Can my company give IP rights away for an application I wrote off hours to another startup? [closed]

Question

I am an intern for a health company (unpaid), let's call it Company A and I noticed that they are using a lot of paper form for things that can be done on the computer. Excel files for things that shouldn't be in Excel. So I wanted to improve on my programming and figured that it was the best opportunity to do.

I developed a couple of apps for their use. All these applications were outside company time. One application I did and they love and one of the director has a brother who has a health start up company. He wants me to give over my source code so his brother's company can further develop it and maybe sell it (I am out of the equation).

I have no intention of handing over my code as I put a lot of time outside doing it but I also don't want to burn bridges with anyone in the company. I can't go to the director and tell him "I don't think so".

I am fine with demoing to the brother how it works but the line is giving up my code. If they want to build something like it then they can go right ahead I have no problem with it.

What is the correct way of approaching this and do they have the right to do this to me?

Edit: there is no contract I never signed anything

Answer 1

IANAL. Contract does matter here. That's all I can say on that and I won't repeat the advice everyone else has given. The company may already own it and you have no say in the matter. Even a lawyer would tell you to hire a lawyer if you decide to simply say "No". So if that's your choice, hire a lawyer.

I read and re-read this question until I figured out why you care about Burning Bridges. I'm guessing that your real concern is that, as an intern, you're not looking for a million dollars. Heck, you don't specify that you're a software development intern, which may mean that you didn't go into this intending to be a programmer. I think what you're really looking for is the company to show respect for your work. You may have even surprised yourself with how well this project turned out and maybe you want to move into a new career path as a software developer. This is something to be proud of. This project is a big deal, don't clutter this with needless crap by taking one thing your boss said and blowing it out of proportion.

The Boss Perspective

First and foremost, remember that your boss is human. He makes mistakes just like everyone else. Second, you also need to consider that your boss may not know anything about software. You showed him something cool, which he is thinking "Cool, my brother knows software; he could do something with this." He doesn't know it took you a lot of time. It's likely he might not even know that you're still an unpaid intern.

How To Think About It

First, I'm going to tell you that you can win this. Even if this company has you under the nastiest contract known to man, in the most anti-employee market on earth, and you have an extremely mean boss, this is still a winnable situation. You could quite easily get them to understand your worth here.

The question is, how do you want them to demonstrate that they care about your work? Do you really want to get paid for this project? Based on the fact that you are willing to demo the software, I'm guessing you don't much care about the payment part, but more the fact that you worked really hard and want to be acknowledged for it. If you'd like a permanent position at the company in exchange, then make that evident. If you think you'd like to move into software development, maybe you could ask about being moved into the brother's company in a real, paying position.

The bottom line is, before you can approach your boss about getting what you want, you have to truly decide what you want.

How To Approach The Boss

First thing's first, don't try to catch the boss while he's walking between meetings. Set up an appointment. You may only need five minutes, but five minutes is a lot of time when you're running a company. Talk to him and ask about times that work for him and put the appointment on his calendar if you can.

With the appointment set up, you need to go in prepared. Have an outline of the points you want to make on a piece of paper with you so you don't get nervous and forget everything. Remember that more people list Public Speaking as their number one fear than Death. You will forget stuff, so write it down. Going in prepared also looks good to the boss. It shows him you're not trying to waste his time. Even the most anal of bosses relaxes a bit when he sees you've prepared what you're going to say.

What To Say

Nothing is more valuable to a manager than numbers. If you grab a BLS statistic or two, you're more likely to get his attention. If you can, calculate the potential value to his company in real dollar amounts and put it in front of him. Show him that you're worth something in terms of time, sales, or if you can, flat dollar amounts.

Use of buzzwords only helps if your boss is into that sort of thing. It's important that you stay on point. Your boss doesn't care about how you wrote that program. He wouldn't understand it if you explained it. He just wants to hear about why you think it's worth something to him.

Don't get personal. Like I said, the boss isn't going to speak your language. Don't spend time explaining some really challenging bug you overcame when writing the program. It's a black box to him. As far as he's concerned it cost you nothing to write it. Instead, throw numbers at him as to cost to you, in terms of time and money.

Look at the things he's said in the past and try to associate it with the work you've done. If you've worked with the boss before, this can be easy. Associate the work you've done with specific complaints he's made in the past. Demonstrate how you're fixing problems he's encountered and why you're worth it.

It Can Be Done

I can tell you in all honesty this is doable. I've sold these sorts of ideas in the past. It's just a matter of doing it right. Think about the things he's thinking about and speak his language and you truly can get what you want out of this.

