I sold my source code to a client, can I now re-build similar code and sell to someone else?

Question

So we built a website and software for a client, charged our fee and handed over the code.

The client then got a request from another company about the software. The client passed on the request but said since they owned the code they would need to recieve money for it.

I'm thinking there are 2 options here:

1. Work with the client as requested

2. We've actually re-built the software, made it much better and use it for other projects. Am i in my rights to sell that direct to the company that enquired about it instead of going through the client?

Any help on this would be much appreciated

Answer 1

A couple of hours worth of lawyer money would be well spent in this case.

Answer 2

It all depends on what your contract with the client said. If you rebuilt what you have now from scratch, you are probably within your rights to sell it again. If you re-used any of the code, the answer may be different.

Remember that the client doesn't have to be right in order to sue you. If they think you are cheating them, they can sue and make your life miserable. Sometimes it is worth a little money up front to avoid a big cost later.

Answer 3

As I see it, you have two options.

(1) Work with the original client to strike a deal that allows a one-time payment to the original client.

(2) Talk to a lawyer to see what you need to do to protect yourself if you decide to cut the original client out of the deal completely.

Both options can be pursued simultaneously.

Answer 4

Ethically I see nothing wrong with it. You have handed over all the assets, but you take experience away from that that makes it easier to do it all again, this is normal.

Legally I think it depends on where you are and what the contract said. Its well worth investing some money in a few hours of lawyer-time.

Answer 5

Probably too late to do anything about this now, but in the future you may wish to license your software to the client rather than sell it or do it as work for hire. You'd need to make sure that your contract stipulates this up front -- that what you are doing is developing software that you will then license them to use.

@Jon B's advice is worth following in this case.

Answer 6

If there is a really strong market for it, try talking them into changing to a license.

How about you give free upgrade to new versions?

If on the other hand, they will be a strong piece of your revenue in the short term, just go through them, but lay out some clear rules for future deals.

Answer 7

Disclaimer: I'm not an attorney.

What do you mean by "sold source code"? Did you specifically agree, in writing, to assign the copyright to the client? Or agree, in writing, that you were performing "work made for hire"? If your contract does not specifically state these terms, you may still be the copyright owner, after all.

If you assigned the rights in the original code to the client, the client may sue you for copyright infringement if you re-create code that copies the old code verbatim or is "substantially similar."

There may be other issues such as trade secrets of the client that may have been incorporated into the code.

1. Talk to a lawyer; and/or
2. Get explicit permission from client. Since the client provided you with the lead, it sounds like they would be amenable to working out an agreement. You could structure it as part of a referral fee paid to the client