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Contract Developer Charging for Source Code?

Has anyone ever had the experience of a contracted developer charging their client to release source code? I have been told that this is industry practice with a fee of up to 20%.

I would love to hear from anyone who has any experience or thoughts about this.

43 Replies

Tom Maiaroto
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Tom Maiaroto Entrepreneur • Advisor
Full Stack Consultant
No it's not. I've been a developer for over 12 years.

Though it might depend. Was it a custom job? What are they going to do with the source code? Not like they can reuse it and you're asking for something that you could go off and resell verbatim. Or is it?
Jason McClellan
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Jason McClellan Entrepreneur
Sr. Systems Engineer at Discovery Communications
Absolutely not.

If you hired them to write custom source code, it's a work-for-hire and you are the owner of that source, no additional fee necessary.

If you hired them to implement something using an existing, proprietary product of their own that they are instead only licensing to you, then I suppose it would be possible for them to charge you for the source, but I can't imagine many scenarios where this would be the case. This type of thing would be spelled out in the initial contract.

So, what does the initial contract say?

Here is an article about works for hire and copyright:
http://www.bitlaw.com/copyright/ownership.html
Ben Gamble
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Ben Gamble Entrepreneur
Lead Developer at ViewRanger (Augmentra Ltd)
Unless the work includes a library or code written by them privately for which they have pre-agreed not to give you, They really have no leg to stand on.
Unless you have an explicit contract stating that you are waiving your automatic copyright (which seems beyond silly, and is totally abnormal practice) it is very hard for this not to be a shake down.
Steve Owens
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Steve Owens Entrepreneur • Advisor
Finish Line - A Better Way for Small Companies to Develop Products
If you are saying you paid a company to write the code, and they want more money now to give you the source code, then no, that is not the way most product development companies work - certainly not the way we work. Steve Owens - Finish Line PDS A Better Way for Small Companies to Develop Products e | Steve.Owens@FinishLinePDS.com p | 603 880 8484 w | www.FinishLinePDS.com 94 River Rd | Hudson, NH | 03051 Click for Product Development White Papers ---- On Fri, 17 Apr 2015 08:03:18 -0400 Mark O'Neill <[removed to protect privacy]> wrote ---- FD:Discuss New Discussion on Contract Developer Charging for Source Code? Started by Mark O'Neill ., .. Previously Cultural Heritage Team, Santos. Has anyone ever had the experience of a contracted developer charging their client to release source code? I have been told that this is industry practice with a fee of up to 20%. I would love to hear from anyone who has any experience or thoughts about this. FOLLOW DISCUSSION or Reply Directly to this email to participate in the discussion Manage your email notifications
Tom Maiaroto
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Tom Maiaroto Entrepreneur • Advisor
Full Stack Consultant
Ben phrased it better. The concern is you could copy the developers business or resell something. Super rare. I highly doubt it applies to you, but possible.

This simply is not a thing and it bothers me as a developer because this is how unfair opinions are formed. It sounds like a rip off. Remember the job you paid for was to build software. For you. Right? Not use software. (Unless it was).
Ted Rogers
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Ted Rogers Entrepreneur
Mobile Architect + Developer
I am a contract developer and have never done this but it depends on the language in the contract, if it is something you have already signed. I DO NOT believe it is the norm.
Tim Kilroy
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Tim Kilroy Entrepreneur • Advisor
Analytics - LTV - Boosting Profits - Digital Marketing
This doesn't sound right - unless you did not specify that the development was work for hire and that the output of the work was your property...this seems really sketchy.
Tim Scott
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Tim Scott Entrepreneur • Advisor
President, Lunaverse Software
"Industry practice" has no bearing. The only thing that matters is what the parties agreed to. It's possible you agreed to some provision that gives them a right to make this charge, but their reference to "industry practice" tells me it was probably simple work for hire and they are shaking you down.
Tim Cullen
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Tim Cullen Entrepreneur
Principal Software Engineer
In contract work I've done in the past the source code was always the thing the client was paying for in the first place. Not just an executable.
Marcus Matos
13
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Marcus Matos Entrepreneur
Software Development & Information Technology Professional
I am surprised at some of the replies here, especially since they seem to be opinion based and not based upon copyright law. As someone who is both a contract developer and uses contract developers, I've been on both sides and would like to clarify some things:
  • Everything I'm about to say is based upon US copyright law.
  • I am not a lawyer and you should consult one.
  • If you hired a contract developer to write source code and you don't have an agreement stipulating that you own the source code, it's pretty much the same thing as hiring a writer, graphic designer, etc. The person who creates the work owns the work, period.
  • A work for hire agreement generally does not apply to programming services because they do not fit in to the categories specifically called out in copyright law.
  • So in short, unless the developer signed an agreement before work startedstating that the copyright to thespecific work described would belong to you/your company, the contractor owns the source code and can do with it as he sees fit.
Now here is how I handle it on my side as a contractor:
  • Here in Texas there are sales tax implications depending on whether or not I assign copyright to my client. If I retain the copyright, sales tax does not apply, but if I assign all rights, it becomes "tangible property" and therefore subject to sales tax (on 80% of the price). Not related but FYI.
  • If the client wants to own the source code, I add an assignment of copyrightto the contract/statement of work that specifically calls out the work and becomes effective only after payment in full.
  • I usuallydo not charge anything extra for assigning the copyright to the client (since I build highly specific solutions that I can't reuse) if this is worked out at the beginning.
  • However, if the client asks for full rights on something after the fact, I have to go through a process of ensuring that I'm not about to sign away the rights to something that I've used on other projects, and this can be a pain, especially if I have to rework something or rip out some shared code/libraries. In this case I would absolutely charge extra for the work and time.
From a client perspective, I do the following:
  • I have a master contract with my developers that incorporates a Copyright and Intellectual Property assignment for all work performed specifically at the request of my company, immediately in effect once I accept the work and pay them.
  • I have a provision that allows for excluding certain works or statement of works.
  • Unlike some companies I've seen, I don't try to force them in to some non-compete or overly broad "I own everything you do" - I just ensure that the work I've specifically asked them to do does get transferred to me, especially since I may need to transfer it to my client in the future.
I hope this gives you some perspective on this, and I also hope that the other folks here who have assumed that "work for hire" covers them takes another good hard look at this, because courts have found that this term does notautomatically apply to software development because it is not one of the nine categories covered under the work for hire doctrine. Be very, very careful that you are not interpreting things relating to employeesas things that relate to contractors.

Some sources:
The last one is quite interesting - a developer provided the specific code that was ordered but not the shared/proprietary parts - which were required for the source to work. How would you want to handle that? By making sure the agreement is clear upfront this can be avoided.

To Long Didn't Read? Don't rely on "Work for Hire". Contractors own their work/source code unless a specific contract is in place stating otherwise. Get a copyright/intellectual property assignment in place. There's a lot of "developers don't care about the source" but that doesn't matter - what matters is making sure that you don't get sued 5 years down the line by some developer you forgot about because you're profiting from work that legally belongs to them.
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