Buying software doesn't ensure copyright ownership

Even so, many businesses fail to recognize that they may not “own” the software they’re using and overlook the potential pitfalls of copyright infringement. Without the ownership label, businesses are exposed to potential liability for copying, modifying or even simply using software, even if it is customized for their use.

Software development has become a booming business, and there are many companies here in the Ozarks that specialize in the creation of customizable software. But assuming you hire one of these companies, who owns the copyrights to the software?

Copyright law cares little about an individual’s perception that they are a purchaser, and it does not necessarily deem the buyer the owner. Rather, in most situations the end user is just a licensee.

Initially, before programmers or designers can claim a copyrightable work, they must first show that their program is original and that they were the author of the program or some part thereof.

A widespread misconception is that the creator must apply for and receive a copyright prior to enforcing his rights. However, this is not the case, as copyright protection begins immediately upon publication of the creation.

Custom work and rights

In a customized work, the creator’s or hiring company’s rights in the software generally turn on whether the creator of the software is considered an employee or independent contractor. Among the many factors courts consider to determine a person’s status as either an employee or independent contractor are:

• the hiring party’s right to control the manner and means by which the product is accomplished;

• the skill required;

• the source of the instrumentalities and tools;

• the location of the work;

• the duration of the relationship between the parties;

• whether the hiring party has the right to assign additional projects to the hired party;

• the extent of the hired party’s discretion over when and how long to work;

• the method of payment;

• the hired party’s role in hiring and paying assistants;

• whether the work is part of the regular business of the hiring party;

• whether the hiring party is in business;

• the provision of employee benefits; and

• the tax treatment of the hired party.

Generally, independent contractors own the copyright for all software they design and fabricate. Therefore, independent contractors have the ability to regulate the software’s future modification, copying and potentially, even its use. Any copying or modification of the program, especially for sale to others, could lead to a copyright infringement lawsuit.

On the other hand, employers generally own the copyrights to the creations of their employees. An employee’s invention, however, must generally fit within his normal job duty or description. An employer would then have the rights to use or modify the program in any way it deems fit.

There are exceptions to every rule, and the facts and circumstances of each transaction must be weighed. An astute program design firm or business will lessen the likelihood of potential liability or the need to clarify each party’s rights at a later court hearing by setting forth the guidelines for the use of the program and having a license agreement executed.

As in most transactions, the terms of the agreement should be reviewed by an attorney familiar with copyright laws to ensure that each party understands its rights and that the agreement does not favor one party.

Joseph D. “Chip” Sheppard III is an attorney with Carnahan, Evans, Cantwell & Brown PC in Springfield. He may be reached at jsheppard@cecb.com.[[In-content Ad]]