Tips for Mitigating Software Development Risk by Nadine Dias

This guest blog post comes from Mary Juetten, Founder & CEO, Traklight

Iron Mountain's Intellectual Property Management business has a strategic alliance with Traklight and offers a free Business Risk Assessment as a part of that alliance.

Over the years, we've worked with various developers, from solos to IT departments in large companies, and in that time, I've seen companies experience some intellectual property (IP) ownership and infringement challenges. There's nothing like losing ownership of your code or refactoring entire libraries to drain all your time and money! Of course, businesses can avoid such costly errors by taking some basic risk management steps. Here are three that we recommend:

Tip 1: Hire-and Fire-Properly

Finding good developers in any market is challenging. Whether you are building a team for a development shop or hiring for your company's IT department, make sure you take proper precautions to protect the company and its products. Ensure that you have locked down the ownership to anything that is created for your company.

Employees are usually bound by the terms in their agreement or handbook plus a legal concept of work for hire. * The theory is that anything created for your company on company time and/or equipment is owned by the company. However, there is a grey area around developer's side projects that may or may not compete within the company's industry. Seek professional advice in this area to appropriately define parameters.

Contractors are not subject to the same work-for-hire provision. Therefore, you'll want to make sure that the company retains all IP rights for any work done by non-employees. To ensure you own what you pay for, you'll want to review all contracts, paying especially close attention to source code transfer and escrow provisions.

In the unfortunate event that you need to let an employee go, or terminate a contract, be sure to discuss which confidentiality, trade secrets, or non-disclosure agreements survive the separation. Create an onboarding and exit process that includes IP protection, and make sure those processes have proper documentation. Documentation around that exit interview can bolster your position should there be issues.

Tip 2: Understand Open Source

The name open source can be deceiving. Although many seasoned developers are aware of how open source licensing operates, we have heard some horror stories. For example, one mid-sized company considered all the open source fair game to use within their proprietary code. No one read the fine print. As a condition of securing financing, their code was audited and it was uncovered that their code was infected by open source code that prohibited commercialization. Entire sections had to be redone, which significantly delayed financing.

Sometimes it's not as simple as reading the license or permissions. One attorney had a case where the open source permitted use for good not evil ; talk about a field day! Not only can IP infringement cause rework, but in some cases, it can cause copyright infringement fines, too.

Tip 3: Inventory Your Licenses

Companies that sell tangible items regularly count their inventory. The same should be done for your intangibles, including software. Keeping such an IP inventory requires a listing of all licenses for software.

Whether you are growing your company for financing, sale, or succession, it's imperative you keep good records. Otherwise, due diligence or vendor approval can take too long, and in worst cases, it can kill the deal. The same can be said for responding to any litigation. Consultants, accountants, and attorneys spend an inordinate amount of time chasing clients to organize their information.

When it comes to software specifically, don't simply read the contract or license; make sure you also create a system to electronically list and file all documents. Having an inventory of the support for your code will help big time when you're asked to comply with a code audit or trying to sell your product to a large corporation. It's an old adage, but an accurate one: You can never be too prepared.

Not sure about your risks around software development or other important assets? Complete Traklight's free business risk assessment now.

*Disclaimer: Nothing in this article is legal advice; please consult an intellectual property professional for any legal advice.

LINK:	http://blogs.ironmountain.com/2015/service-lines/technology-escrow/3-t...
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