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I have been working on contract for 4 years developing software. (and more than a decade before that as a regular employee elsewhere) The contract is conventional in that the work I do for them belongs to them and I have no problem with that.

About a year ago, I became aware of a "problem" that would benefit from a software fix and counted a few distinct industries that would benefit from my solution. All of these were outside the scope of my current employer/client's industry.

A few months before that, I formed an LLC. I did that primarily for asset protection and potential corp-corp contracts without particular regard for developing my own product. My solution for this problem is essentially my first product. Since my contract is full time and family life important, my time on my project has been minimal. I have little more than notes and an early project that I developed on my own time and on my own equipment. I am not particularly concerned about someone scooping my product as this is a decades-old problem that nobody has yet solved despite its simplicity.

My client approached me recently about a problem they are having with the systems my software runs on (it is not a problem with the software I develop for them). This problem is nearly identical to the one I wish to solve with my own project. As it is not yet finished, however, I will need to spend a good amount of time developing and testing it. I cannot, then, immediately offer them a finished product.

My goal is to maintain my main contract and the good working relationship I have with my client while also maintaining ownership of the product I conceived of and have so far developed solely on my own time. My question is, how should I negotiate this arrangement with my client?

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    If you only have notes as this time you don't have a lot to negotiate with. You might offer them what you have for free and stipulate you retains ownership of the software and they get a perpetual license. You might negotiate you can do some development on billed time. – paparazzo Jun 15 '18 at 23:26
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    I'm pretty sure their going to either have someone else solve this problem before you ever do and they'll own it. Or you'll do it for them on their terms and they'll own it. Unless you've already got some intellectual property protection on this, you're too late. – Glen Pierce Jun 16 '18 at 1:21
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    @GlenPierce - They wouldn't own my implementation if another developer creates their solution. They would be uninterested in marketing anyway as they are only concerned about this one product. There are other developers in the organization. I just happen to be the only one who deals with the affected devices at present. – a.o.d Jun 17 '18 at 6:00
  • Where are you (country and, if US, state)? Different places have different laws. In California, you have negotiating room, but if you're in Texas your employer likely owns your after-work project. – David Thornley Jun 18 '18 at 16:29
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    I think this question is complex enough that you really need to get a contract lawyer to help you draft something. They will be able to help you run the fine line of keeping your intellectual property while still satisfying the customer's needs. – David K Jun 19 '18 at 16:14
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I would suggest coming to them with proposed solution from the LLC stand point and quote a budget for "tailoring" this solution to their particular needs. Stipulate, that finished product would be on life-time license to them, you can even throw in a 3-5 years of updates

  • I am thinking this might be the most advantageous solution. Based on @paparazzo's comment to my question, I am presently thinking to finish at least a proof of concept even though it would pretty much only run on a PC and lack some of my planned features. I edited to add that the contract is governed by the laws of California and will wait a little while to see whether that brings specific details before I accept. – a.o.d Jun 19 '18 at 16:14

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