doesn't mean there isn't one. Once a corporation disappears doesn't mean anyone can take their IP. Like all their physical property, all their IP gets sold to pay back investors. Some times the sale of the property is handled by a 3rd party, so no one in the former corporation may know who owns it. The bottom line is someone paid money for the right to the IP and once they realize what you have done I am sure they will not be too happy.

Re:creditors and dead code

[digiZen]

Can't Microsoft claim that what they paid for it was their developer's time and effort and housing and salaries, etc? In that case, we would be back to the original (retail) valuations.