Need help: Licensing program code to a client of a client?

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Gambit37
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Need help: Licensing program code to a client of a client?

Post by Gambit37 »

Hopefully some of you programmer types might be able to help with this?

I developed a Wordpress powered website for a client: this was through an agency so I didn't work with the client directly:

ME ---> AGENCY ---> CLIENT-A

Part of the project included some custom coding of various unique features. Client-A wants to package up one of the features, "de-brand" it and sell it on as a standalone asset to their own clients (Client-X)

ME ---> AGENCY ---> CLIENT-A ---> CLIENT-X

I told the agency that I still own the intellectual property rights on the custom code and that if Client-A wanted to sub-licence it, I'd need to have them pay a licence fee. They are fine with this, but I'm not sure how I work out the value of this licence as I've not done this before. Any ideas?

The second issue is that the Agency want to know what I would charge for these two situations:

1) "Client-A" SELLS the code on to "Client-X"
2) "Client-A" GIVES AWAY FOR FREE the code to "Client-X"

I have no idea how to quote for these two different scenarios! I simply have no idea what is reasonable.

Can someone please help with this? I can't seem to find anything useful online and I need to go back to the Agency before the end of the week.
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Sophia
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Re: Need help: Licensing program code to a client of a client?

Post by Sophia »

I wouldn't make any distinction between the two, because all that will happen is they'll find a way to "give the code away" in order to have to pay you the lesser rate or not pay you at all or whatever they decide on. Don't go with any sort of royalties based on sales or they'll do the same thing.

I find the whole notion that you can be contracted to write custom code for someone and still own the code a bit ridiculous anyway. Do they need your permission if they want to modify something? Fix a bug? If your problem is that they're going to turn around and resell it and profit from your work, my advice would be to charge them the difference between what you did charge them and what you would have charged them had you known this-- and then in the future, just charge the higher rate and not worry about this kind of thing.

Yes, I realize my answer sounds probably very cynical. That's mostly because it is. :mrgreen:
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Paul Stevens
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Re: Need help: Licensing program code to a client of a client?

Post by Paul Stevens »

I agree w Sophia. I think.

When I wrote code for a living, it belonged
to the person who paid for it.

In your case, you should charge them what
it costs to produce the code. Then it is theirs.
Just as if you sold them a car or a clean floor
or a sandwich.

Unless there was an explicit agreement before
hand that you were only selling a license.
Then, welcome to the world of Microsoft and
and product registration and stops working
after three weeks and whatnot. And future
bad feelings everywhere.
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Re: Need help: Licensing program code to a client of a client?

Post by beowuuf »

I mean its no different to artists if they are commisioned for a piece of work that is digital (music or art). Will that work be used as an illusstration in future paid products, reused to make paid content websites look /sound better, etc. It might help to look into that side of things too, to see how they develop their costing for a single piece of work that would be owned by the buyer, that could be reused in many ways.
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Re: Need help: Licensing program code to a client of a client?

Post by Mystic_Unicorn »

I think u already got paid for your work. That is where u end. Now It is only up to client A what it wants to do with it.
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Gambit37
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Re: Need help: Licensing program code to a client of a client?

Post by Gambit37 »

Handing over a website is one thing. Handing over the right to copy what I've done for other unintended purposes, is quite something else as Beo noted. I still have the intellectual property rights on that work. Client A paid for a website for a specific purpose and now wants to make money off my hard work, which was not in the terms of the original agreement.

@PaulS: Did you specifically have a contract that signed ownership and copyrights over to the client? If not, then those rights still remained with you.
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Paul Stevens
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Re: Need help: Licensing program code to a client of a client?

Post by Paul Stevens »

I can certainly understand where you are
coming from. It sounds like a can of
worms, however. If I were to think as
you do, I would be very sure to let
potential clients know up front that the
product of the labor I do in exchange
for their money does not belong to them.
Otherwise I see the possibility of
misunderstandings and bad feelings.

These kinds of discussions are common
in the university setting here. Did he
develop the idea for that clever code
on company time as part of his supported
research or did he think of it totally
independently while watching birds
during his vacation in Florida?
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Gambit37
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Re: Need help: Licensing program code to a client of a client?

Post by Gambit37 »

I've just checked my Rights section of my Ts & Cs and realised it's rubbish!
The Client will own the rights to the deliverable(s) once the project is paid in full and no further revisions are needed.

The Client will not be permitted to use the work for any purpose but the stated purpose. Frisk Design retains all rights to use this project for marketing materials and portfolio exposure.

Some work may include software licensed from other third parties or classified as “open source.” Where this is the case, the Client must ensure that all license transferrals are undertaken in accordance with the third-party requirements. If such licences are not transferrable, the Client is responsible for acquiring and/or purchasing the necessary software themselves. Under these circumstances, attention will normally be drawn to this extra expense in the project proposal.

In the event of cancellation of this assignment, ownership of all work completed so far shall be retained by Frisk Design.
So I give them the rights, but then tell them they can't do anything else other than use my work for the purpose it was created for. That's crazy! What was I thinking? I should stress that this document has not been given a green light by a lawyer!

Since I'm giving all this freelancing up anyway and going back to full time work, I'm not going to sort out this Ts & Cs mess, it's just not worth it. But I do need to resolve the cost issue. Someone else gave me this advice:
Pick two numbers:
The first one is the bare minimum amount that would make it worth it for you
The second number should be the highest amount you would feel comfortable asking for before you think that you're taking advantage of them.
The amount you really charge should be somewhere in between those two numbers.
I think it's probably just easier to say "The licence is £XXX and they can do what they want with the code". Since I am also charging them to "debrand" it, make it standalone and re-package it and then write the documentation, that's probably fair enough.

Bearing in mind I already lost several thousand pounds on this project, and this is an opportunity to make something back -- how much should I charge? ;-)
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Re: Need help: Licensing program code to a client of a client?

Post by Sophia »

A decent compromise is for you to retain copyright but grant the client a perpetual, irrevocable, transferable, etc. license to do whatever they want with it. It's more or less like saying "I made this, and you have to acknowledge that I made it, but other than that, you can do whatever you want," which is probably the spirit of your first line of your terms. I've worked under this kind of contract a couple of times. That let me keep the code and use it for other things, too-- if you just outright sign it over to them, and then copy the code later, you might be committing copyright infringement by using your own code!
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Re: Need help: Licensing program code to a client of a client?

Post by beowuuf »

Actually, that sort of 'you have the rights but not really' is exactly the trick publishers can pull in reverse. So artists can retain copyright, and own their property, but can't actually do anything with that property right away while under terms of the contract they've signed.

Sophia's contract arrangement sounds like exactly what you want to do - just got 2/3 of your highest price and see where it goes :)
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Re: Need help: Licensing program code to a client of a client?

Post by Gambit37 »

That sounds good. Do you have any text I might use for that Sophia?
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Re: Need help: Licensing program code to a client of a client?

Post by Sophia »

Unfortunately, no, sorry. I mean, I can make up some stuff off the top of my head but none of it would be anything a lawyer would say was sound, probably.
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Re: Need help: Licensing program code to a client of a client?

Post by Gambit37 »

Just an update. This all got messy and kept going back and forth. In the end, I couldn't be bothered with the time I was wasting on it, so I suggested that instead of charging a fee, that the work would be placed under Creative Commons Attribution. That way, at least I retain a credit on the original work. Everyone seems happy with that (unsurprisingly!) :)
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