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I was an intern in a small furniture company for over year where I had an idea to develop an integrated software solution that would help any company of the same type get organized. A verbal agreement was made that I could keep the IP rights to my code being free to sell it, and the company would have exclusive license to use/modify its copy. I developed the software mostly as an intern (1.5 years), and recently (5 months) as an employee (still no contract), heavily underpaid.

Recently the company has changed its attitude and asked me to sign a contract giving them 50% of the IP rights ownership. I didn't sign, I am now checking what my options are. My question is: Who owns the IP rights to the software if no contract was present? Intern or an employer? What are my options to legally claim my code and avoid any future disputes? If I leave the company tomorrow, can they sue me if I modify and sell the software for profit?

It was a big mistake on my part that I didn't ask for written agreement up front, I never thought this would become an issue since the company dealt with furniture, completely unrelated to software. What they are asking is not fair and shows how greedy they've become. Hopefully the law is on my side.

Sincerely,

PT

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2 Answers

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Your question is fairly fact intensive; you need a lawyer in your jurisdiction to answer it. This is a complex area of law and you have a complex fact pattern, so applying the law to determine ownership will be difficult. These are only a couple of guideposts:

  • Yes, a work created by an intern can be a work-for-hire.
  • If there is an agreement between an intern and an employer that the intern retains ownership, that probably overrides the work-for-hire doctrine.
  • An agreement doesn't have to be written, though there are evidentiary issues if it is not.

It sounds to me, though, that they might not contest the oral agreement and acknowledge that you own the code, which is why they are asking you to sign the agreement giving them 50% of the rights. If you don't sign the agreement and leave, can they sue you? Well, just about anyone can sue anyone else... the issue is whether they will win. You'll need to retain and consult with a technology copyright lawyer in your jurisdiction to get a reliable assessment on that.

(The preceding information is not legal advice and does not create an attorney/client relationship between us)

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Thank you David for your informative answer. As you mentioned that work created by an intern could be cosidered work-for-hire, is this true even without the contract/legal agreement? – P T Oct 22 '12 at 6:15
If it's the U.S. "An agreement doesn't have to be written" is just bad form. Whenever you're in business and you need to secure your rights in that business (if you don't possess ownership [stock] of that business), you better have an agreement. A handshake and a smile doesn't cut it in court. – Mechaflash Oct 22 '12 at 13:11
@Mechaflash I understand that completely, it was a big mistake on my part not to ask for a contract in the first place. I was naive and trusting, thinking that being transparent and fair was enough. Lesson learned :) – P T Oct 22 '12 at 16:05
up vote -1 down vote

If you are in the US, there is a very good chance that the copyright to the software is yours exclusively. In the US, in most cases the copyright defaults to the creator unless there is a employment agreement/contract in place that says otherwise. You really need to consult a lawyer though.

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I was hoping that was the case, unfortunately from what I learned so far it is not that straight forward. It is common sense that legal contract/agreement specifying the IP rights assignment was required, without it a company shouldn't even be able to put together valid lawsuit - it is employer's responsibility to protect generated assets of a company if the 2 parties legitimately agreed on it. – P T Oct 22 '12 at 6:34
@NeedAGeekIndy are you sure you're not getting your information mixed up with patents? Last time I checked, the software developers at google don't own rights to the software... google does. – Mechaflash Oct 22 '12 at 13:13
@Mechaflash Developers at Google and the majority of tech companies require their employees to sign a non disclosure agreement, which has a clause assigning all IP rights of produced work to an employer (it's also messy as it sometimes creates disputes over developers' side projects). My case is different as no such agreement was signed, and I was an intern. They can always sue me even for false reasons, I just need to know how the IP rights law is interpreted in case I have to defend myself at court. – P T Oct 22 '12 at 15:58
This is incorrect. Work performed by an employee is owned by the employer. – littleadv Oct 22 '12 at 18:05
No it is not. In the software world, you always sign a contract that assigns the IP to the employer. Without it, the person who originates the idea owns it. No contract, no reassignment. You may want to do a bit of research before you speak. – NeedAGeekIndy Oct 23 '12 at 16:59
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