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Daniel Protopopov

Software IP, Idea and Copyright issues

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Hi there everyone, I have a dilemma at hand which I cannot resolve straight away and thought to ask you for advice on. I and my partner have written software for Person Y using his design and ideas during the period of a year. We haven't been paid a cent, however my partner early on signed an NDA - not sure what it has in it. Basically, now, that we're trying to establish an agreement on between our parties (me and my partner, Person Y), our negotiations are heating up and Person Y threatens to take me into court if I don't sign an NDA, because it was his idea and his IP(as he claims) and because early on we verbally agreed on having escrow account in which all physical property to take place - code, art, documents etc. Again, we haven't put it into writing or anything, and I'm not sure here if Person Y just trying to threaten and scare me with court and law, or is really sure of his victory in case of occurance. The thing is, again, he haven't paid us a cent, we wrote and tested software in our personal time; Person Y who initially decided to be a publisher and is concerned about us ransacking him. In turn, I don't want to sign an NDA until I get some assurance that in case of Person Y not putting enough effort into publishing the software, and be able to take it to a different publisher. As we've been told by lawyer, idea IS in public domain, however I'm not sure about the IP - it may be a trade secret or something else, yet to figure this out. Can Person Y really sue me and win on the grounds that earlier on we had verbal agreement to one thing (escrow agreement), and then now when me and my partner may have decided to license the software (as code owners) to Person Y? Somehow Person Y really tries to convince me that he NEVER "busted" anyone in his life' business dealings and that I trust him on that completely - but I, in turn, would like to have some protection that the source code I wrote isn't going to lie around as a program, which Person Y fails to deliver. What I also wanted to ask is - is it a common practice to have publishers have exclusive distribution rights? Do developers have a backdoor in case publishers forget or do not put effort into distribution? I know, it's pointless to talk about large publishers, but I'm more concerned about one or few persons publishers. I'm not talking about set figures to be sold in certain period, but rather about being able to have, say, mid-year meetings where, in certain cases, developers may decide to go to a different publisher? Is it really viable or commonplace? I will be arranging another consultation with a lawyer before actually signing anything to understand all bits and pieces, but wanted to know your opinion prior. Thank you.

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Hi Daniel, you wrote:

>I and my partner have written software for Person Y using his design and ideas during the period of a year. We haven't been paid a cent,

Why on earth have you been working for free for a year?

>my partner early on signed an NDA - not sure what it has in it.

When are you planning to find out?

>Basically, now, that we're trying to establish an agreement on between our parties (me and my partner, Person Y),

Why on earth have you waited so long?

>our negotiations are heating up and Person Y threatens to take me into court if I don't sign an NDA,

And of course you've both threatened to take him to court for not recompensing you for your work?

>Person Y ... is concerned about us ransacking him.

"Ransacking" in what way?

>I don't want to sign an NDA until I get some assurance that in case of Person Y not putting enough effort into publishing the software, and be able to take it to a different publisher.

That's bizarre reasoning. The NDA has nothing to do with what he does with the game.

>Can Person Y really sue me and win on the grounds that earlier on we had verbal agreement to one thing (escrow agreement), and then now when me and my partner may have decided to license the software (as code owners) to Person Y?

What does your lawyer tell you?

>[irrelevant ramblings deleted] I, in turn, would like to have some protection that the source code I wrote isn't going to lie around

You need an agreement between the two parties. You're both being too stubborn - this needs to break free, somebody's gotta give.

> is it a common practice to have publishers have exclusive distribution rights?

Yes, sure. Unless you get multiple publishers for different territories, one for North America, one for Europe, one for Russia, one for Japan...

>Do developers have a backdoor in case publishers forget or do not put effort into distribution?

Not without a contract, and all you guys have is one NDA.

>I'm ... talking about ... being able to have, say, mid-year meetings where, in certain cases, developers may decide to go to a different publisher? Is it really viable or commonplace?

