As a software entrepreneur, you may jump at the idea of partnering with an outside development team. Well, you, like many others are off to a great start and an outsourcing partnership is a smart decision. There are many reasons you may choose for partnering with a 3rd party: You don’t have to go through the troubling and elongated process of finding and hiring credentialed coders. Maybe, you don’t have in-depth knowledge of software development or coding. Whatever your reason for outsourcing, there is one aspect that you should be well aware of – the ownership of intellectual property and source code. As a business owner you need to know your rights and understand that sole ownership of code will be in the best interest for your business. Here are a few questions to consider before choosing just any team as your partner.


Would you give a consulting team ownership of your business?

Most wouldn’t. So tell me, why would you give a team ownership of your product?  Let’s face it, when you partner with a development team, you’re hiring them to provide a service, not a product. Sure, the software is the result, but when you are paying a work-for-hire team for the development of your idea, you deserve to own the source code. It’s critical to understand the ownership terms you agree to before you sign an agreement.

Is it a bad idea to share joint ownership with the development team? Not always, many believe that because the developent team created the code, they should be the best option to maintain it – a reasonable assumption. However, many people tend to run into pitfalls, more often than not, when they choose a joint ownership and the partnership does not deliver the best results. When a code is owned by the development team, many times it tends to be pinned on one developer – putting you in a tight spot if the code needs to be revisited at a moment’s notice. This developer that has the ownership of your code could be difficult to track down, or could be let go from their employer when you need them. Remember, you can always be a returning customer for that development team, but it’s more beneficial to your business when you have the choice.

Do you want the freedom to transfer or sell the code?

With full ownership, you have the right to use, transfer and sell the source code developed by the outsourced team. However, in a joint ownership, you are restricted to what you or anyone else can do with the source code.  Depending on the contractual agreement, you may be legally restricted to what you can do with that code. The previous team may also have part ownership to any new code built on top of theirs, even if the former’s use is minimal. It is in your best interest to have access to all the information and resources a new developer may need to continue where the other left off, no strings attached.

How do you attain ownership of the source code?

To answer this question in one word, knowledge. In order to receive full ownership of your source code, you must choose a team that offers you full ownership of the code up front. It can be a nightmare realizing after the project completion that you don’t own the code. You spent your company’s money on a product and you end up not owning your product – it grants you no freedom. Trust a team that offers full ownership in a well written, detailed agreement. This agreement will eliminate future headaches and pitfalls that hurt your business. Make well-informed decisions around rights of use, code transfers and sales.

For an overview on the copyright law surrounding software development, click here

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