How does a small startup legally protect itself from developers stealing or selling its codes?


#1

I cofounded a small business that is gaining traction. The business is registered only as a business name. We have some paying customers but not making profit, we’ve never paid tax. So far we’ve been funded from personal sources.

We are now thinking of hiring a developer. My concern is, it took a lot to build our software. 3 years of grueling research and development. And deploying the software doesn’t take a lot. What do I need to do to ensure that I can legally go after any developer I hire should the developer sell the codes to a third party or start a competing business?

I need practical “naija advice”, I can Google but then I’ll get “western advice.” I would like to minimize cost and anything that may tie us down with unessential bureaucracies.


#2

Consult a lawyer. That’s your best option, in my opinion.


#3

Exactly.

This is the best advice.


#4

Simple. Get an Attorney to draft a simple employment contract. Make sure he inputs these clauses you desire like “non compete” “ownership of codes written on work equipment or during office hrs”, “anti-theft” etc. I tell you most solemnly, no one has d balls to steal your codes if these are clearly stated.

Also, if getting a lawyer seems too tedious, go online, search for employment contracts and edit some clauses. It will be enough to prove a simple contract existed btw you.

However, getting a lawyer to draft this is safer and cheaper in the long run. Plus you can reuse the docs for all your employment contracts in future.

My learned opinion.


#5

Will the contract be binding considering the business isn’t Incorporated and we have never paid tax?


#6

Yes, why not? You mentioned is registered as a business name, that works too


#7

Getting a lawyer is just the best option, trust me


#8

Hello,
As others have advised, you should get a lawyer… But I am sure you’re not satisfied with the replies you got; so I have the following advices for you.

  1. Visit http://www.eregistration.copyright.gov.ng/ to register your software (please note that you pay some fees): After you’ve complete all the necessary registrations, your software/product will be protected under the NCC (Nigeria Copyright Commission) Law. And it will be prevented from being sold locally.

However, I will advice you not to stop there… What if the “pirate” decided to sell your software to international market?

Then you will need to protect it internationally:

  1. Visit www.copyright.com to register your software and get copyright license for it. You will also pay for the service.

If you’re the one that personally developed the software (I don’t know the kind of software we are talking about; but I am thinking in my line of work; in this case, web programming, you can encrypt some lines of codes that will notify you of illegal use. This can be done using licensing technique [e.g CCL].

I hope this helps.

Godspeed.

N:B Protection type varies from software to software… the best of protection is Licensing Key.


#9

not sure what your business is… but i am guessing it is more than just the software. It isn’t easy to steal an idea or lift and replicate, there is a lot more involved i mean all the other stuff outside of the software but then if i am wrong and the software or technology is the “koko” then some manner legal protection or trademarking should suffice that way whether an ex-employee or not you can sue


#10

Get them to sign a legally enforceable NDA (Non-Disclosure Agreement) and (NCA) Non-Competing Agreement.

Good Luck.


#11

Yup agree with previous comments, get some legal advice. Fortunately there are law firms that have sprung up now that focus on helping startups.


#12

Well, we do hope enforcing the law would be easy in Nigeria. I’d advise you work very hard in your hiring process. If you pick the right developer (and make her see that she’s also a part of the company: a company win is also their win), they’ll move your software onward to places you haven’t even thought of.

Maybe I am bias (being a developer myself), but most developers hardly run away with your code/idea except your business is in the sector/area they’re passionate about. Most times, theft is by more business/marketing types whose passion is making money and as such (if unethical), will easily use your property to make money.

PS:
I’m not shooting down the importance of the law in Nigeria but except the thief has gone on to build something very valuable with what was stolen, even your parents will tell you to leave it to… well, God.


#13

Western Advice: Sign an NDA or get a lawyer to draft up something with legal words that scare people to the bones.

Naija Advice: Sign the NDA, but understand that with the way our legal system is set-up you will find yourself fighting an endless battle if your code is actually stolen. It’s not worth it, so don’t put your faith in the NDA.

