Is it problematic issuing irrevocable license to a company?

s.lindberg · Post by **s.lindberg** » Mon Dec 19, 2016 6:11 pm

Background:
- Entering into an extensive employment agreement with a company.

Goals:
- Want to allow company to use my code.
- Do not want to allow company to prevent me from using my code under any circumstances.

Question: is wording "will provide to the Company an irrevocable license" OK, or will the word "irrevocable" cause me trouble (e.g. company barring me using my own code)?

AndyJ · Post by **AndyJ** » Mon Dec 19, 2016 8:24 pm

Hi,

You don't say in which country your employment will occur so I'm assuming that it is either the UK or USA. If it's elsewhere then you will need to seek clarification of the legal position locally.

In the UK and USA when you enter into an employment contract, copyright in anything which you create in the course of your employment is owned by your employer (see section 11(2) of the UK Copyright Designs and Patents Act 1988, or Â§ 201 (b) of the US Copyright Act 1976).

So the clause containing the words "will provide to the Company an irrevocable license" in you contract is not strictly necessary and is probably there to make sure you understand your legal position from the outset. However, neither that phrase nor the law itself prevents you from trying to negotiate a licence with your employer to enable you to use your code in the future. Depending on the type of employer, this may or may not be feasible. I would suggest that if the company's main products revolve around software (eg games or apps etc) then they are going to be less likely to agree, since you could in theory set up in competition with them using their own code which they paid you to produce for them.

But code that you create outside of your employment duties would not be covered by the law or the clause which you quote, unless of course the same clause goes on to discuss those circumstances. If it appears that you being asked to give up the copyright in all code you write during your employment, including something created outside the terms of your employment duties, then you should get some advice from an employment lawyer before signing anything.

s.lindberg · Post by **s.lindberg** » Tue Dec 20, 2016 4:53 pm

Assuming there is no danger of competition and I am negotiating retaining the ownership of my code (but issuing an irrevocable license to company); is there danger of the word irrevocable (if agreed by both parties under UK law) giving the right to company to bar my use of code in the future?

AndyJ · Post by **AndyJ** » Tue Dec 20, 2016 6:23 pm

Hi again,

If you get the company to agree to you retaining copyright ownership, and they depend on the licence alone, then the actual terms of the licence would need to be spelled out explicitly. There are a number of types of licence: ones which are limited by time (the 'term'), by territory, by usage and by the degree of exclusivity. So taking just that last one, an exclusive licence means that only the licensee (the company) can make use of the copyright work to the exclusion of everyone else including the owner, while a sole licence means that just the licensee and owner may use the work and no other licensees may be created, and a non-exclusive licence means that the owner can license several people to use the work concurrently (an EULA is an example of the latter category).

Most licences are revocable if the licensee fails to abide by one or more of the conditions - in this respect it's just another form of contract. But that appears not to be possible in this case as, bearing in mind that the employer has the legal right to ownership, as mentioned in my earlier posting, they will effectively be able to determine all the terms and conditions of the licence, which doesn't leave you with many bargaining chips.

The word irrevocable on its own does not bar you from using the code, it just means that the licence cannot be revoked unilaterally. But it is fairly meaningless except in the context of the whole agreement, Therefore the important thing is to get all the licence terms in writing so that you know exactly what rights you do and don't have in respect of the copyright work(s).

I am not sure if this is important to you, but one of the other things you may want to negotiate is whether you will be entitled to a credit as the author of the code. Normally where section 11(2) applies (ie where the employer owns the copyright of works created by employees), the author's general right to be credited is disallowed. There is also a specific problem with computer programs - see section 79 subsections (2) and (3).

Lots more on IP licensing here (pdf)

s.lindberg · Post by **s.lindberg** » Wed Dec 21, 2016 11:19 am

Thank you for the further in-depth clarification, Andy. Liked the IP Licensing Handbook attached; had a quick skim through (and intend to read it throughout). I wonder what the default position on exclusivity is if it is not mentioned explicity.

AndyJ · Post by **AndyJ** » Wed Dec 21, 2016 2:43 pm

Hi s,

If nothing is mentioned about exclusivity I would imagine that the licence would be interpreted as non-exclusive, but that might depend on the contract law prevailing in the jurisdiction chosen as the applicable law - as discussed in your other thread.