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CS 501: Software Engineering Fall 2000 Lecture 7 Management II Business and Legal Aspects CS 501: Software Engineering Fall 2000 Lecture 7 Management II Business and Legal Aspects of Software Engineering

Administration • Read instructions for Assignment 2 Schedule presentation Group and individual assignment • Administration • Read instructions for Assignment 2 Schedule presentation Group and individual assignment • No office hours next Tuesday • No recitation session on Monday • See Notices for Teaching Assistant assignments to projects. 2

Legal Environment Software is developed in a complex legal and economic framework. Changes in Legal Environment Software is developed in a complex legal and economic framework. Changes in laws follow changes in technical world. Jurisdictions: • • • 3 United States Constitution International treaties Federal and state statues Precedents Supreme Court Cost of establishing precedent

Legal Topics • International • Intellectual property (copyright, patent, contract) • Tort (e. g. Legal Topics • International • Intellectual property (copyright, patent, contract) • Tort (e. g. , liability of Internet service provider) • Privacy • Free speech and its limitations (government secrets, obscenity, blasphemy, hate) Legal Information Institute: http: //www. law. cornell. edu/ 4

Copyright A copyright gives the owner the exclusive right to: • reproduce • distribute Copyright A copyright gives the owner the exclusive right to: • reproduce • distribute • perform • display • license Gradually extended to cover text, music, photographs, designs, software, . . . 5

Copyright at creation • • • Works for hire Contracts and licenses First sale Copyright at creation • • • Works for hire Contracts and licenses First sale Fair use Infringement (contamination) International differences • • 6 Moral rights Copyright registration

Software Patents • Should be: non-obvious, novel, useful • 17 years from award (20 Software Patents • Should be: non-obvious, novel, useful • 17 years from award (20 years from application) • Poor quality of examining can lead to broad patents for routine computing concepts • International differences Copyright applies to the expression of ideas, patents to the ideas themselves. 7

Contracts and Licences Contracts allow intellectual property to be sold or licensed • • Contracts and Licences Contracts allow intellectual property to be sold or licensed • • 8 Promise in exchange for adequate consideration Written document with signature Permanent or temporary, whole or part Exclusive or non-exclusive Termination, problems and difficulties Terms and conditions as agreed Enforceable by courts

Derivative Works When software is derived from other software: • New code is owned Derivative Works When software is derived from other software: • New code is owned by new developer • Conditions that apply to old code apply to derived work If you write S, which is derived from A, B, C and D, you can not distribute or licenses S unless you have right to distribute each of A, B, C and D. To create a software product, you must have documented rights to use every component. 9

Privacy Invasions of privacy: • • intrusion appropriation of name or likeness unreasonable publicity Privacy Invasions of privacy: • • intrusion appropriation of name or likeness unreasonable publicity false light Be very careful about collecting personal data without the knowledge of the individual 10

Software Business Questions • You are employed for company X writing software. When you Software Business Questions • You are employed for company X writing software. When you leave, who owns your work? What use can you make of the work? • You work free-lance for company X. When you finish, who owns your work? What use can you make of the work? • You are a student on CS 502. What you finish what use can you make of your project work? What use can Cornell make of it? Read the contract! 11

Your Next Job. . . • Employment contract may restrict your next job (not Your Next Job. . . • Employment contract may restrict your next job (not working for competitors, etc. ) • Trade-secret information (non-disclosure agreement) Ask when you are interviewed! 12

Trade Secrets and Non-Disclosure Agreements Trade Secret Trade Secrets and Non-Disclosure Agreements Trade Secret ". . . information, including a formula, pattern, compilation, program, device, method, technique, or process that derives independent economic value from not being generally known and not being readily ascertainable and is subject to reasonable efforts to maintain secrecy. " Uniform Trade Secrets Act Non-Disclosure Agreement Legal agreement not to disclose trade secrets. 13

Some Business Models • Software developed in-house • Package licensed to customer, binary only Some Business Models • Software developed in-house • Package licensed to customer, binary only (Microsoft model) • Package licensed to customer, source code for customer's modifications • Bespoke software for customer (may be owned by supplier or customer) • 14 Software bundled with hardware product (Palm. Pilot)

Free-Lance Software Development You and a few friends create a company to develop software. Free-Lance Software Development You and a few friends create a company to develop software. How much should you charge per hour? You plan to work 40 hours a week for 50 weeks of the year and want to earn $50, 000. Hourly rate = $50, 000 / (40 x 50) = $25 But. . . 15

Free-Lance Software Development Salary Taxes and benefits Rent, equipment, etc. Fees, services, etc. Travel Free-Lance Software Development Salary Taxes and benefits Rent, equipment, etc. Fees, services, etc. Travel and misc. TOTAL EXPENSE Hours worked less administration less marketing BILLABLE HOURS 16 $50, 000 $15, 000 $10, 000 $100, 000 2, 000 400 350 1, 250 Hourly rate = $100, 000 /1, 250 = $80

Fixed and Variable Cost: Packaged Software Example: • The initial development cost of a Fixed and Variable Cost: Packaged Software Example: • The initial development cost of a software product is $10 million. • The cost of packaging and distribution of each copy is $5. • Technical support costs average $15 per copy. • The package sells for $200 per copy. Fixed cost = $10 million 17 Variable cost = $20

Fixed and Variable Costs: Profit or Loss $15 M $10 M $5 M 18 Fixed and Variable Costs: Profit or Loss $15 M $10 M $5 M 18 2, 500 5, 000 7, 500 Unit sales

Community Development • Shareware • Open source (e. g. , Linux, Apache, Perl, etc. Community Development • Shareware • Open source (e. g. , Linux, Apache, Perl, etc. ) -> Shared development -> Market penetration Example: TCP/IP for Vax/VMS Software may be open source, but packaging and services can be profitable businesses 19

Open Source • • Source code • Derived works • Integrity of the author's Open Source • • Source code • Derived works • Integrity of the author's source code • 20 Free redistribution No discrimination against persons or groups

Open Source • No discrimination against fields of endeavor • Distribution of license • Open Source • No discrimination against fields of endeavor • Distribution of license • License must not be specific to a product • License must not contaminate other software http: //www. opensource. org/osd. html 21

Practical Advice Be aware of the law, but do not pretend to be a Practical Advice Be aware of the law, but do not pretend to be a lawyer. Use a professional for: • • Troubles (complaints, injunctions, subpoenas, etc. ) • Personnel issues • 22 Contracts and licenses When in doubt, ask help!