Selling or licensing my code

[2camjohn]

I have the opportunity to license my code to a company im the US. The code is put onto hardware they produce.

I would prefer to be paid a commission per unit, as would they I think. ALthough if it has to be sold outright then so be it.
I think that lawyers are out of the question, as they would probably consume more money than I stand to make...


My questions are not reallyabout electronics, but I ask here hoping to find people who have experience with licensing embedded software:

What measures can I take to protect my code, I wouldnt want them reverse engineering my code, developing it themselves or disclosing it to other parties?

How can I prevent them from producing and selling more units than they say they are?

I realise its probably not possible to guarantee all those things, what is the normal procedure in these circumstances?

 

[panic mode]

read this and you will have job for life:
https://www.thc.org/root/phun/unmaintain.html

 

[Nigel Goodwin]

Without having more details it's difficult?, but I would suggest selling the code to them - this way there's no possibility of them selling units without paying you.

Presumably they have given you an estimated number of unit sales per year? and how many years they expect to sell them? - do the sums from those estimates and offer to sell it to them for half of that total. Negotiate from there!.

This way you get a decent amount of pay and no risk - the unit might be discontinued after a few months, and you might get very little!.

 

[i_build_stuff]

Chances are, you won't be able to do much to prevent them from reverse engineering your code (although it might be hard to do if it's for something complicated, like an FPGA). You could use the "code protect" feature on whatever chip it's for (if present), but then you'd have to program all the chips for them (which would put another supplier in their chain, and cost you money).

The best option would be to make sure your license agreement is solid and be prepared to enforce whatever contract they sign (you should definitely let a lawyer look at it--otherwise you could wind up getting sued yourself). If can't afford the risk, then it would probably be better to sell it outright. That way, you get paid up-front and there's no possibility of dishonesty (since they bought the whole package anyway).

Either way, I wouldn't be so worried about it that you never sell anything--underpaid is still better than not paid...

 

[justDIY]

In my town, which is a very small industrial and farming community, we have a local chamber of commerce ... they have put together a group called SCORE, which is basically a bunch of retired executives that help out small business owners, for free ... this town has the benefit of attracting a lot of retiries from big cities, so there's all sorts of executives in the pool. Maybe some organization in your community offers a similar service?

Failing that, don't think of hiring an attorney as expensive - think of it the other way around, not hiring an attorney can be very, very expensive for you!

I'm not sure how the law works for your country, but over here in the USA, you would deffinately want to setup a shell corporation or LLC, to protect yourself and your family assets (house, car, land, college fund, etc) ... you would transfer the rights for your software to your corporation, and then the corporation would sell or license the software. this way if for some reason, the product your software is embedded in causes a liability issue and the "lets sue someone" feeding frenzy starts up, a well structured shell will protect you from the brunt of any attacks - sure you'll lose the corp, but it really just existed on paper - you won't lose your house and land and other assets.

 

[2camjohn]

Guys,

Thanks for all the advice so far, as Im sure you can tell I am very naive in the ways of business.


Panic mode:
Thanks for the link, my background is writing complex systems in java on IBM PCs so I found it very interesting. It just goes to show how far you need to go to protect your code.
But I think that the fact that I will be supplying my code in hex format will negate alot, if not all of the ideas on there.



Nigel,
Thanks for the suggestion, I feared I would have to do it this way. What details do you want to know?

Here is some more information.
The other company have already supplied me with details of the hardware (something which I could have found out myself anyway given a multimeter and enough time).
They currently purchase their code from another company as a ready programmed chip. This will not be possible in my case.

There will be some possibility of code maintinence and updates, as the requirements for the device do change over time.

Hopefully this project should open the door for other collaborations between our companies.


I build stuff:
Cheers for the help. Caution is in my nature, I am trying not to be too paranoid but I am aware little fish like me get screwed over all the time. My aim is to put the odds as much in my favour as possible.


justDIY,
Thanks for the tip we do have places here where i can get advice, however embedded software is not a common thing.
I already have a LTD company, I have been selling my code on my own (somewhat rudimentary) hardware for some months now.



Thanks for all the help so far, If anyone has any more advice or tips please post it here. I really appreciate your help.

John