What? I don't understand. You think your publisher is going to sign a six-month deal?

Daniel, how old are you and your partner? In your country, what's the legal age for entering into contracts? It's 18 here in the U.S.

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Tom Sloper:
In regards to your questions:
> Why on earth have you been working for free for a year?
Because I was offered a percentage from sales of the game, i.e. a share of profit

>When are you planning to find out?
I've tried him to get me the NDA signed by my partner, but he resists to it or not interested in showing it to me

> Why on earth have you waited so long?
Because we had a few meetings and had changed our previously set verbal agreements. Now I want to put all into paper and make it final.

> "Ransacking" in what way?
In the way that I run away with his idea and so-called IP and allow someone else publish it.

> That's bizarre reasoning. The NDA has nothing to do with what he does with the game.
Doesn't NDA signifies an agreement both parties should abide to, besides the standard trade secret and such protection? Or there should be separate agreement? Will it allow me to choose different publisher if I sign Person Y' NDA without any legal implications?

> What does your lawyer tell you?
I haven't yet consulted him about this.

> Not without a contract, and all you guys have is one NDA.
So if he(Person Y) has NDA of my partner, that means... what? Can I go to different publisher and let him distribute the software without legal implications?

All I'm trying to figure out here is the common grounds with Person Y - so that he a valid and legal path of breaking the contract in case we don't maintain and update the game - and for me, where I can go to different publisher and let them publish the game.

About my age - I'm 26.

Postnote:
Not that it matters, but I just want to be somehow protected from the outcome like in all those stories I heard and read of online and newspapers, where party at loss rambles about "why, oh why I didn't do that or this" - I want to make sure that each of us have a proper, legal way out in case other party does not meet standards outlined in the contract.

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Hi Daniel, you wrote:

>> Why on earth have you been working for free for a year?
>Because I was offered a percentage from sales of the game, i.e. a share of profit

But why did you work even one day without a signed development agreement? That's why you're in this mess - because you went to work on a verbal agreement.

>>When are you planning to find out?
>I've tried him to get me the NDA signed by my partner, but he resists to it or not interested in showing it to me

My suggestion was that you ask your partner to show you his copy. You must always keep a copy of any agreement you sign.

>> Why on earth have you waited so long?
>Because we had a few meetings and had changed our previously set verbal agreements. Now I want to put all into paper and make it final.

You totally sidestepped the question. You shouldn't have worked even one day without a signed development agreement.

>> "Ransacking" in what way?
>In the way that I run away with his idea and so-called IP and allow someone else publish it.

If the verbal agreement didn't give you a right or option to do that, then of course you wouldn't do that, which means he's just being unreasonably paranoid.

>Doesn't NDA signifies an agreement both parties should abide to, besides the standard trade secret and such protection? Or there should be separate agreement? Will it allow me to choose different publisher if I sign Person Y' NDA without any legal implications?

You don't have the slightest idea what an NDA is, do you. All a non-disclosure agreement does is say you won't disclose the other party's confidential information (and it defines what that information is).

>> What does your lawyer tell you?
>I haven't yet consulted him about this.

I was giving you a subtle hint there. Too subtle?

>> Not without a contract, and all you guys have is one NDA.
>So if he(Person Y) has NDA of my partner, that means... what? Can I go to different publisher and let him distribute the software without legal implications?

You are so over your head! Lack of NDA doesn't give you any rights. You need a court to sort out whether the verbal agreement is binding before you take any precipitous action.

>All I'm trying to figure out here is the common grounds with Person Y - so that he a valid and legal path of breaking the contract in case we don't maintain and update the game - and for me, where I can go to different publisher and let them publish the game.

You are so in need of a lawyer! Not us guys. A lawyer.

> I just want to be somehow protected from the outcome like in all those stories I heard

The best way to have done that would have been to have a written signed development agreement in the beginning. But now that it's progressed to this point, you need to hire a lawyer. This mess will be difficult to sort out, and you can't do it without a professional attorney.

