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Contract Engineering: Software Development Agreements

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Behind the ordinary private law contract surface, we come across with multidisciplinary core, which contains flavors from International private law, intellectual property law and data protection law. Furthermore, mastering at this niche study field requires not only strong law command but also requires above average understanding of the essence of software coding.

Software development agreements richly various, when it comes to warranty and liability clauses. On the one hand, some agreements are prepared as a contract of service. Developer sides of such contracts generally aren’t willing to give any warranty after passing software to the counterparty. On the other hand, some others, consider this agreement as a contract of work. Such developers commonly, provides warranty for their products as far as 12 months after the delivery of the software, with additional liability clauses including maintenance, warranty, and other assurances. Between these large scales of agreement options, each party designate their primary requests and meet on common ground.  

Every software development agreement comes with considerable privacy concerns. Therefore, negotiations about confidentiality between parties challenging but attainable. Especially joint software development project agreements require comprehensive regulations. Since both parties participate with their Intellectual Properties (IP), their desire to protect their property is understandable. Nevertheless, parties may need to share their private information to achieve progress. Legal counselors should maintain the fragile balance between these privacy concerns and cooperation requirement.

IP disagreements are one of the most mispriced clauses. Furthermore, using standard IP clauses with general terms is one of the main mistakes done by parties. On the contrary, every IP conflict needs unexampled solutions. Developing and delivering the software is just a beginning for disputes over IP rights. Thus, every aspect of the property and IP rights of software should be discussed diligently at earlier stages of negotiations by parties. To prevent judicial encounters which is expensive and time-consuming, these negotiations should be conducted by counselors who are accustomed to engineering contract terms.

One other effective factor to IP rights of parties is chosen governing law. Depending on the governing law choice, procedures applied to both securing and protecting IP changes. The prominent scenario for this contrast is the different specification of software IP’s in Turkey and the USA. Turkey protects these rights with only Copyright protection, while the USA provides the same protection with the patent laws. Despite their common purpose, patents and copyrights follow different paths.

Even though developers are very familiar with the term of the source code, many counselors are light years away from this term. Nevertheless, since this code guides the counterparty into the secrets of the software, every responsible counselor must understand the consequences of sharing such code. The most obvious outcome of such actions is reverse engineering or IP infringements. Thus, the developer party which chose to give software with source code should precisely regulate the clause which is related to open source protection.

To sum up, the software development industry alters every day like other technology industries. In that vein, legal expectations changed and became more sophisticated. To meet these expectations parties should prefer counselors who are familiar with terms of software coding. This preference not only helps them protect their rights but also increase the chance of getting better deals.

Author: Furkan Demirkol

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