Lots of entrepreneurial start-ups and spinouts engage third party developers to build, or assist with building, their key software product. However, not all of these businesses are aware of the legal risk that is inherent in this arrangement. Without taking the proper steps you could be left with a situation where you don’t own the copyright in your software. Here’s a brief rundown on the law regarding copyright in software.
Copyright in software
There are a number of elements of software that attract copyright protection, including:
- source code or object code;
- preparatory design materials; and
- the general structure, sequence and organisation of a computer program.
Who owns this copyright?
In Scotland, the first owner of copyright in software will generally be the author. This means that if you do not have a contract in place with your third party developer, this third party developer may well own the copyright in what is created for you.
This may not be the case if your developer is an employee, but for most of the start-ups and spinouts I work with, developers are not actual employees.
What does all of this mean?
The owner of copyright has the exclusive right to copy their work, adapt it and issue copies of it to the public. So if your developer owns the copyright in your software, you could be infringing his/her copyright by doing any of these acts. This could lead to a legal claim for breach of copyright, which can harm your business both financially and reputationally, as well as causing untold disruption.
If you are looking for investment, also bear in mind that your investor will want you to own all of the copyright in your software (partly to avoid a developer coming out of the woodwork with a legal claim as mentioned above).
What do I need to do?
If your developer is not an employee, you should enter into a software development agreement which ensures that all copyright in the software created is transferred to your business. Then you will own the copyright in your software.
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