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Well, would a verbal agreement that has changed twice throughout our dealings be considered binding in court?
I will be seeking help of an attourney, for sure. And I have waited so long because we were on a friendly foot, however (and I see where many people coming from) when matter actually came down to property ownership and money, Person Y has proved to be... well, stubborn and willing that we all are to walk path he charted instead of finding common grounds.

Unfortunately my partner is too careless and forgot where he put the NDA to, so it'd be hard for me to see Person Y' copy of it.

I understand now what NDAs are for, thanks for clearing that up, Tom.



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Quote:
Original post by Daniel Protopopov
Well, would a verbal agreement that has changed twice throughout our dealings be considered binding in court?

Yes of course. A verbal agreement is binding and any agreement can be changed as many times as the parties wish - the point is that each time you agree to change the original agreement you are making a new agreement.

The problem is that as you don't have anything in writing it will be very hard to prove anything and very hard to get an agreement, now that you are not on good terms with Y. You now have two options:
1. Sit down with Y an negotiate an agreement you can all accept (which means each of you giving up something) and then getting a written agreement to that effect.
2. Go to court and argue - which will be very expensive. It will likely cost more money than your game will ever make.

Quote:
I will be seeking help of an attourney, for sure. And I have waited so long because we were on a friendly foot,
When you are friendly is exactly the time when you should negotiate and sign an agreement. Once the project gets into trouble the negotiation becomes much harder/impossible.

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Quote:
Original post by Daniel Protopopov
> Why on earth have you been working for free for a year?
Because I was offered a percentage from sales of the game, i.e. a share of profit
By the way, never, ever, agree to conditions of which you have no control. For example, if you are offered payment on the condition that remuneration is subject to the approval of someone, do not agree. You have no control over their opinions and preferences.

Likewise, if you are offered only a commission, based on actual sales, for long-term performance, do not agree. You have no control over production delays, market forces, or anything else that could impact actual sales.

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Thanks to both of you for last replies,
I am not so much concerned with him getting me into court on the grounds that our agreement has changed twice and because of that now he doesn't have or possess any rights to the source code. I don't mind giving it up in case of loss, since it was a sort of hobby project anyways, but paying extra on top of that gives me the creeps. I was brought into this thing by Person Y 1 and a half years ago, but then we didn't sign anything and it was more like a "work for hire" without him paying us a cent, but rather saying he wants this and that in the program. Now, however, he seems quite surprised when I went in our negotiations and mentioned the fact that he doesn't own a single line from the source code; the program' idea is in public domain (as I figured out not so long ago) - I guess he didn't do proper market research... And now in our arguments he tries to force me to sign an NDA or else he'd take me to court based on some blurry issues he doesn't even sure of (as I see it). What can he sue me for? Only thing I proposed is that me and my partner be able to monitor his achievements publishing it and be able to have an escape plan in case Person Y doesn't do his job. I don't mind giving him an escape plan as well, however he seems too stubborn and wants everything to go as he says - or else it's the court ;)

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Quote:
A “work made for hire” is a work prepared by an employee within the scope of his or her employment, or a work specially ordered or commissioned for certain uses (including use as a contribution to a collective work), if the parties expressly agree in a written instrument signed by them that the work shall be considered a work made for hire. The employer is the author of a work made for hire.


According to copyright.gov note the signed instrument part since you have signed nothing it is impossible for it to be a Work For Hire situation where he could use copyright against you. You own copyright on anything you wrote.

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Quote:
Original post by stonemetal
....it is impossible for it to be a Work For Hire situation where he could use copyright against you. You own copyright on anything you wrote.

Sadly that won't stop him taking the OP to court and costing the OP a lot of money.

Quote:
Original post by Daniel Protopopov
.....however he seems too stubborn and wants everything to go as he says - or else it's the court ;)

Sounds like the guy doesn't know the law and is stubborn which is a pretty dangerous combination.

