The Life-Cycle of Software

copyright 1997 Donald M. Cameron , Aird & Berlis

Contents

• Conception/Development
• Employment Agreement
• Confidential Disclosure Agreement
• Consulting Agreement
• Software Development Agreement
• Distribution/Use
• Beta Test Agreement
• Software Distribution Agreement
• Software Licence Agreement
• Improvement/Repair
• Maintenance and Support Agreement
• Obsolesence
• Source Code Escrow Agreement

Software, like most products, has a life-cycle: conception, development, distribution, use, improvement, repair and obsolescence. Different contracts govern the relationship between the parties along the life-cycle of software.

Most software is developed by employees of companies who, in their employment agreements, assign the intellectual property rights in the software to their Employer. The agreement also includes provisions requiring the employee to keep confidential all trade secrets and other confidential information learned or created during the term of employment. (See Employment Agreements)

Confidential information often has to be disclosed by the software developer to a potential customer or vice-versa so that the software developer can learn about the business of the customer to create the software needed by the customer. Confidentiality protects the secrecy of ideas contained in the software. (See Confidentiality Agreements)

Consultants are sometimes required to assist in the design, development or coding of software. A Consulting Agreement makes use of the consultant's talents and designates who will be the owner of the intellectual property rights in the consultant's work product.

When a customer needs custom-made software, and cannot make it itself, it will contract with a software developer to create that software. Again, intellectual property ownership issues must be addressed.

Software is sometimes evaluated at a potential customer's business on the potential customer's data. The customer becomes a "guinea pig" for the software in return for which it provides valuable feedback to assist in the final design of the software.

If the software developer decides not to do its own distribution of the software, then it will have to retain a distributor in its place. The Software Distribution Agreement sets out the obligations of the Distributor in respect of making customers enter into sub-licences and in respect of minimum sales to maintain the disributorship.

This Agreement governs the grant of permission to the end-user to use the software.

Maintenance and support are the "cash cows" of the software industry. Software suppliers contract with end-users to provide on-going assistance, repairs and upgrades to the software.

In most cases, the object code is licensed; the source code is not licensed. In order to make changes to the object code, it is necessary to have a copy of the source code. In order to protect their ability to make changes to the source code, end-users sometimes require software suppliers to place a copy of the source code "in escrow" so that if the supplier goes into receivership or bankruptcy, the end-user can access the source code.

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