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Intellectual Property Issues in Software Development
Categories: General, Project Management

by Olga Rekovskaya

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Many people underestimate one of the most important aspects in software development process – Intellectual Property (IP) issues. Failure to pay the necessary attention to these issues may result in serious consequences, such as lawsuits and huge sums for compensation.

In this article I will tell you about the most important points.

Which license type to choose?

By a software license we mean a legal means of exploiting intellectual property rights (IPR). It constitutes a contract between a licensor (a software publisher) and a licensee granting the latter to use this software under certain conditions. In addition to this, a software license normally includes liability and responsibility terms.

Which one will be suitable to protect your product? Let's see what are the options.

Software licenses are usually divided into the two categories: proprietary licenses and free and open source licenses.[1]

Proprietary licenses

Under a proprietary license, the licensor grants the use of a copy (or copies) of software to the licensee. However, the ownership of those copies remains with the licensor (or the software publisher). Software modifications and access to the source code are usually prohibited by in this type of license. A proprietary license involves strict control of software use conditions which are normally reflected in the end-user license agreement (EULA).

This license category involves different types of contracts, most of which assume a financial contribution from the licensee in order to be granted the use of the product (although shareware and freeware licenses are different).[2]

Free and open source licenses

Free and Open source licenses assume granting the licensee the rights to run the software, to study how it works, to modify it, and to redistribute both unmodified and modified copies.[2] This license category can be further divided into the following two sub-categories:

  • permissive licenses (such as BSD license and MIT license) allowing a licensee to use, study, privately modify the software and imposing just minimal restrictions on further software redistribution;
  • copyleft licenses (such as GNU General Public License (GPL)) allowing a licensee to use, study, privately modify the software and redistribute it (provided it is consistent with GPL terms and conditions).[1]

The image below gives a general understanding of how these two license categories differ in terms of the rights reserved.

Photo Source

Which option to choose will depend on the type of product you are developing.

4 IP issues to consider while developing a software product

You have already decided how you will protect your product once it is ready. But have you ever thought of the challenges you might face during software development process? Let's see which IP issues can arise while developing your product.

Program code reskinning

If you came up with a decision not to develop the whole project from scratch, but to purchase the source code of an already existing app and reskin it the way that it will constitute a new unique project, it is important to know how to avoid possible legal troubles.

  • First, the code should be purchased under completely legal circumstances and from a reliable vendor.
  • Second, you need to check what the purchasing agreement actually allows you to do with the code – modify it and use it for your own needs, or distribute the modified version further.
  • Third, you have to make sure that you customize the purchased material enough for it to be considered a new product.[3]

Keeping these things in mind, you might prefer creating the project from the ground up to reskinning the existing code. Read more about the pros and cons of both options here and here.

Graphic and UI design

Most of the software projects require not only clean programming code creation, but also beautiful design.

It is important to initially make sure the designer is not going to use other designers' works. In case the designer is going to purchase images, ask him to show you payment documents. If the designer uses free images, you should make sure their usage does not violate ownership rights.

Make sure that while making mockups Provider will not use similar existing interfaces as a basis as well.

Parsing third-party sources

Some projects involve scanning information from the third-party services – flight tickets/hotels booking services, price comparison websites, etc. You will need to check the Terms of Use of the third-party resources and make sure that you can use their materials, and on which conditions. Most of resources will require giving credit to them.

Source code ownership rights

The deployment stage of the project assumes placing the source code on the customer's server (or on customer's hosting provider's server), and project documents handing over to the customer (for example user manual), if such has ever been created.

Together with that, you should consider whether the software will be competitively sensitive. If you feel that your Provider can potentially develop something similar for others in future, you might want to obtain IP ownership.[4] For example, in our company the exclusive ownership rights are always handed over to the customer by means of signing an IP rights transfer agreement (an Agreement for compensatory transfer of exclusive intellectual property rights).


To ensure that everything goes smoothly, be sure to check that all these points are stated in your software development agreement. Ask your lawyer for help if needed.

Share this information with your colleagues and relatives to be sure they will not encounter these IP issues.

References: [1] [2] [3] [4]