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Quote:
Original post by Obscure
Quote:
Original post by stonemetal
....it is impossible for it to be a Work For Hire situation where he could use copyright against you. You own copyright on anything you wrote.

Sadly that won't stop him taking the OP to court and costing the OP a lot of money.

Quote:
Original post by Daniel Protopopov
.....however he seems too stubborn and wants everything to go as he says - or else it's the court ;)

Sounds like the guy doesn't know the law and is stubborn which is a pretty dangerous combination.


That and me = idiot, OP is not US based. So what I said was entirely irrelevant.

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Quote:
Original post by Daniel Protopopov


I will be arranging another consultation with a lawyer before actually signing anything to understand all bits and pieces, but wanted to know your opinion prior.

Thank you.


I'm going to be very frank about this-- once you get the opinion of an attorney, most of the opinions you find here will be moot, including mine. That being said, this is general education and does not constitute legal advice:

1) Try to maintain a professional relationship with Y. If you can't compromise enough to even hammer out a basic set of terms for your deal, this probably isn't the type of business relationship you want to enter into. That being said, your lawyer will probably inform you that you are entitled to reasonable compensation for the work you performed for Y. There are several equitable remedies that you and your lawyer may want to consider, but bear in mind that legal action tends to destroy professional relationships. Also remember that lawsuits are financially, psychologically, and mentally draining. If you decide that you can't work things out with Y, do make an effort to get paid for your work.

2) As far as ownership goes-- Work for hire application is relatively international in scope, with some exceptions re: moral rights. Regardless, whether your work is defined as a work for hire is something that only becomes an issue when you're putting together the terms of your agreement or when you're in court.

3) Publishers who screw over developers by failing to adequately distribute and promote the product do not last long. If you aren't confident in this publisher's ability to do it's job, hammer out rights ownership and part ways. If you can't have faith in your publisher you have no business doing business with it. An agreement is only worth the paper it's written on if the parties don't trust one another to perform on the deal. As Tom mentioned, it isn't uncommon for your publisher to own exclusive reproduction/distribution rights for the territory they're distributing to.

4) I can't push this enough-- you need to feel comfortable with the people you're doing business with. That being said, your written agreement should contain reps and warranties for both parties. There is also an implied duty of good faith and fair dealing in every agreement. If you're really concerned, see if you can spell out exactly what you expect from your publisher in the agreement. Non-performance constitutes a breach.

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Quote:
Original post by madelelawonce you get the opinion of an attorney, most of the opinions you find here will be moot, including mine. That being said, this is general education and does not constitute legal advice

Shouldn't you be cramming for your bar exam rather than spending time on forums? I hear it's a VERY tough exam! (^_~)

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Executive Summary:

Talk to your lawyer. NOW. This is what lawyers are for. Yes, they're expensive, but that's the price of doing business.


Also, for any neophytes reading this thread, remember this axiom: "A verbal agreement isn't worth the paper it's written on." Get it in WRITING.





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Quote:
Original post by Tom Sloper
Quote:
Original post by madelelawonce you get the opinion of an attorney, most of the opinions you find here will be moot, including mine. That being said, this is general education and does not constitute legal advice

Shouldn't you be cramming for your bar exam rather than spending time on forums? I hear it's a VERY tough exam! (^_~)



><

Who's to say I didn't turn this into a contract remedies essay, huh? Also, who told on me?



Kind of going crazy. thanks for checking. :)

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To say that he's the publisher is an overestimation - he's a business coach who thinks that he can spread the product via means of his contacts in various places, including overseas.
As far as the thing goes - I ain't really worried about getting paid for the project as I can simply have it in my portfolio to show to potential employers - no sale is it intended here, don't worry ;)
I just don't want to let this slip between my fingers - since this is my very first dealing with commercializing a software product - and let it float away on the waves of time in hope to get something.

Thanks to all for your advice, I shall consider in my next discussion with Person Y.

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