The computing world evolves rapidly, as do the software programs which support it. Moreover, their increasing complexity makes it difficult to identify with certainty their components and origin, as well as the rights inherent to them.

Knowing this information is essential to any developer who wants to market a software program. It is also a significant consideration when the software edition business becomes the subject of a merger or an acquisition.

A software program is composed of a group of instructions called "source code". While a portion of this source code is entirely created by the developers, other portions are obtained from third party sources such as free software directories or open source software or are acquired from other developers. These other portions constitute "external source code".

Although a portion of this external source code may be free, it is often subject to copyrights and its user licence may provide for certain obligations or conditions which must be disclosed to the public for whom the software is created.

Depending upon its complexity, any given software will likely include a significant amount of external source code. That being the case, anyone who wishes to market such a software program or hire a programmer and acquire his ongoing projects would be well advised to identify the rights and conditions attached to the software he develops.

In order to avoid the significant costs related to the due diligence process carried out after the software program is developed, it is preferable to implement an automatic and integrated verification process of the software from the initial steps of its development.

This process should particularly include the following items:

  • a policy for managing the software related intellectual property, which delimits the external content which the developer may use (the "policy");
  • the analysis of the existing source code (inherited code or patrimonial code) of the business and the creation of a data bank ensuring its compilation.
  • the analysis of the status of each software program in respect of the policy;
  • the real time compilation of any new source code which the developer creates or that he borrows from third parties;
  • the preventive review of any new external source code to ascertain compliance with the established policy;
  • the implementation of an automatic alert system which activates whenever external source code does not comply with the established policy and the implementation of a procedure to remedy the situation.

Using such a process will facilitate the preparation of a report on all the electronic content of the business, including information on all the source codes of its software programs, their origin, the obligations resulting from all licence agreements, the history of their suppliers, the versions thereof and any other useful information for their management and use.

This report on the electronic content may eventually serve as a basis for the preparation of a certificate of integrity of the electronic content (the "certificate") signed by a senior executive of the business.

The best business practices would require that such a certificate be provided each time a software program changes owners in order to establish with more certainty the scope of applicable rights and obligations.

Lavery's corporate law team is able to assist you in implementing an intellectual property management policy pertaining to the software programs which your business develops or uses.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.