One of the consequences of a development where two or more parties have collaborated not only to produce a software product (see Contract 10) but also to continue to enhance, modify and support the same especially over a period of time, and perhaps also where further products or Applications based on that product are produced, is that the copyright in such enhancements, modifications, supporting software and documentation relating to any of the foregoing becomes less distinct unless the parties have continued to be vigilant in ascertaining ownership not only at the outset of the original development (see Clause 9 of Contract 10) but also at each stage where copyright or ownership may come into question, e.g. prior to creating a new Application.
At some stage, the parties to such a co-operative development may each wish to exploit the fruits of the development in their own way and in order to avoid subsequent disputes as to ownership of certain parts of the developed work it is preferable for the parties to grant to each other reciprocal rights to use that part of the developed work which is or may belong to the other party so that each party can exploit the whole jointly developed product.
This Contract is aimed at being a short, simple but effective way of avoiding costly disputes and lengthy litigation during which neither party will benefit. However, it also provides that neither party will be liable to the other for loss or damage suffered by the other in exercise of such reciprocal rights. This is fair where there is no competition between the parties in the same market.
If it is likely that there may be competition in the same market and the acts or omissions of one party will affect the other, then the following terms should be added to Contract 11:
(a) a defaulting party should be liable for the loss or damage suffered by the non-defaulting party;
(b) the termination provisions should be extended to list events of default agreed between the parties and whether or not damages (in addition to forfeit of that party’s licensed right) should ensue;
(c) a cross-indemnification should be added to cover loss or damage suffered by one of the parties attributable to the acts or omissions of the other; and
(d) a joint undertaking that neither party shall disclose any information, take or fail to carry out (as the case may be) any action which would affect the other party’s market, product, support or otherwise disparage or bring the other party or its product into disrepute.