As a patent attorney, I have something to admit: understanding patents is not as valuable as understanding copyright and contract law for software people. This may have been different a decade ago, before cases like Alice put software patent law squarely in the “nobody knows the rules” bucket. But I think that the changes in case law have only accelerated the shift in importance, and that copyright and contract have always been the driving forces for software.
Why is Copyright Law Important for Software Companies
Did you know that whoever writes software, by default, has rights to that software under 17 USC Section 201(a)? You have a brilliant idea, tell a contractor or employee what you need to happen, pay him or her handsomely for their time, and…they own the rights to the software.
Unless you contractually (and up front) negotiate rights to the software, the person who wrote the code can end up in a position where they can sell the code to a 3rd party, such as your competitor. Bummer.
Why is Contract Law Important for Software Companies
Think of contracts as legal systems that operate between the parties of the contract. So, if you do not like the default behavior of the US Copyright laws, you can enter into a contract where you define how rights are shared between the members of the contract. Instead of petitioning Congress to create a smarter system, you write up your own rules.
The first thing you should do is, for all of your employees and contractors, have them (as part of their employment agreement or a specific engagement agreement or statement of work) assign their rights in any copyrighted material to the company. Because this is done before wages are earned or fees are paid, there is consideration for this transfer of rights from coder to company.
Second, you can agree that any work that cannot be assigned to the company was created as part of “work for hire” arrangement. You can learn more about a work for hire in Pillsbury Law’s article entitled “Work Made for Hire does not Generally Apply to Computer Software.” In short, work for hire grants employers additional rights, but may also create rights beyond the expectations/desires of the parties (particularly in California, where an employee relationship can be created when works for hire contracts are in place).
In short, the most important priority to keep in mind when hiring employees or contractors to write software is to have a framework in place that AS CLEARLY AS POSSIBLE lays out the rights afforded to each party. Most software developers understand that, when they are working for a company, the company owns that software. By creating a contract that reflects this understanding up front, confusion down the road can be eliminated.
If you have ideas about how to protect either software companies or software employees, I would love to hear about them.