Answer 2

It depends on the your contract with Company A. Do they have any clauses in the contract regarding the works you write outside of work? Some do. If that's the case, I'm not sure what you can do. If not, you are still the owner of the code and you aren't obligated to give it up.

You could try to sell them the application source code. I agree that you shouldn't "burn any bridges", but that doesn't mean you can't have a firm stance on your product. You don't have to give things away for free just to maintain a positive outlook in the company's eyes. There is no reason why you can't sell the software to them and still maintain a good relationship with the company.

After all, if the company wants to take advantage of your work like that, do you really care if you burn that particular bridge?

Answer 3

If I were the OP, I would ignore every answer posted!

You are asking a LEGAL question and getting answers from people who ARE NOT LAWYERS!

Simply put, you need to consult with a lawyer in your jurisdiction.

The answer to your question may be different based on your locality.

A lot of people here (who are not lawyers) talk about "contracts" however, just because something is written on paper and called a contract, does NOT necessarily make it legally binding. In contrast to that, just because something hasnt been written into a legally binding contact, doesnt mean you have free reign.

Again, the only way to get a proper answer is to consult with a lawyer.

PS: Im not knocking people's intelligence here. Im sure there are a lot of extremely gifted developers here. It just seems people love to give legal advice and swear that it is fact, when the reality is, they have no idea what they are talking about.

Answer 4

This depends on the contract you signed.

Just because you did it "on your own time" does not mean it is yours to keep. This is 100% a contract issue.

You have to be careful when you say "on your own time." What do you think that means? If a pro basketball player decided to play for two teams, do you think thats ok? He obviously has down time to do what he wants. So should he be able to do that?

You also have to be careful about getting sued now by the company. They could say you used some of their Intellectual Property to produce an application you had no right to, especially if you decide to sell this or give it away to another company later.

That being said, were you hired as a Intern programmer to the Health Insurance Company? If you were hired as a programmer I am going to say you are most likely obligated to give them the source code.

I have seen plenty of contracts that say everything an employee creates , no matter what it is, is owned by the company. I imagine Apple and Microsoft most likely have these clauses. Chalk this up to lessons learned.

Look at it from their perspective. How did you write the application? On your own computer you brought to work or one of theirs? On their network? Did you test against their data and their forms?

This isn't a matter of ethics, it is a matter of legality.

If you signed a contract that makes all your works theirs, and the Director has the power to make decisions about their companies works, he can do what he wants.

Answer 5

Wow, these guys are greedy. They get you to work for free, and then want you to donate IP you developed on your own time. Are you sure you care about their feelings? They don't sound like very nice people.

The business-like thing to do is set a price for your work. About $150/hour for the time you spent developing it would be perfectly reasonable; it will cost them at least that much to reproduce it.

Answer 6

First off, this on the surface seems very sleazy. Contract or not.

Are you sure that the manager is even aware that this was done off hours, in your own time? He may be under the impression you did this while at the office. I would politely thank him for his interest, but note that this was something you did on your own time. If they would like to talk about aquiring the source code or hiring you to expand on it, you'd be open to the idea. After all, you have already demonstrated you would be quite an asset to them.

"Edit: there is no contract I never signed anything"

With this, I think the words you are looking for, then, are:

Show Me the Money

Do NOT worry about burning bridges here. If this company is actually sleazy enough to 'demand' source code you wrote off hours as an unpaid intern and generally take advantage of you, then you arent going to want a long career with them anyways.

Answer 7

Wait! He is unpaid!

There is no way in hell that contract would stand up, assuming that a contract exists in the first place. Without just compensation contracts are not legally binding.

Tell them you are willing to license it if you want, but by no stretch of the imagination do they own it.

Answer 8

I'd first figure out what your goals are here. You don't want to hand over the code and you don't want to burn bridges, but what do you want to do with it now? Open source it? Try to sell it? I'm not sure if you know, but I'd figure that out first.

Once you know what you goal is, I'd sit down with your boss and calmly explain your position before you do anything. Explain how you put a lot of effort into your code, and that you'd rather not hand it over. You're working for free, so I don't believe your boss can force you to do anything. If you want to open source it, tell him before you do it. Otherwise it might look like you tried to undercut him. If you want to sell it, tell him you're open to negotiating with his brother.

The biggest thing here if you don't want to burn bridges is to be as straightforward and polite as you can. Don't let on that you're aggravated or insulted that they want you to hand over work and don't be accusatory. Just explain why you don't want to hand over your code and what you'd like to do with it instead. If they're reasonable, they should understand. If they give you grief then frankly I wouldn't worry about it. If they're going to try to bully you into handing over your work, then they're frankly not worth it.

