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Ideal EULA for Custom Software? 72

Posted by Cliff
from the licenses-everyone-can-be-happy-with dept.
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?"
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Ideal EULA for Custom Software?

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  • Ask a lawyer (Score:5, Insightful)

    by j1mmy (43634) on Saturday April 29, 2006 @09:51PM (#15230200) Journal
    sheesh.
    • Re:Ask a lawyer (Score:5, Insightful)

      by Ohreally_factor (593551) on Saturday April 29, 2006 @10:13PM (#15230278) Journal
      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.
  • of the rights you want to retain, and what rights you'd expect a customer to want, then rank them from most important to least important. Then take these to an IP attorney. Seriously. There's too much case law around that deals with IP that you'll never get it right yourself. It gets harder when you sell software in other states.
  • None (Score:4, Interesting)

    by Bogtha (906264) on Saturday April 29, 2006 @09:59PM (#15230232)

    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.

    • 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).

      • 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 (Score:5, Informative)

      by Ohreally_factor (593551) on Saturday April 29, 2006 @10:21PM (#15230309) Journal
      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.
      • 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

        • 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.
    • 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

      • 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.

        • by 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 (Score:3, Interesting)

          by 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

        • "it's pretty sleazy to lock it away and claim that it's yours even after you've been paid for it"

          Well, what does exactly mean "you have already been paid for it"?

          Does this mean they will pay me for the hours it effectlively took me to write down the program? Is that enough?

          What, then, about the costs in time and money it took me to learn my trade? What the time saving my client can get because I can reuse code from previous works? What if I feel proper that future clients will take advantage from the wor
      • by 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
      • 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.
      • 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
        • by FLEB (312391)
          the vast majority of work-for-hire contracts

          "Work-for-hire" nor "contracts" is "default".

          AFAIK (USA+IANAL perspective), WFH status occurs when you are an employee of the company, and involves considerations above and beyond just "I pay you, you work" (I'm not sure of the exact considerations, but I know that there are some.) The default state is that of a contract employee, with copyrights defaulting to the creator (not the client). Of course, rights assignment can and should be covered in the contract agre
          • Thanks for the in sight. IANAProgrammer, although I do work as a freelancer/independent contractor in a creative field. Almost invariably, everything gets spelled out in the contract (or deal memo, in my case), and very rarely do I hold any creative rights. Nine jobs out of ten, I'm not on payroll, but paid as an independent contractor, even though on some jobs most of the equipment is provided by the client, while on others I am providing my own equipment.

            On the other hand, I know a guy that shoots a lot o
    • Re:None (Score:3, Insightful)

      by SpacePunk (17960)
      Tell this to photographers.
      • 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.

        • 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 (Score:4, Insightful)

      by hazem (472289) on Sunday April 30, 2006 @12:30AM (#15230654) Journal
      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.
      • That's a negotiated contract, not an EULA. A EULA defines the terms under which the software can be used, and can be exited from at any time by destroying the software. It doesn't get signed. Acceptance is indecated by use, and the penalties are usually limited. IANAL, but what you described looks like a signed contract covering the work.
        • by hazem (472289)
          Right, but I imagine what's really needed here is a contract, not a EULA. This looks like a single developer making software for a single customer.

          Of course, there are plenty of companies that like to think that a click-through EULA has the same strength as a contact.
    • I had the idea of a sliding scale depending upon what they want. If they wanted to allow the code to be released under GPL then the cheapest rate If They wanted to walk away with the code, then the highest rate. Somewhere in between would be a middle rate with an annual maintainance fee to keep the GPL code non-releases... it would be released when the maintainance fee was dropped.
    • "None whatsoever, the client should retain the copyright"

      Why? In any case, the client will know, not you.

      Probably the computer you sent you message is full of software you don't own the copyright for (probably you don't have any single piece of software within you retain copyiright of) and, still, you are perfectly able to fullfill your needs about it. The fact we talk not about "off-the-shelve" but about "on-demand" software doesn't change the fact that the client *may* need full copyright passed to him,
    • by sribe (304414)
      The bottom line is if somebody pays you to create something to their specifications, then it's a work-for-hire...

      In your opinion: yes. Ethically: there's an argument to be made for this position, depending on the specific circumstances. Under copyright law: NO. Copyright law specifically and exclusively defines the term "work for hire", and it does not apply to entire software applications developed under contract.
  • by stinerman (812158) <nathan,stine&gmail,com> on Saturday April 29, 2006 @10:10PM (#15230269) Homepage
    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.
    • In addition to what the parent said, they're insulting to your customers. Do you really want to be a bully?
    • You're thinking of shrink-wrap or click-thru EULAs. There's no problem with a legally binding EULA if you put it on paper and have the customer sign it before they purchase the product. (Been there, done that.)
      • I'm not sure of the actual law regarding EULAs if it is an actual contract.

