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
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
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
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.
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A recent Saskatchewan Court of Queen's Bench decision allowed a court-appointed receiver to sell and transfer intellectual property rights free and clear of encumbrances, finding that a license to use improvements of an invention was a contractual interest and not a property interest.
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