Software Royalties

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:?: guys, what's you take on this ?

Company X has source code for controlling a widget. This source code they are licensing @ $10 per device sold. Company A is in a rush to get the product out so they buy the source code & license agreement from company X. the product successfully gets out and is a hit. thousands are sold the first month, and it looks like sales are going to quadruple.

the CEO, being a greedy bastard that he is quickly realizes that in his haste to get the product out he should have spent the extra time and had his software engineers write the code for controlling the widget. now he is paying Company X big bucks that could be in his pocket. So he tells his software engineers to take a look at the source code from Company X and change it enough yet retain it functionality so that they can call the code their own.

Now that you have the story outline my question to all is this:

#1) if you purchase source code with licensing rights can you change it enough to then call it your own, and if so what changes are to be made (i.e. can I just change variable names, or can I change A++ to A = A + 1)

#2) this is a legal no no and should not even be thought of.

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Hello,

(IANAL)

I would rewrite the source code entirely. Its just too risky to try and change it a tiny bit. I would also _try_ to make sure it looked quite different from the exsisting source code and used different algorithms if possible. Otherwise it looks like you convinced Company X in good faith that there would be lots of units sold - but in reality you just rip off their source code. If it was considerably different it would be obvious that you put time into your own code.

An easier solution for company A to talk to Company X and either buy unlimited rights or reduce the fees. If Company X knows you are going to dump it then it would probably reduce the price or offer other solutions, because some money comming in is better than none!!

Also I would assume it depends on the contract, if at some point Company A says that it will give Company X $10 for every unit sold, then Company A is kinda screwed. if it said it would give Company X $10 for every use of the code, then I think you could back out if needed.

Regards,

-Colin

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As a side line to this; company A makes items X, this uses serial in circuit programming.

Another company has a patent on using ISP in that application so is demanding royalties from company A.

Who is the real S**** B****** here the Patent office staff (good old USA)! The lawyers who are can not wait to charge inflated fees (to go with their egos) or just humans in general who are not prepared to turn round and say push it where the sun does not shine?
Mike

Keep it simple it will not bite as hard

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jimparisi wrote:
:?: guys, what's you take on this ?
Now that you have the story outline my question to all is this:

#1) if you purchase source code with licensing rights can you change it enough to then call it your own, and if so what changes are to be made (i.e. can I just change variable names, or can I change A++ to A = A + 1)

#2) this is a legal no no and should not even be thought of.

1) It will need to be re-written entirely, and it must be done so by 'virgin' programmers. (That is programmers that have never seen the source to the original code) It basically works like this (this is how Compaq reverse engineered the PC BIOS back in the 80's) One group tears apart the original code, and writes a specification on it's operation, with no detail of the implementation itself. The spec is then passed onto a group of engineers who will write a new piece of code to meet the written specification, there must be no other contact between the spec writers and the code writers. (in Compaq's case, the engineering team was even sequestered for the duration fo the project) You will need to document all of this procedure, in the even that Company X decides to take Company A to court . (Refer to SCO vs IBM and misappropriation of code)

2) While reverse engineering software isn't illegal, it may violate the license agreement made out during the licensing phase. (check that shrink wrapped license on any microsoft product) You must also be careful not to violate any patents that other companies may have taken out on a particular implementation or algorithm.

Writing code is like having sex.... make one little mistake, and you're supporting it for life.

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2) Its a no-no.

If they copy part of it, then they copied it and it would be a violation of the author's copyright.

If they have someone who has never seen the source code reverse engineer it (perhaps based on specs alone) this would the so-called clean room process that was used to write the Pheonix BIOS for the PC back in DOS days.

More importantly, the author should have this covered in his contract with the company he licensed the software (firmware) to.

Rick

--
"Why am I so soft in the middle when the rest of my life is so hard?"
-Paul Simon

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Ethically and legally, the answer's no.

But if company A is much bigger than company X (e.g. company A = Microsoft), then we all know the pragmatic answer.

:!:
(That's the nearest emoticon I can find that looks like an upturned middle digit)