        My point is that any copyrighted work should be subject to the doctrine of first sale. Short of copying and then distributing the work in question, I should be able to do anything I wish with the work. I'm not sure if that holds up legally, but its my opinion. Similarly, I believe any non-commerical copying and distribution should not be illegal. Of course, that isn't the case.
    • additionally, since it is literally impossible to amend such EULAs by the signer, they are not a true contract, which a real contractee can line out and initial with changes.
  • 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.
  • ...nobody reads them anyway. Why don't you just copy the EULA off of a similar product? Make sure the lawyers read it first.
    • This license is much more entertaining than any one you'd copy from a competitor, and about as effective ;)

      USER TERMS OF SERVICE AND VERY BORING CONTRACT

      The "USER" (you) of this Program shall agree to not steal, sell, rent to others, copy, burn or otherwise destroy Program. Program's rights are obtained, reserved and withheld by Program's programmers, artists, designers and composers. Plagiarism and theft is a breach of the Terms of Service, and Breacher is subject to the full extent of the law against co

  • What else would you expect Slashdot to recommend?
  • Readability.

    If at all possible, use an established, recognized license. The GPL, something from Creative Commons -- hell, I love the Unreal licenses for simple brevity and readability, but chances are, you'll want something written in 20 pages of pure legalese, so make sure it's something I've seen before, so I don't have to read through it again.

    It'd be so nice if there were only 5 or 10 licenses in the world, so that it's actually feasable to read them, and know what you're agreeing to when you see the l
    • The OP wasn't asking for a license, s/he was asking for a EULA.
      • EULA - end user license agreement

        notice the key word?
        • "EULA - end user license agreement

          notice the key word?"

          Indeed. Nobody has to agree to a license. If you don't, you cannot distribute the work, but otherwise you are fine.

          However, if the author wants to force you to be bound by usage restrictions, he will let you agree to a contract: the EULA.

          A license is not a contract. If it were, it'd be called a contract, not a license.
          • Nobody has to agree to a license. If you don't, you cannot distribute the work, but otherwise you are fine.

            No, if you don't agree to the license under which it is released, you can not legally use a piece of software.

            After all, most of them outline the restrictions not only for the distribution of the program (or writing, etc in the case of creative commons), but also for its use (even though it is usually a fairly blanket "you can use it however you want as long as you do x and y").

            It's not as cut and dry
  • I'm facing a similar situation myself right now and read with interest the comments to this post - I saw lots of issues raised and opinions debated, but very few concrete responses. Obviously, contacting a software licensing attorney at some stage of the process is pretty much unavoidable, but does that mean that we can't have a substantive exchange of ideas on a public forum?

    I'm a contractor who's been developing customized versions of a simple application for an agency who uses it with client after clien
    • "but have no idea how to even begin to put stuff on paper"

      Don't you read your own words?

      That's exactly the point when the software licensing attorney comes in. You already know what would you want to do with the software and know what the other part expects from the contract too. Know it's time for an attorney to translate it into legalesee.
      • > Don't you read your own words?

        No, I have people for that.

        You're right as far as you go; I could've been more specific. We want to use the attorney as little as possible - there's a very limited and specific market for my software, and my employer is a nonprofit which gets much of its project-specific funding from taxpayer dollars, so there is strong motivation to minimize spending. If, for example, there are ready-written licenses we can adapt to at least be a jumping-off point, that could potentiall
        • I think I don't get you.

          "my employer is a nonprofit which gets much of its project-specific funding from taxpayer dollars"

          And your company is still doing this _for_a_profit_?

          Now: The work is not yours, but your employer's (it's a "for hire"). Your employer is a nonprofit, then GPL is quite good for the case. And it reaches your objetives: you won't need an attorney at all to use it. You just need to follow the FSF guidelines.
  • How about "All your base are belong to us"?

    I think that's what Sony is using on CDs nowadays.

  • by nurb432 (527695)
    "consumer has no rights after accepting this agreement"

  • You get payed to develop custom software for people, then you go ahead and develop it, keep ownership, and graciously provide the customer with a restrictive license to use your code?

    In case you hadn't noticed, you are not Microsoft. Fucking over your customers is probably not a very good business plan when there's a million other companies that would be glad to actually give them what they payed for.
  • Haven't done it many times but I use the GPL. Reasoning thus:

    Look Mr Client, I ain't writing a work for hire, at least not unless you add a zero to the check. Because I'll be cutting and pasting code in from my own stash and from other Free/Open code under normal conditions and I priced this job on the basis that I'd be doing likewise with the new code written for this project on the next one, and it is a lot simpler to use one uniform license. Now, the benefit to YOU is that I'm giving you the source co
  • Use a Free Software license. It is unethical for the developer to take away the rights and freedoms of his users.

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