Building for a client, using it yourself

A client of mine has approached me to developer a web based app for one of their clients.

I don’t have a contract with my client, and from what I gather here in the UK, everything I build for them, I own the IP to.

Anyway, I would like to develop the web app for my client, but then make improvements to it, and convert it into software as a service, while giving it a new look.

Obviously, I understand this ‘may’ potentially cause issues between me and my client, but I just wondered, on the legal side of things, am I doing anything wrong?

Hi Mate

it’s always advisable to have a contract form signed with your client to whom you are developing an application in order to avoid further problems.:slight_smile:

<snip>faux sig</snip>

I’m not a lawyer, so take this advice as opinion. I notice you have said you have been approached (so I’m guessing you’ve not discussed or setup a contract with them yet) but I would discuss non-exclusivity on the application with the client and ensure that your right to use or resell the application is clearly stated in the contract. If your client agrees to you both having exclusive reseller rights they probably won’t have a problem with it, but you NEED to explicitly state that you retain ownership of the IP and that you are simply transferring them a license to use the works (and resell) as per the agreement otherwise the implication will be that they will assume they were given full rights to the item in question (and thereby may target lawsuits at you). Apart from consulting with a lawyer I would simply chat with your client as to the potential of you being involved in it - I know some clients won’t agree to your terms as they were the ones hoping to monetize their idea (rather than you) but if you bring them something good to the table which may sweeten the deal, you could negotiate yourself a good position which you could draw value from. :slight_smile:

I think it’s a great business model to target a particular market with an application/service, but I’d expect to pay for the development of the app myself. Having one of your soon-to-be competitors pay for its development and then declare you own the app, then go off and re-jig it to go into competition directly against them certainly sounds like a recipe for legal troubles.

Maybe speak to the client to hammer out a deal, i.e. get them in as partners with a % commission and that way you have a clear conscience, no legal worries, plus have a contact in the industry to fall back on for quality advice.

I second this. Partner up with your client and get them to provide something you dont have access to, such as infrastructure, management, capital or contacts. Then you can split the profits proportional to the investment. It would probably be 30/70 I would think.

The other trade off to proposing your SaaS straight off the bat is the client benefits from it too. If they are reselling it on a per instance pricing scheme, they could deploy it as a SaaS solution and then charge as though its a per instance product, but with the benefit of lower margins for them and more profits for your joint venture.

I would talk to a lawyer first though and find out how much IP the client already owns. It could end up that they own the whole idea, tangibly or not.

Then perhaps, since it sounds like you havent built anything, you propose a joint venture with a business plan and a cost benefit analysis. If they see bigger profits than they originally forecast, then you could be onto a winner.

Make sure you do due diligence though. You dont want to get stuck in a venture with an unstable or non reputable company.

That definitely sounds like you will need to talk to your client or a lawyer. That said, why not just write a similiar application from scratch after you develop one for the client. Chances are you will revisit situations in the code that could do with some enhancing any way.

After all, someone is hiring you to write them some code. It’s not going to be perfectly suited to your situation. Why bother with all the legal fuss, just start again in my opinion :smiley:

The app will be developed so that my client can re-sell it to other clients, but will be dependant on an installation for each instance. I plan to make it into a service with one instance serving many customers. So, in a way, it could well be a competing product.

IANAL, but it’s my understanding that the creation of a ‘work for hire’ arrangement in the UK can be ‘implied’ without the existence of any formal documentation. That means one poorly worded email to your client could be used as evidence that you agreed to transfer ownership to the client.

So add that to one pretty peeved ex-client, and it’s certainly a possibility that you’ll be getting some kind of legal threats or action landing through your letterbox.

You don’t mention in your post, but this web service you’ll be offering, will it in any way be in competition with your ex-client? That would certainly spice things up.