I'm currently in an intellectual property dispute over software I developed in a new start-up (Canadian corp). It was written under the false pretense that I would have 25% ownership of the company, but in its current state, I have 0%. The owner later changed the offer to 5% prior to the software's release.
Since I have no ownership, I was a contractor (no contracts signed) working in the office with them, though I was also freelancing in the office as well so I am in no way an employee. All the payments I received were from revenue I directly generated as a contractor. If I was a standard contractor for hire, I worked for less than a quarter of my typical rate since I'd own 25%.
While the software was written for the company (no legal agreements), the compensation structure was changed significantly over what was initially verbally agreed upon (both contract rate + ownership). Most of the software development was done after hours, and was also done entirely on my own computer. My payments were via check, and the product name was part of the memo (along with other projects we'd worked on).
Myself and another guy from the company have parted ways based on these and similar ethical reasons, which leaves the primary dispute of the product / IP ownership.
From what I typically see, unless IP is explicitly transferred, it is retained by the creator. I understand some of the above circumstances make this very gray to me.
In summary: I was paid to be part of the team, but not to directly build the software. The product was originally my idea, and was creatively developed by me and the partner I am leaving with. The rest of the team had no creative input on the software or the business model we built around it. No contracts were ever signed for the project and I was paid as a contractor.
Who owns the IP?
(FYI - I will be seeing a lawyer soon as well).
I'm not a lawyer, and my advice relates to US laws. Canadian laws may differ.
In the US there is something in the law that states that if you continue to work with someone after the original terms of a contract have been modified (or have been broken), you are in essence agreeing to those new terms.
It's unclear from your question how the change from 25% ownership to 5% ownership came about. Did you continue to work on this project after they stated they were going to reduce your ownership to 5%? If so, how much? If they can show an email message from them to you stating this change, and can also show that you worked on the project after you read the message, you may be in trouble.
Of course things are rarely black and white when it comes to these issues. You should definitely ask your lawyer about this aspect of the law.
I'd probably just offer to get bought out of the 5% by paying you the difference between your normal rate and what you got paid. If not, then bill him for that and perhaps take him to small claims court for some small subset of the payments.
The other alternative is a lot of lawyering and bickering. Best just to move on and be rid of it.
At the very least you need to figure out what you want in the end. Do you want to be 25% owner in a company with this guy? Do you want to spend years and your real money chasing some 20% equity or money?
Just my opinion.
Unfortunately one of the very hard lessons in life to learn...This just stinks..
But only you can answer these questions, One..on who's servers does the code exist on? Two, do you have ANY paperwork to verify your claim to a percentage of product? If not you are in the classic he said, she said situation and worse he can demonstrate payment to you for your work.
I understand this doesn't make you feel better but ask yourself this, How will the judge, mediator or anyone know what you or the other party says is truth? Why should your words be any truer than the other parties? No paperwork, No leverage.
I learned a similar lesson also early in life on a commission check of 14k... Honesty doesn't always pay...contracts and deliverable protect.
I'm sorry about hearing about this abuse. Trust, they will get there just desserts soon enough. We wish you well.