Advice on how to manage a side project that a separate company wants to use?

Question

I'm currently contracting full time but as a side project ive created a simple recommendation system. A company has approached me wanting to use the system. Currently its just packaged as a jar file. The system is not fully developed and said company will be providing me with the data to make recommendations.

I'm currently not being paid for this and its dependant on how well the system works over next few weeks but all signs are that it will work as expected.

Currently this system just works on my local machine but said company have asked me to upload it their server so that they can run it anytime they want. This makes sense but it feels like im being pushed out. This is something that I've been working on for almost a year, taking courses, reading books etc and so I feel extremely close to it. But perhaps this closeness is clouding my judgement and I should'nt really worry ?

I've considered approaching said company and offering to host the system myself but they will still be able to run the system on demand but it will be hosted by me. With all of the open source software out there perhaps im being too protective ? It would not be overly difficult for someone else to do what ive done so at same time I do not want to "shoot myself in the foot" by being overly protective.

I can see a day in the near future when I will be asked to share my source code so developers within their company can make changes.

I can see myself transitioning to work on this system full time if demand requires.

Any advice on what I should do ? Do I just need to explain what ive asked here and make clear that although they are using my system I'm still the owner , perhaps that is too hard lined ?

Answer 1

First, congratulations on having something of "Your own" that you see market potential in.

You are facing the same issues that major software vendors face, so don't feel threatened.

As a disclaimer, I would carefully review your contract with your client, and ensure you aren't violating any terms. Most likely you aren't, but if you're not sure, a couple of hundred dollars for a lawyer to look it over could well be worth it.

Now for the interested party: You have to decide what terms you want to offer them.

Many vendors will use a Software-As-A-Service model for entry-level customers. You can host that on Amazon for next to nothing to get started. A lot more stable and headache-free than running it out of your basement (Although I will admit I have done the "basement server" thing in the past myself).

Then, you could have an "Enterprise" version where your customer could put it on their own server. I would absolutely use an obfuscation tool and a professional 3rd-party license component. Don't try to implement your own licensing. That's not your expertise, and you can get very good license components for under $1,000 from several vendors.

Finally, a "Source Code" license. Typically you would sell this for 5 to 7 times the cost of the Enterprise license, and you would have the customer sign an NDA (with a proviso for compensatory damages - there's that lawyer appointment, again) as part of their license not to share the source code. Then your customer can make whatever changes they like, and you can continue to develop down the path you want.

Go find the "big boys" in the area you are in, and see how their licenses are set up. Most component and server suppliers are offering source code licenses these days.

Remember, your product's value isn't in its source code. It's in your knowledge of the domain and your efforts in continuing development.

Answer 2

@Adrian, as I understand it:

1. You are a contractor working for a third party.
2. You are in the process of developing intellectual property (your software).
3. A company wishes to use (license) your software.
4. You wish to assert and protect your right to ownership of the IP.

From what I can see, 1. above is irrelevant to the point that it only affects the amount of time you can devote to developing your software.

If you plan to license your intellectual property, you will need to;

1. assert copyright by placing copyright notices within your code and associated documentation.
2. create or adopt a software license.
3. ensure those who wish to use your software agree to the terms of your license.

If you distribute binaries, you may also choose to use obfuscation techniques to reduce the ease of reverse engineering and employ a licensing tool to keep your users honest.

I would see this as an opportunity to learn. If you wish to commercialise your IP, its sometimes hard to get your first few customers. This company will be providing you with data to test your code against and feedback which you can use to improve your software. Consider them a beta test site and a potential reference customer.

You have the choice to provide them with a service based on your software or a license to use your software. This is a business choice you need to make and will be dependent upon the nature of the application and customer needs.