Mass Law Blog

For the Want of a Nail the Kingdom was Lost – Failure to Get Clear Title to IP, Redux

by | Feb 11, 2009

In June 2007 I wrote a post discussing two cases in which clients of our firm had, before they became clients, failed to get written assignments of copyright ownership from independent contractors who wrote software for them. Without a written assignment the contractors were able to claim ownership of the works, and make life very unpleasant for their customers, who may have assumed that since they paid for this work the code belonged to them.

A case decided last Fall shows what happens when this problem is taken to an extreme. In this case the programmer-contractor claimed ownership, and the value he assigned was in the millions of dollars. The customer was forced to go through a federal court lawsuit that involved discovery (expensive), summary judgment (quite expensive), and finally appeal to the Ninth Circuit Court of Appeals (very expensive), only to finally have a court declare that it owned an “unlimited, non-exclusive, implied license to use, modify and retain” the source code written by the contractor.

While this case had a happy ending for the customer, the entire expense, as well as the risk of a loss, could have been avoided if the customer had a piece of paper with only one sentence, signed by the contractor: “I hereby assign to [customer] all right, title and interest to all intellectual property developed by [contractor] during the course of any engagement by [customer], including but not limited to all property protected by copyright, patent or trade secrets.”

The case is Asset Management Systems, Inc. v. Gagnon