Power points re development k's 050311

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Power points re development k's 050311

  1. 1. Fundamentals of Software Creation Agreements Presented on May 2, 2011 in Palo Alto, California at Royse Law Firm, PC by Joel Riff [email_address]
  2. 2. Ground rules <ul><li>Stop me when I use a term you don’t understand </li></ul><ul><li>Stop me with other questions you have </li></ul>
  3. 3. Today’s Agenda <ul><li>Creation as one component of a tech transaction </li></ul><ul><li>IP basics, particularly copyright </li></ul><ul><li>Overview of software creation agreements </li></ul><ul><li>Key provisions of software creation agreements </li></ul>
  4. 4. Technology transactions <ul><li>A collection of one or more “threads” </li></ul><ul><ul><li>Confidentiality thread </li></ul></ul><ul><ul><li>License thread </li></ul></ul><ul><ul><li>Distribution thread </li></ul></ul><ul><ul><li>Maintenance and support thread </li></ul></ul><ul><ul><li>Creation thread </li></ul></ul>
  5. 5. IP basics: Copyright protection <ul><ul><li>He/she who puts fingers to keyboard owns the code unless: </li></ul></ul><ul><ul><ul><li>author signed an (employee) assignment agreement </li></ul></ul></ul><ul><ul><ul><li>OR </li></ul></ul></ul><ul><ul><ul><li>it was a “work made for hire” </li></ul></ul></ul><ul><ul><ul><ul><li>Often simply called a “work for hire” </li></ul></ul></ul></ul>
  6. 6. IP basics: Copyright protection <ul><ul><li>Never forget ! </li></ul></ul><ul><ul><ul><li>Copyright assignments </li></ul></ul></ul><ul><ul><ul><li>must be </li></ul></ul></ul><ul><ul><ul><li>in a signed writing </li></ul></ul></ul><ul><ul><li>So the fact that a company paid its non-employee developer, makes no difference </li></ul></ul>
  7. 7. IP basics: Joint ownership of IP <ul><ul><li>A can of worms </li></ul></ul><ul><ul><ul><li>Copyright: duty to account (i.e., split profits 50-50) </li></ul></ul></ul><ul><ul><ul><li>Patent: no duty to account </li></ul></ul></ul><ul><ul><ul><li>Variations by country </li></ul></ul></ul>
  8. 8. Software creation agreements: Overview <ul><ul><ul><li>Most important agreement/thread because new IP created </li></ul></ul></ul><ul><ul><ul><li>Ownership of creation lasts “forever” </li></ul></ul></ul><ul><ul><ul><li>Licenses often expressly limited in time </li></ul></ul></ul>
  9. 9. Software creation agreements: Overview <ul><li>Titles of agreements </li></ul><ul><ul><li>“ You can’t tell a book by its cover” </li></ul></ul><ul><ul><ul><li>“ Development” agreement </li></ul></ul></ul><ul><ul><ul><li>“ Consulting” agreement </li></ul></ul></ul><ul><ul><ul><li>“ Professional services” agreement </li></ul></ul></ul><ul><ul><li>Must read the agreement itself from start to finish, including </li></ul></ul><ul><ul><li>Recitals may be misleading </li></ul></ul>
  10. 10. Software creation agreements: Overview <ul><li>Start with non-binding preliminary agreement? </li></ul><ul><ul><li>“ Term sheet” </li></ul></ul><ul><ul><li>“ LOI” </li></ul></ul><ul><ul><li>“ MOU” </li></ul></ul><ul><li>Will it be cost-effective? Depends on: </li></ul><ul><ul><li>Size of deal in dollars </li></ul></ul><ul><ul><li>Complexity of deal </li></ul></ul>
  11. 11. Software creation agreements: Key provisions <ul><ul><li>Pre-existing IP </li></ul></ul><ul><ul><ul><li>Who brings what to the table? </li></ul></ul></ul><ul><ul><ul><li>Who will own what? </li></ul></ul></ul><ul><ul><ul><ul><li>Each wants to continue to own what it brought to the table </li></ul></ul></ul></ul><ul><ul><ul><li>Who will have a license to what? </li></ul></ul></ul><ul><ul><ul><ul><li>Customer wants license to Vendor’s pre-existing IP </li></ul></ul></ul></ul>