Answer 9

I am not a lawyer. The following is friendly (bad) advice, not legal advice.

Do I understand correctly that you interned at company A, and one fellow's brother works at company B and company B wants your code for free? Ha!

You need to determine who owns the code. What sort of agreement did you sign when you agreed to intern with Company A? Many "non-disclosure" agreements have a clause that gives all your work to the company, whether done on your own time, or work related, or not. Sadly, this is very standard these days. In some states (Delaware, I think), this clause is not legal, so state law may come into effect as well.

Another variable is any sort of non-compete agreement that either you, or the guy with the brother may have signed. Giving or selling a useful tool to another company could be competition, or moonlighting, and probably needs to be cleared with Company A's ethics office - either by you, or preferably by the A-employee with the brother in Company B. He is probably violating ethics. You don't have to throw him to the wolves, but you might want to ask him about the ethics of what he is proposing. That alone may take some of the wind out of his brother's sails.

If Company A owns the code OR has a legal agreement preventing you from working with Company B, then your only bargaining power is to disclose fully to Company A and ask Company A (nicely) to let you license the code in order to keep you happy, but you may have to promise to work for Company A in return.

You might need an intellectual property lawyer to sort this out, and they are not cheap. Coming to some sort of written agreement with Company A (fully disclosing what you are doing) before doing anything with Company B is probably the only safe way to proceed.

Remember, you are more valuable than your code. Better to get out of a potential mess than to spend the next 10 years in and out of court, or jail. You'll probably write it better the second time anyway, and hopefully some company will pay you for the time it takes you to do it.

Good luck.

Answer 10

You could explain that it was written in your own time as a pet project, and that you are happy for them to continue to continue to use and develop your application, but that it would be reasonable for them to pay you a contribution towards your time. This could be a reasonable amount based on some percentage of the normal bespoke system coding rates. (It comes down to cost/benefit for the company - ie how useful your stuff is).

If you were keen to maintain some rights on your code, you could include a stipulation in the sale that you are to retain rights to it develop and use it for your own purposes as long as you don't conflicy with the company.

This all depends a little bit on your contract, and how fair your employers are. Even where there are intellectual property clauses, this usually relates to the field that the company is selling into - ie it protects against you competing with them. IP that doesn't conflict directly is often exempt.

Answer 11

Totally Different Answer

It seems to me as though the other answers were clearly provided by developers. Developers tend to have a "black and white" approach to things - but I think that's completely the wrong approach here.

Here's how I'd handle it:

First, determine for yourself what you believe the product is worth to them (not you).

Next, determine if you'd be willing to accept whatever value you came up with in the first step if they offered it to you. If not, consider what your other alternatives are for monetizing the product and, especially, how much extra time/money you'd have to spend on making the product marketable. (An office? A website? Tech support staff? Programmers? Marketing in trade magazines or tradeshows? Few products really get started for south of a million bucks)

Finally, go ahead and demo the product to the brother. I'm not sure if they specifically told you they wanted to pay you nothing for it - or if you just assumed as much - but, I'd simply chalk it up to an "interesting starting negotiating position".

Lastly, if they see value in your product, consider the fact that you may be able to get compensated for it even if the compensation doesn't come directly in the form of a check. Maybe the brother would like to hire you on to continue developing it. Would this be an option for you, or something you'd be interested in?

It's always nice to have a product someone else wants to use. Be gracious and put on your "salesperson" face. No one wants to buy from a jerk.

I've had customers rub me the wrong way in the past - but, if you can grin and bear it, they may turn into a great customer.

You don't have to be taken for a sucker - but that doesn't mean you have to be awkward about telling them what you'd like to see from them to make the deal work.

Good luck.

Answer 12

You say you are not getting paid, and there is no contract. Quit now. Go work for someone that doesn't expect something for nothing.

Do not give them your code.

If you are serious about not wanting to burn any bridges with these people (although I can't imagine any reason you'd want to work for nothing, unless you're already a millionaire or something), then I guess you have to do what they say. In that case, someone else's answer seemed pretty good: release it as open source.

You say you did not sign anything, which means there is no written contract. Is there a verbal contract? Are there witnesses to the verbal contract? If not, then you have no legal obligation to these people, and certainly no moral obligation. The only reason you'd want to give them your code is in the hope that they will either start paying you, or give you a great recommendation to someone else that will start paying you. I don't think that is going to happen; they will probably just keep trying to take advantage of you until you quit.

