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Sometimes You *Shouldn’t* Assign All Rights

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I have written, on several occasions, about the importance of assigning copyrights (and other intellectual property rights) when work is done by an independent contractor. (See, e.g., Independent Contractors: How to Assign Copyrights.) Sometimes, however – as suggested in a comment to What is a Derivative Work, and Why should I Care? – it is appropriate not to assign all rights.

This situation arises frequently in the case of custom software development. The reason: Over time, developers collect portions of code that they can re-use on other projects, saving their customers development time and money. This approach works, though, only to the extent that the developer retains ownership of the code; the customer, then, must be granted a license permitting use of (and perhaps other rights to) developer-owned code. The following is a typical provision for this type of situation adapted from an Independent Contractor Agreement:

“Contractor Intellectual Property” means inventions, designs, mask works, processes, methodologies, literary works and works of authorship that: are so identified in the applicable SOW; and Contractor developed or acquired from a third party, but in neither case at Customer?s expense, before providing Services under the applicable SOW; and are used or delivered in connection with Contractor?s performance under the SOW; and are not Customer Intellectual Property, Customer?s Confidential Information or Deliverables.

Contractor will not incorporate any Contractor Intellectual Property into any Deliverable except as may be expressly specified in the applicable SOW. Contractor hereby grants to Customer a perpetual, irrevocable, worldwide, nonexclusive, nontransferable, royalty-free license to use, operate, maintain, copy, modify and create derivative works of, and to grant to third parties the right to use, operate, maintain, copy, modify and create derivative works of, Contractor Intellectual Property contained in any Deliverable for the purposes of the applicable SOW.

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Dana H. Shultz, Attorney at Law  +1 510 547-0545  dana [at] danashultz [dot] com
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