Fairly Sharing Proprietorship of Software Product


I am currently working as a Software Developer with a company. As well, I provide solutions also to some clients part time. Recently I got an inquiry for a software product. I believe that the product has good scope in the market and would be more demanding in future. But the catch is, the client wants whole proprietorship of the product and source codes to be delivered to him. He is saying, he'll pay royalty for each sale, if he sells it to some third party.

But, I also want to have partnership in proprietorship of the product also rather than giving him the sole proprietorship.

So, can anybody suggest me how can I workaround to allocate fair proprietorship respecting both of party's efforts? Or is it OK to deliver whole proprietorship to client and receiving royalty for third party sales?

PS : The client brought the idea and have provided enough requirements of the products.

Software Partnerships Sole Proprietorship

asked Apr 17 '13 at 01:42
Rumit Parakhiya
110 points

1 Answer


Your client is demanding that you work-for-hire (ie assignment of copyright to him) upon promise of a trailing commission (you don't say anything upfront?). So my questions are

  1. who audits the software sales
  2. what incentive is there for aggressive marketing/sales
  3. if there's a dispute what happens to the as yet unpaid for IP

Now there are mechanisms to resolve each of them, with different levels of "ownership"

  1. place the software in enscrow, granting only a sole (but not exclusive) license and clear termination clauses
  2. assign ownership but have aggressive sales volume ratchet where if underperform, transfer rights back to you
  3. in Anglo-saxon jurisdictions, register a personal property security interest on the intangible after documenting everything

I'll invoke the golden corollary here, he who write the rules, define the gold. Your advantage is that you have the know-how to rewrite the code/app (perhaps not perfectly) and release it at a lower price-point kill his market (aka a certain firm embrace+extend+extinguish strategy). Technology licensing is an IP swamp so here I'd suggest finding which option is least objectionable and getting a good IP lawyer.

answered May 4 '13 at 16:47
501 points

Your Answer

  • Bold
  • Italic
  • • Bullets
  • 1. Numbers
  • Quote
Not the answer you're looking for? Ask your own question or browse other questions in these topics:

Software Partnerships Sole Proprietorship