Answer 13

In the USA, unless you are receiving "course credit" at your college (or actual pay as you stated you are not), then there is no legal "consideration" (compensation), which is necessary for a contract to be formed. I am not a lawyer, but this is basic high school level knowledge of contracts. A contract MUST have "consideration" for both parties, or it is NOT a contract. If it is completely unpaid and you receive no other consideration, then the firm is violating the federal minimum wage regulations AND your IP is still your IP (if you protect it). Unless your IP is really of considerable value, you should be careful to be too hasty or too angry...."one hand washes the other" in business...Again, I'm not a lawyer. Use your best discretion.

Answer 14

You need to step back from the legality question. Why did you do an unpaid internship? You are being compensated in two ways:

1. Work Experience
2. Job Recommendations

So talk to your boss, make sure he knows you think you went the extra mile for this project, and ask him if he would be willing to provide strong recommendations when you go looking for a job. If you try to bring a lawyer into this, what kind of recommendation do you think you'll get?

Sure, you made no money on this code, but you already went in with the expectation of no pay! The entire point is to get a good paying job. Whatever you get by haggling over this one project is not going to compare to the lifetime gain you stand to get if he can help you jump start a career.

Answer 15

If you're serious then consult a lawyer. That will cost you $$.

Or just give them the code as-is, don't sign or agree to anything more, then get very busy with other projects and activities.

They will want you to answer questions, how to compile, configure, make changes, documentation etc. Respond to their emails within a few days and politely, tell them it is in the code, but remind them how busy you are with your other projects/life.

If they really want help from you then turn it into a paid gig.

Either for you or for the startup, it will take a lot of time and $ to convert a very useful in-house tool to a sellable product, and even more time and $ to actually sell it. It is a lot harder and more expensive than it looks.

Answer 16

Put a license on your code that disallows commercial work, and you will be hired to write it again.

Update:

You said its "your code". I assume you did not put a company copyright line anywhere in your code? If you did, you already gave up all rights to the source, and you can't say "No" to your boss.

If you didnt... and have not choosen a licence at all: It's all your copyright and they can do nothing about it. If your Company A is using your code "for free" and without any licence or contract (look up your contract, often there is a clause saying that everything you do, including home-work, is theirs) you still own all rights to it.

Therefor I recommend you put a non-comercial-use allowed licence like: http://creativecommons.org/licenses/by-nc-sa/3.0/

Then you can hand-over the code, but they can't use it. (Unless it's a non-profit company)... they could still use it, but that would be against the law.

Now the cheapest and quickest and easiest sollution for Company A+B would be to ask you to write your code "again", this time probably paying for it ;-), and put the new code under a different licence.

(!) WARNING: You said you don't want to burn bridges or get into trouble with either of the company's. So maybe you try be diplomatic and talk to your boss about the conditions you would be willing to hand over the code for your apps first.

Answer 17

It really depends on contract you signed (read it!) and country you are in. There is also lot of potential problems, for example how would you prove that you wrote app in your free time? Judge may find it hard to believe that you worked for free, just for joy of programming...

Also right now that app is useless to you. Try to sell it, even if its just for peanuts.

I would recommend to ask company for some paid time-off, to cover time you spend writing that app. There are some ways to put it, for example: "code is very ugly, contains offensive words and builds only on my home machine. I will need N days at home to clean it up."

If they refuse handover the code and find a better employer.

Answer 18

You may have a contractual obligation with the company but nothing with the director. Does this person have the right to take company property and give it to his brother or anyone else?

Find out where you legally stand with the company. Let the director know you plan on being upfront about everything. If he has a problem with this, too bad. If he's smart, he won't want the company to know he's doing some side deal.

Answer 19

Bad news. As a non-developer, something you developed on your own time that looks brilliant to a non-technical manager is unlikely worth much of anything on the commercial market, so while it may be useful to both your company and the brother's company, there will likely need to be several hundred hours of additional programming and testing required to make it a marketable product, dwarfing the effort you put into it to create the original program.

Answer 20

At least in the United States, my understanding of the law is that if you weren't specifically directed to write this program and signed no contract, at best your employer has something akin to a "shop right". Per 17 USC 201, it hinges on whether the work is considered a "work made for hire".

Answer 21

(assuming US law)

It seems fairly clear that this is not a "work made for hire" under 17 USC 101, because that requires the work to have been made by an employee within the scope of their employment. For this to be so, the person necessarily has to be an employee.

Interns that are employees MUST be paid minimum wage under the Fair Labor Standards Act, and so we may infer from his internship being unpaid that he was not an employee.

Thus, under 17 USC 201 the copyrighted vested in him, the author, and there it remains.

