Protecting your rights in the workplace.

What Is a Software Development Agreement and Who Owns the Copyright to It?

A “software development agreement” is an agreement between a customer and a developer in which the customer contracts the developer to create a specific piece of software. A common software development agreement breaks down the creation of the software into phases. This ensures that the customer is able to see the product they are getting step by step, and it also guarantees to the developer that the client is pleased with the project at each stage and won’t later claim that the developer was doing unsatisfactory work the entire time. The decision on how much the customer pays the developer can be based on how much time and materials were put into the product or a fixed amount can be decided on before beginning the project. 

Since software is copyrightable under the Copyright Act of 1976, someone has the legal right to own the exclusive rights to the finished product, and it us up to the client and developer to determine who will own the copyright to the software unless the developer is already the client’s employee or the software is part of work that is made for hire. Depending on what the client needs from the developer, the agreement can be that the customer will retain outright exclusive ownership or both parties can agree that the entire finished product will be granted to the client as a non-exclusive license.

Another important part of a software development agreement is who retains ownership of the background technology. Since a software developer generally uses development tools along with programs, data, and material for developing the software, many of these can end up as parts of the final product. It is therefore important for both parties to agree on who owns the background technology to the final product. Generally, a software producer will retain ownership of this material, and in that case the agreement should specify that the client will receive a nonexclusive license to use the background technology along with their exclusive right to use the finalized software.

It is important to have all of these factors hashed out so that both parties understand the products they are retaining copyright ownership of and the compensation received for any services. If you believe someone is infringing on your software or you need legal assistance in retaining ownership of a copyright to a developed software, you should consult an intellectual property attorney to learn your rights.