In the rapidly developing open-source world of the Internet, it is currently in vogue for company’s to forge partnerships whereby one company, a software developer, contributes software code to another company’s platform. This code is often in the form of an “add-on application” that allows users to install applications on top of their originally purchased software. For instance, on Apple’s new iPhone, a user can choose from hundreds of available applications to install on the phone, such as customized versions of video games, music programs, or trivia. Once installed, these applications run as if they were part of the phone’s software, but in fact, they were designed by outside software companies. From a legal standpoint, in order for these companies to become integrated with the Apple service, they had to first sign a “Contribution Agreement” with Apple.
The same can be said for software contributors to the well-known Facebook platform, which has become the main peer-to-peer networking site on the web, boasting a membership of more than 70 million users. Just like with the iPhone, a Facebook user is able to install and “add-on” countless applications, such as Word Twist, Poker, Movie Trivia, and other applications that can be used to play games or connect with friends. Here again contributors must execute Contribution Agreements. This article will look closely at the provisions commonly found in software Contribution Agreements, hopefully providing a blueprint for transactional attorneys to use when representing software developers or platform operators and for reference when drafting agreements for their clients on either side of the transaction.
The most important decision for the platform-operating client to make is whether or not they will require contributors to assign the intellectual property rights in their contribution to the platform operator. This is a very dangerous thing, obviously, as the program undoubtedly took hard work to create and may be extremely valuable. Naturally, the extent to which the contributor must assign or license the IP rights to the software code depends on the leverage of the two parties.
In the case of Facebook, Facebook requires that contributors assign the IP rights to Facebook, but with the provision that Facebook automatically licenses back the IP rights to the developer to use in any way the developer wants. In other situations, such as Contribution Agreements with Sun Microsystems, the contribution agreement effectuates an assignment of joint ownership of the software code to Sun, the platform operaton. In case the assignment is or becomes invalid, the contributors grant to Sun a perpetual, irrevocable, non-exclusive license. Similarly, in the Facebook contribution agreement, if any rights to the contribution cannot be assigned, the developer grants an exclusive, irrevocable, perpetual, worldwide and royalty-free license to use the software. The contributor to Facebook must also waive any rights to sue Facebook in terms of the use of the software.
Once the platform operator and software developer have agreed on the transfer, assignment, or license of intellectual property rights, the rest of the agreement pretty much falls into place. The platform operator may want the contributor to agree to take all further, reasonable actions as may be requested of them, to perfect the assignment of the contribution, including but not limited to executing any necessary documents. It is also typical to include a Warranties and Representations provision, whereby the contributor must promise that it is legally entitled to grant the above assignment, that it is the contributor’s original work, and that the contribution is free of any viruses or software disabling devices.
These are the key aspects of an Open-Source Software Contribution Agreement. Clearly, the handling of the intellectual property rights of the contributor to the contribution is the most important task for the drafter to address.
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