However, that doesn't necessarily mean he's free to do anything he wants with the code. It is possible that he was exposed to trade secrets of theirs and that he embodied those in the code. If that's the case, they may have some recourse under trade secret law to keep him from disclosing the code to third parties.

Answer 22

(IANAL, etc)

Assuming you're American, it's safe to say you have no legal or contractual obligation to give them anything, certainly not without compensation. A better question is whether or not your unpaid internship is technically legal itself, though you may not want to go there unless they try and be difficult about this.

Check this for the guidelines about unpaid internships.

Specifically: "The employer that provides the training derives no immediate advantage from the activities of the intern; and on occasion its operations may actually be impeded;"

Answer 23

Unless you have clear contractual rights to the source code/app, then it is likely that the IP belongs to the company you work for. You could take it to a lawyer, but that will almost certainly burn those bridges you talked about.

I think you should chalk it up to experience. Next time, make sure you have the rights to your off-hours work (often you do not, if it is related to that work) - or simply only do it for pay or on a special agreement for the project.

You could lie of course; say you don't have the code itself, only the spreadsheet - or that its from an earlier project nbefoire you started for them (i.e. you changed the code, but do not own it - and thus they can't either). That's all up to you, but be careful and don't shoot yourself in the whatsits for the sake of a few nights of private work.

Answer 24

IIRC unpaid interns technically aren't suppose to do regular employees work (otherwise they MUST be paid). They just look, try to do small projects for themselves, etc. Tell your boss your happy to demo it and your more willing to sell it to them if they are interested (and reasonable). If he/they say something about selling or giving it for free just say its your own project and you were interested in doing something outside the company with it. Its not something small that you would give away for free.

Answer 25

The answer is no, they can't give away your intellectual property.

As for your dilemma, perhaps consider licensing your code. As a programmer myself, I know it would suck to just have my work stolen without recognition. If you don't want to charge them for it but simply wanted to maintain your authorship, perhaps consider an open source license such as Creative Commons Attribute-ShareAlike which would allow them to use the code for commercial purposes, but they'd have to attribute you and distribute any changes to the code under the same license. This won't stop them from simply plagiarising your code, but they should at least have a guilty conscience if they chose to do so.

Answer 26

I can't go to the director and tell him "I don't think so".

Actually, if you own the copyright, that is exactly what you can do, especially as you have been working for free. You should tell him that if his brother wants your code, his brother should come talk to you, and you can do business.

If this guy doesn't like that, consider whether or not you would really want to work there. You've been doing him a favour just by being there. The onus is on him to ask for a further favour, or to bargain with you to buy what you have to sell.

Answer 27

IANAL and YMMV. Obviously, the legal ramifications in different jurisdictions are quite varied, so I will not try to suggest the correct legal determination.

You may have done the work on your time, but as you stated yourself, you based the work on knowledge gained from observing the procedures and methods for executing their work. You then wrote a program based on this knowledge and gave it to them. To me, this is the entire purpose for IP laws. The valuable object here is not the program, but the knowledge used to create the program. Philosophically speaking, anyone could have written the program, if they had the knowledge. You have knowledge of their processes and it was gained because of your position as an intern there. I believe they have a right to control that knowledge and any derivative works.

I would suggest that you play nice and see if they would consider this program as an indication that you are a good enough developer to make a permanent hire.

Answer 28

I am not a lawyer and suggest you contact one. The following is based on my understanding of the law in some jurisdictions.

I an surprised at the increase in unpaid intern positions. From what I have seen it allows employers to get something for nothing. I have also heard reports that they rarely lead to paid work. If you are an unpaid intern, look of paid work somewhere.

I don't know what, if any contract you signed with the organization. From a transfer of intellectual property basis, I wouldn't expect them to have a valid contract. I believe they would need to show your work falls in the category of 'work for hire', which I don't see any evidence of here. Whatever the law it, it does not prevent an employer from trying to claim the intellectual property rights.

If, as I suspect, your retain the intellectual rights, then your employer does not have the rights and therefore can not give or assign them to anyone.

In my limited experience, even in the presence of a contract stipulating ownership of work done on your own time, you would still retain ownership. Courts in some jurisdictions will declare the clause unenforceable and give the rights to the employee, not the employer.

Answer 29

This very likely isn't their program. I would point out to them that you are unpaid, so this is not a work for hire, therefore it is yours. Offer to sell it to them for 5k and think of it as a nice bonus. If they fire you send a notice revoking all licences to use the app. Do not sign anything until they have a cashiers check and you look over the contract with a lawyer.