Non-payment of Invoice / Intellectual Property

[evilagent]

There's been a thread about client not paying invoices.
I didn't want to take the thread off-topic for the specific matter, so will explore an idea here, separately.

If you are a software developer, you are essentially doing creative work.

If a client doesn't pay, can you claim that the software belongs to you, as a company, as intellectual property, until such time an invoice clears?

Could you, therefore, demand return of the software, and they desist from utilising any gain?
(in the same way companies can demand you not to use their logos, etc)

If the client refuses to pay, could you claim a "lease fee", or some fees based on the fact they are using it, as a daily charge?

(there must be audit logs, transaction logs, showing that a particular piece of code had to be triggered for a certain outcome to have happened, etc)

Or is this a non-workable idea?

PS: I think this should be in General, as its a generic topic. Mods: can it be moved? thanks

[Safe Collections]

There's been a thread about client not paying invoices.
I didn't want to take the thread off-topic for the specific matter, so will explore an idea here, separately.

If you are a software developer, you are essentially doing creative work.

If a client doesn't pay, can you claim that the software belongs to you, as a company, as intellectual property, until such time an invoice clears?

You can claim it (provided the contract allows for it), but in our experience chasing an overdue payment is considerably less costly than pursuing a claim for IP infringement.

Could you, therefore, demand return of the software, and they desist from utilising any gain?
(in the same way companies can demand you not to use their logos, etc)

If it is included in the contract, yes you can. Will it work? Unlikely in our experience.

If the client refuses to pay, could you claim a "lease fee", or some fees based on the fact they are using it, as a daily charge?

(there must be audit logs, transaction logs, showing that a particular piece of code had to be triggered for a certain outcome to have happened, etc)

Again if it is in the contract/agreement you could charge a lease fee, but without some indication that the client was aware of the term at the outset (by its inclusion in the contract) then you would likely struggle with actually enforcing it.

Hope that helps

[d000hg]

I have a moral dilemma from a similar situation. On work over 12 months, roughly 2 months went unpaid. No contractual clause mentions IP ownership.

The moral dilemma is that much of the code I wrote would be directly usable in my plan B. So far I have resolutely refused to even look at the code to see how I did things, and re-done things totally from scratch. But I'm starting to wonder if I am legally justified to say "stuff it" and raid the code I wrote.

What do the panel think?

[TheFaQQer]

I have a moral dilemma from a similar situation. On work over 12 months, roughly 2 months went unpaid. No contractual clause mentions IP ownership.

The moral dilemma is that much of the code I wrote would be directly usable in my plan B. So far I have resolutely refused to even look at the code to see how I did things, and re-done things totally from scratch. But I'm starting to wonder if I am legally justified to say "stuff it" and raid the code I wrote.

What do the panel think?

The client paid for ten out of the twelve months - how could you work out which of the code they have paid for and what they haven't? They paid for the code (or a large percentage of it), so it's reasonable to assume that they own the IP rights.

Assuming that they own the rights to the code, then you shouldn't be directly copying it. However, there's nothing to stop you from forgetting what you've learned - if you've done it before, what's to stop you from remembering how to do it again.

You could, of course, copy it directly and then claim that you would always write it the same way - however, if there was ever a case, I think you'd find it hard to prove that you wrote it exactly the same, down to the last space and names etc.

If you can afford it, though, you can argue anything in an IP case - Google admitted copying Java from Oracle into Android, and got away with it....

[socialworker]

If it was a twelve month contract and they have failed to pay you all that they owe you, I would have thought they are in breach and hence any contract terms giving them property of IP that you developed are void. if however lets say you had a six month contract, you developed the IP in that six months, and they paid you for it, then gave you an extension for the remaining period, it might be different.
Mr socialworker had a similar situation, made redundant by co that went into administration and not paid all expenses he was owed. He took his IP with him. Not challenged by the administrator.

[d000hg]

The client paid for ten out of the twelve months - how could you work out which of the code they have paid for and what they haven't? They paid for the code (or a large percentage of it), so it's reasonable to assume that they own the IP rights.

This is a good point... but does the client breaking the contract mean the contract is wholly void?

As it happens I could figure out roughly what work was not paid for - a substantial new feature took most of that time - but I agree it's getting silly to work that way.

I of course can create something similar using the knowledge I have... but where does one stand opening up code files in notepad++ to refresh one's memory? I know lots of contracts say you must delete the work when the contract ends and/or when the client requests it.

[VectraMan]

I understood that by default, the IP remained with the developer, unless explicitly transferred to the client (as it would be almost always in practice). But please correct me if that's wrong.

I guess it's impossible to prove that you did, or didn't copy code, but if you came out with a product similar to the one you developed for the client not long after, it's going to look very fishy - whether you actually copied the code or not.

[TheFaQQer]

I understood that by default, the IP remained with the developer, unless explicitly transferred to the client (as it would be almost always in practice). But please correct me if that's wrong.

Subject to any agreement to the contrary, the author is the owner of the copyright in a work (Copyright, Designs and Patents Act 1988 Section 11(1))

Where the work is created in the course of his employment, the employer is the first owner of any copyright, subject to any agreement to the contrary. (Section 11(2))

If there is no agreement transferring ownership of copyright (copyright ownership cannot be inferred), then ownership remains with the company providing the software (Infection Control Enterprises Limited vs Virrage Industries Limited and Aidan Cartwright [2009] EWHC 2602 (QB).

Of course, there are other intellectual property rights, and you will always have the moral right to be identified as the author.

I guess it's impossible to prove that you did, or didn't copy code, but if you came out with a product similar to the one you developed for the client not long after, it's going to look very fishy - whether you actually copied the code or not.

Borland v Lotus shows that you don't even have to copy the code to lose the case.

[d000hg]

Well there is definitely no IP clause. But then I am UK based and the client was based in Hong Kong and then USA. I wonder if any laws apply here?!

Interestingly, the client's customer - a big US corp known for aggressive legal action - made a play that they owned the IP. I know my client chose to re-work the same functionality in a different technology partly to escape the sorry mess they'd got into but they clearly believe they owned the IP. I had considered telling the client's client that due to non-payment I had not granted him ownership of the IP, to stir things up, but figured it was a can of worms that could come back to bite me.

[Safe Collections]

Well there is definitely no IP clause. But then I am UK based and the client was based in Hong Kong and then USA. I wonder if any laws apply here?!

Interestingly, the client's customer - a big US corp known for aggressive legal action - made a play that they owned the IP. I know my client chose to re-work the same functionality in a different technology partly to escape the sorry mess they'd got into but they clearly believe they owned the IP. I had considered telling the client's client that due to non-payment I had not granted him ownership of the IP, to stir things up, but figured it was a can of worms that could come back to bite me.

We would agree with that sentiment.

Generally we do not get involved in IP disputes, if a file looks like it has legitimate IP issues we often recommend going straight to an experienced solicitor