Redaction

This document is partially redacted. The SHA256 of the unredacted text is:

993e61fe0524e9cd642eaab636ea5a90793c545beffb685804f6407df958bbbd

Background

███████ (an ███████) contracted me over the course of a few months, during which I produced ███████ repos containing original code, folders of notes, etc., all of which was original and written and therefore copyrightable. The intention is always to assign it to the company contracting you, as this will need to become their IP, but it did not come up mid-development.

I honestly immensely enjoyed my work, the flexibility they afforded me, and my working relationship with ███████, but the founding team seemed inexperienced and problems eventually came up. I offer details not to bad-mouth the company (hence the redactions) but mostly to explain how strong IP rights protected my interests. Almost all of the negative incidents described here arose out of naive incompetence on the founding team's behalf, rather than actual malice.

The first major problem was that they ran into issues with payroll and failed to pay their invoices on time for a period of nearly ███████. The resulting drama ended with us terminating our relationship—though it was not very bitter, we simply decided we could not continue working together. I still consider myself tight with ███████.

When I asked them whether they intended to throw my work out or what their plan was with the unfinished work, ███████ said something to the effect of "No, we're going to finish it on our own." When I explained that they could not do that until the IP was assigned, they responded that "didn't think that's how it works." I was an IC working on an oral contract, so it was absolutely how it worked. Despite the prior issues, this was where I started to feel like this team did not know what they were doing very well, and it was complicating my ability to wrap this relationship up.

Wait, actually, we do need that

Within a few days, I heard back from ███████, who told me that I was right, that they did need me to sign an assignment agreement (which they had emailed), and also indicated that they would be unable to close their ███████ until they had gotten signatures on the ███████ of these agreements they had sent out. It seems like there was one very pissed off lawyer that day when this founder mentioned something about a contractor talking about IP assignment, only to find that the company had hired "███████" of contractors without owning the underlying IP.

Who could possibly know how much of that code is in the codebase now? The issue with this is that if this company is using even one line of original contractor code (or one line written by someone else derived from contractor code) without explicit assignment/license, they are violating that author's copyright. This is the reason why investor diligence for software companies is a stickler for IP rights: If we are investing in a software company, we are ultimately investing in its intellectual property, and if we can't be sure that you own 100% of it, it raises issues.

Hilariously, the offer to assign the IP was for less than 1% of the cost that was paid to develop it. When I told ███████ I would redline the agreement and send it back, they told me that they "were not in a position to do revisions." I was actually shocked: Here we are, our relationship over, they need me to sell them my property in order to close their round, as well as take on additional liability by making various representations and warranties to them, and they say can't do revisions.

Ball-busting ensues

I was happy to assign the IP to them until this point; now I would need to be buttered up. So, for for the first time, I committed to busting their balls just to set the record straight about who does and does not need who to do what—which is an option you do not have if you do not own the underlying IP in the first place (as you would not in standard employment arrangements).

My counteroffer was 20x what they asked, and it expired after 72 hours of no response. If they reach out again, it will be at least 10x that. If they proceed otherwise, our relationship is over just as it was before they reached back out to me asking me to take on additional obligations.

If you need contractors to release IP, remember that you're the one convincing them and not the other way around. If you don't like it, hire an employee.

Resolution

I expect that deal will eventually be closed, mostly because the alternative would mean putting investors at risk (bad idea lmao), and if it does they're going to walk out of it bloodied (paying ~30x more than I was originally going to release it for until they became uncooperative).

For me, I was prepared for this scenario, and am exactly where I would be either way, and I was well-paid to develop software that I still currently retain ownership of, mainly ███████, which is great. If I do something with that software and monetize it, the profits are mine to keep.

They, on the other hand, own nothing until we reach a new (and separate) agreement, and have to be concerned about investor diligence and the issue of contamination. Even if they throw out all references to the work that was produced, the issue with not getting IP assignment from contractors is that if that work is even relied on indirectly to produce derivative work (say, a feature based off a subconscious memory of a contractor's notes, even accidentally), that infringes on the contractor's copyright.

Thus, you should always expect to get your contractor IP assigned to you, and contractors should always remember that they retain ownership of their software until they assign it.