‘I’ve been working on a contract for a client through an agency,
developing and supporting a software product.
My contract is coming to an end, as the client intends to discontinue
the product and cease supporting it. I
have a good relationship with several of the client’s customers who are using
the product, and they are upset that the client intends to cease support. I’m thinking about offering ongoing support
directly.’
First we need to consider the terms of the contract under which you are
working through the agency; sometimes
we see a restriction in these contracts which appears to prevent you not just
from providing services to the Client (other than through the agency) after the
end of the contract, but also which tries to extend the net to other third
parties with whom you have come into contact whilst performing the contract. In
general terms, such restrictions are in restraint of trade, and will therefore
only be regarded by the law as enforceable to the extent that they go no
further than is reasonably necessary for the protection of some legitimate
commercial interest of the party imposing the restriction.
In outline, the law will recognise the agency’s trade secrets,
confidential information, and business connections as capable in principle of
being legitimate commercial interests which may properly be protected by such a
restriction. In the case of a
Contractor working through an agency, (s)he is unlikely to have encountered the
agency’s trade secrets and confidential information, and so we probably only
need to worry about business connection.
However, whilst the agency may have a business connection with the
Client, it is unlikely that it also has such a connection with the Client’s own
customers. Restrictions in agency
contracts which try to prevent Contractors dealing with parties other than the
Client actually introduced by the agency would generally be regarded by the law
as too greedy, and as simply trying to prevent competition, rather than to
genuinely attempt to protect a legitimate commercial interest. Such restrictions will therefore generally
fail – although the wise Contractor will still be very careful about managing
the situation so as to minimise the risk of having to waste time and money
dealing with a claim by the Agency.
There are also other reasons why such a restriction might fail. This is a specialist field, and it would be
wise to take advice from someone who has experience of the subject.
Next we need to consider whether there is any direct contractual
relationship with the client, and if so, what its terms are. Sometimes Clients will expect a Contractor
to sign a separate document, not for the provision of the services themselves
(this issue being covered by the relationship via the agency), but covering
such issues as secrecy / non-disclosure;
copyright; and (occasionally)
dealings with the Client’s own customers.
A restriction against dealing with a Client’s customers in such a
document as this has a greater risk of being enforceable – but is far less
frequently encountered. Unlike the
agency, the client clearly does have a business connection with its own
customers, which may well be capable of amounting to a legitimate commercial
interest, capable of giving legal justification for a restriction. The client’s plans to abandon these
customers by ending support for the product may suggest there is no ongoing
business connection – but here there may also be trade secrets and confidential
information, which could themselves be enough to justify a restriction.
We then need to consider other angles.
In continuing to support the Client’s product to its own (former)
customers, you would be making use of your own knowledge and experience, gained
whilst working for the Client. In
general, this ‘know-how’ that you have learned belongs to you, and you are free
to make the best use of it for your own benefit. There are still some potential pitfalls though – using your
know-how is one thing, taking advantage of any knowledge you might have of the
Client’s trade secrets and confidential information is quite another. And sometimes it can be difficult to see a
clear distinction.
Copyright in the software you intend to support will almost certainly
belong to the Client – even though you yourself shared in writing it. Copyright is a right which arises in
original works one they have been committed to some form of record. It doesn’t need to be registered. The first owner will generally be the author
– although when the author is an employee and the work was produced in the
course of employment, the employer will be the first owner; and in the case of commissioned work
(including work by a Contactor), the contract should say who will own the
copyright - if it is silent on the point, then the law is likely to take the
view that any copyright is held on trust for the person paying for it.
Copyright is the right to control reproduction; ‘reproduction’ includes copying,
distribution, and making changes;
‘copying’ includes the transient internal copying of code by a computer
in order to run a program; ‘control’
means the right to say ‘yes’, ‘no’, or ‘yes subject to conditions’. The Client will probably have licensed its
customers to use the software – a form of ‘yes subject to conditions’, set out
in a Software Licence.
Support of that software by you, where the support consists of helping
the client to use the product ‘as is’, would probably be quite legitimate. Bug-fixing and making changes, on the other
hand, could well amount to modification of the software, and as such could be
an infringement, save to such extent as it might be permitted under the terms
of the licence granted to the customer.
On the other hand if the software has an API which has not been kept
secret by the Client, then writing enhancements which simply hook into that API
would probably not be an infringement.
Overall, you may be wise to discuss your plans with the Client, and to
try and find a way forward which has their support and ongoing
cooperation. For all you know, they may
welcome this initiative by you as a means of solving something they themselves
regard as a problem.
23rd June 2000
I'd really appreciate your feedback on this FAQ - so mail me and tell me what you think of it, if it's been useful to you, or let me know of any specific problem you have where I may be able to help.
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