What are the legal and ethical implications of this?
For a few months now, I have been developing a web application for a "non-profit" (unofficial, more on this later) of my own accord. I'm the only one who has written the code, it was my idea in the first place, the only thing the "non-profit" has provided is the server space where the code is currently hosted. They have also not paid me a dime (though I'm sure I have made them quite a bit of cash).
When I started out on this venture, my ultimate goal was just to help the community that I loved and maybe have a nice, shiny web application to list in my portfolio. After countless hours of work, however, I have begun to rethink my strategy. Somewhere along the way, I came up with a great idea to monetize my application, which would have otherwise been a closed-source project to be used only on this one particular site.
At this point, I want to take my code and start a new company of my own. I believe the demand is there, and I think this is a good opportunity to get some experience in the startup world while making a bit of cash in the process.
My question is - what are the implications of this? The "non-profit" is simply a community of like-minded people that accepts donations to stay running. It's not an LLC, incorporated in any way, or a 501(c) nonprofit - nothing. As I said before, this project has been run and created solely by myself.
I have not discussed this with any of the owners of the site as of yet, I wanted to get a bit more information fist.
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Would using the code you wrote to start a new company cause any harm to the non-profit? Could it cause some form of financial loss or any other kind of tort? If so then make sure to mention how in your question. In any case, I would recommend the owners sign some form of acknowledgment that you built the web app on your own time and that it's yours. In exchange for that, you could let them use your app for free forever. – Frenchie 12 years ago
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@frenchie No - using the code myself would cause no harm to the non-profit in any way, nor would I be competing with them. As far as an acknowledgment, what sort of things would this include? – John Doe 12 years ago
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Well then I think you should be in the clear. For the acknowledgement, you want to get a simple letter saying that you built the app on your own time and that the NPO acknowledges that it's entirely yours and agrees to make no claims of ownership. Such letter would become important later when you'll need funding: investors will want to make sure that you own the IP. A lawyer might be helpful to review this letter but if you keep it really simple then showing intent is what will matter most if the subject ever becomes a point of litigation. – Frenchie 12 years ago
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Make a product out of your code and start charging the non profit for it. – Jsz 12 years ago
2 Answers
I am not a lawyer, and you should consult one.
Typically, when
- no money has changed hands and
- there is no legal agreement that says the code is owned by the receiving party (the non-profit) under a work for hire scenario - the creator is the owner.
If you provided the software to the non-profit, you've done a good thing (created value for them from your hard work) and fulfilled your moral obligation, but you shouldn't feel as though you need to tip toe around this issue with them.
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Thank you, seems like great advice. – John Doe 12 years ago
It sounds like legally you are fine, although you do need to consult a lawyer to be sure.
All I would suggest is to talk to the "non-profit" and get their okay. It's best to do this in writing too.
I don't say this for legal standing, just your own peace of mind. There are plenty of stresses in starting a company, you don't need to always be looking over your shoulder that someone could pull the rug out from under you. So get it sorted with them, and then you don't have to ever look back.