  12. 12. Software creation agreements: Key provisions <ul><ul><li>Newly developed IP </li></ul></ul><ul><ul><ul><li>Who will develop? </li></ul></ul></ul><ul><ul><ul><li>What will they develop? </li></ul></ul></ul><ul><ul><ul><li>Who will own what? </li></ul></ul></ul><ul><ul><ul><ul><li>Customer thinks it should own </li></ul></ul></ul></ul><ul><ul><ul><li>Who will have a license to what? </li></ul></ul></ul>
  13. 13. Software creation agreements: Key provisions <ul><ul><ul><li>Define “Deliverables” </li></ul></ul></ul><ul><ul><ul><ul><li>As specifically as possible </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Reference specifications </li></ul></ul></ul></ul><ul><ul><ul><li>By when is each delivered? </li></ul></ul></ul><ul><ul><ul><ul><li>By mm/dd/year OR </li></ul></ul></ul></ul><ul><ul><ul><ul><li>“ Best efforts” by mm/dd/year OR </li></ul></ul></ul></ul><ul><ul><ul><ul><li>“ Reasonable efforts” by mm/dd/year </li></ul></ul></ul></ul>
  14. 14. Software creation agreements: Key provisions <ul><ul><li>Payments </li></ul></ul><ul><ul><ul><li>Upfront payment = 1/3? </li></ul></ul></ul><ul><ul><ul><li>Progress payments = 1/3 total? </li></ul></ul></ul><ul><ul><ul><li>Acceptance payment = 1/3 total? </li></ul></ul></ul><ul><ul><ul><li>Liquidated damages for delays (not “penalties”) </li></ul></ul></ul><ul><ul><ul><li>Sometimes: Incentive bonuses for early deliveries </li></ul></ul></ul>
  15. 15. Software creation agreements: Key provisions <ul><li>Timing of corrections/fixes </li></ul><ul><ul><li>During acceptance periods </li></ul></ul><ul><ul><li>During warranty period </li></ul></ul><ul><ul><li>During maintenance and support period </li></ul></ul>
  16. 16. Software creation agreements: Key provisions <ul><li>Acceptance testing </li></ul><ul><ul><li>Meets specs “in all material respects” </li></ul></ul><ul><ul><li>Especially difficult if specs are a moving target </li></ul></ul><ul><ul><li>Timing </li></ul></ul><ul><ul><ul><li>Time for testing </li></ul></ul></ul><ul><ul><ul><li>Time to fix </li></ul></ul></ul>
  17. 17. Software dev. contracts: Key provisions <ul><li>Performance warranty </li></ul><ul><ul><li>Meets specs “in all material respects” </li></ul></ul><ul><ul><li>“ Sole and exclusive remedy”: </li></ul></ul><ul><ul><ul><ul><li>Repair to meet specs </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Replace to meet specs </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Refund </li></ul></ul></ul></ul>
  18. 18. Software creation agreements: Key provisions <ul><li>Indemnity by Vendor against 3 rd party IP claims </li></ul><ul><ul><li>Shouldn’t extend to Vendor’s own breach of contract </li></ul></ul><ul><ul><li>Shouldn’t extend to creations based on Customer’s specifications </li></ul></ul><ul><ul><li>Requires a session of its own to analyze </li></ul></ul>
  19. 19. Software creation agreements: Key provisions <ul><li>Limitations of liability </li></ul><ul><ul><li>Limits on Vendor’s liability </li></ul></ul><ul><ul><ul><li>Disclaimer of consequential damages, etc. </li></ul></ul></ul><ul><ul><ul><li>Recovery cap </li></ul></ul></ul><ul><ul><li>Sometimes limits Customer’s liability </li></ul></ul><ul><ul><li>Requires a session of its own to analyze </li></ul></ul>
  20. 20. Thanks for attending and participating! <ul><li>Any more questions? </li></ul><ul><li>Join our email list to receive: </li></ul><ul><ul><li>Notices of future presentations </li></ul></ul><ul><ul><li>Legal updates </li></ul></ul>

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