5

my friend and I set up a e-commerce company together as %50-%50 partnership. My part of work was get product information from websites and keep the inventory accurate for our online store. We do not have any written agreement over task division among company. Since my friend has no coding skills, I was doing that part.

I have developed a web scrapper from scratch on my personal computer and the software was running on my personal computer as well. I took the software from updating an Excel file to web store daily to updating the web store inventory with webstore's provided API continuously. Since software does all my work, I look like I am not doing anything.

Now we are dissolving the partnership and there is dispute over the software. He states that it belongs to company and I should leave it. But It did not feel right to me because I created it to do my part and that does not make it companies property. During the software development none of company's resources has been used. Since we split the profit %50-%50, I was not on payroll as software developer and paid to create that software. Also we would both ship the orders so there was no clear distinction on other job duties.

I would appreciate your inputs regarding this software ownership dispute since I don't know anyone to consult regarding this issue. Thank you all already!

P.S. We are located in NJ, USA

closed as off-topic by gnat, IDrinkandIKnowThings, David K, Kate Gregory, Dan Neely Dec 12 '18 at 22:13

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  • 17
    You probably should consult with a lawyer, but if you developed the software specifically for a project in this company it belongs to the company and I don't think it matters that you didn't use company equipment. – sf02 Dec 12 '18 at 17:04
  • 5
    See a lawyer, and for future reference, if you do this again, license any software you develop to the company, and make it a contract. That way you're better protected. – Richard U Dec 12 '18 at 17:17
  • 3
    VTC This is about law not navigating the workplace. – IDrinkandIKnowThings Dec 12 '18 at 17:36
  • 1
    If you developed that software to respond to your company needs, it belongs to the company. – Danny Coulombe Dec 12 '18 at 20:36
  • Can you clarify whether you're seeking clarity on ownership of the software (that is, right to license and/or sell it) or clarity on use use of the software (that is, right to use the software), or both? – David Schwartz Dec 12 '18 at 21:31
18

You seem to have worn two hats in this transaction:

  1. Manager responsible for selecting software.
  2. Developer of a software package.

Wearing Hat 1, you were responsible for selecting software with a license that meets the company's needs. There are many ways you could have done that. For example, if picking freeware you would need to check it was licensed for business use. It would have been very irresponsible to select software with a license that says "This license is valid only as long as Lamazone remains with the company.".

Back when you decided to develop the software you should have sorted out the terms and licensing. If you were doing it as part of your contribution to the company, it probably belongs to the company anyway. If it does not belong to the company, wearing Hat 1 you should have required, from yourself wearing Hat 2, a suitable license that meets the company's needs. To avoid self-dealing, you should have discussed the license with your co-owner and got his approval. Using it to do part of your job without a formal license strongly suggests that you developed it as part of your contribution to the company and the company owns it.

To fix all this now without paying a fortune to lawyers, I suggest offering your partner an exchange in which he drops any claim to company ownership of the software, so you can use it and license it to others, and you grant the company a perpetual source license to modify and use the software.

16

I'm not familiar with USA/NJ laws, but this seems really straightforward to me.

My part of work was get product information... ...Since my friend has no coding skills, I was doing that part.

You agreed you would do something and you decided to do it as an automated software. It was done within the company and what you both understood as "work" or your responsibility, and for the company. And therefore it's owned by the company.

Who owned the tools to create the software doesn't matter. Also, as a former entrepreneur I have to say that being an entrepreneur requires you to have a bit of good faith, and not to dive into disputes like this. I'm sure your partner made calls with his personal phone and wore a suit he had bought himself. Starting to argue that YOUR contribution was somehow more special for any reason is counter-productive.

  • 3
    If there's no contract, any code you write is yours. Enforcing is an other costly matter. – dan-klasson Dec 12 '18 at 21:52
  • In California law, what you develop on your own time with your own money is yours, even if you signed an employment agreement to the contrary. – Joshua Dec 12 '18 at 22:09
  • @dan-klasson Founders aren't employees, they don't sign normal employee contracts (who would have authority to sign the first contract from company's side?). He signed the paper saying he owns 50% and that's if that doesn't show the intent of doing work would be ridiculous. – Sopuli Dec 12 '18 at 22:10
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    @Sopuli That's not ridiculous. Just because he's the co-owner doesn't mean that anything he writes is owned by the company. – dan-klasson Dec 12 '18 at 22:15
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    @Sopuli: These are not simply assets but copyrighted materials that fall under strict copyright laws. – dan-klasson Dec 12 '18 at 22:30
7

Based on experiences, it seems you own 50% of a company that owns the software you created.

Unless you can prove the software was created for other consideration (payment, trade, etc.) the company owns it. That you used your personal resources likely doesn't matter.

Meaning, when dissolving the partnership, you are entitled to 50% of the value of the assets which includes the value of the software. You can negotiate retaining the software as part of your 50%.

Since it seems there is already disagreement, you should now focus on locating legal counsel.

2

So many wrong answers in here.

If there is no written contract between you and your friend, you own it. If you haven't licenced it as open source it's proprietary by default. That's why when you work for professional companies they specifically mention in their contract that any code you write during work time is owned by them.

Enforcing this is another matter however. It would require a lawyer. You could always document as much as you can now and then hit the company with a lawsuit later down the road if it becomes profitable.

Keep in mind though if he has documentation himself, such as email correspondence where you discuss ownership, he could use that against you in court.

  • Too short a fix for me to make an edit...did you mean proprietary where you wrote propitiatory? – mkennedy Dec 12 '18 at 22:22
  • I wouldn't be too sure about that. I'd suggest consulting a lawyer. A partner wrote that for a business need of a partnership. A partnership is not an employee relationship, so there is no actual "not work time", in the absence of an agreement. – David Thornley Dec 13 '18 at 16:43
  • @DavidThornley There's always work time. Suppose you have two partnerships in two companies. Who would own the code then? Company A, company B or yourself? It's pretty clear. But yeah, should always consult a lawyer. – dan-klasson Dec 13 '18 at 19:12

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