Instead ensure you find someone you can trust, someone that is recommended, don’t pick someone with a shady background, pick someone with a track record, again this will not eliminate your issue but can help.

Also find ways to give people only segments of your code, sometimes they don’t need access to the entire code to work on your site.

Last but not the least, stop worrying about replication so much so that it causes you to slow down your execution, you can buy an instagram clone or elance clone or facebook clone for less than $300 today. You could also find developers in India or other affordable countries that can replicate site functionality without skipping a beat. Point is that sites can be replicated, but what can’t be replicated is your brand and the trust you have built with your customers and your passion. Put your effort there.

And please incorporate quickly and pay your taxes, those guys at FIRS are not playing in this recession.


#14

All these people advocating for non-competes, hope you know they are hard to enforce?
Many companies in the US are no longer looking too much in that direction as courts have repeatedly decided in favour of the employees.
Also, when I was perusing some legal documents on Nigerian company law a while ago, I came across something that suggests any agreement that tries to constrain a person’s practice of his trade/livelihood (which is what non-competes basically are) is essentially void.
I cannot remember the exact section/document where I saw that, and I am not a lawyer.

Tax bodies the world over are made up of people who do not have a playful bone in them.
You had better fix your tax situation.
No government/tax body I’ve heard of forgives unpaid taxes, so beware.


#15

Hello I know this is a fairly old thread but I thought I could help. You need an employment agreement drafted by a lawyer with some IP expertise. The employment agreement should have a clause where the developer assigns to your business all copyright and other IP rights to the source code, preparatory materials for the software, and other documentation such as user instructions or technical guides. Under Nigerian law, the first owner of copyright would be the developer rather than your business even though you are the employer. You do not necessarily have to register copyright of your source code. It is protected by copyright immediately upon creation.

You will also need confidentiality provisions in the employment contract to protect your business ideas and the functionality of your software. Copyright will protect against copying of your source code but not copying of the functionality because copyright does not protect ideas. The confidentiality provisions should continue in force even after termination of the developer’s employent so that your business remains protected after his departure.

You cannot prevent a person from earning a living. This is why non-compete clauses can be problematic. They have to be proportionate and necessary to protect your business interests. There is a better chance of it being upheld if the clause is restricted in time and/or place and your competitors are defined strictly e.g. for a period of 6 months following termination of employment, employee must not provide services to or by employed in Nigeria by any company providing identical or similar services or developing or intending to develop an identical or similar product to yours.

These are the basic legal protections usually used but these are only half as important as the actual security measures and processes that you put in place to prevent theft of your IP. A tech person would be better to advise you on what these should be, but I understand this could include for example using repositories in the cloud that require 2FA for access and monitor all editing and extraction. These processes should be reduced in writing in a policy which the developer must adhere to. A policy should also address the use of property belonging to your business and return of such property on termination.


#16

Most of the replies here I see are from a legal point of view.

Have you thought about building the software in modules?

The idea is to get different developers who don’t know each other to build different modules and the modules talk to each other via a module built to handle the “talking”. This way if a developer steals one module, he/she will need to figure out a way to build other modules from scratch before getting the software to work.


#17

@easibor your are the only one with a good idea. All others talking about drafting bra bra or having a lawyer to draft a mere paper are just normal thing but does not stop any fraudulent developer from selling your codes online or anywhere else… even if he had an agreement, what proof do you have to question him that he is the one hanging your code or software online for sales for a mere $300 or less? if the software is an app developed using android studio for example… what stops the developer from making a copy and exporting same to google cloud or drive… The fact is, get it done in modules, and again, you too need to have the skill to run those module and fix any error that may come up…

However, I recommend, get a trusted one if any and let it be. I dont know how the bigger companies are doing it, ie facebook but the important thing is your brand name… even if they go with ur code, they may never go with ur existing brand.


#18

…by the way how do you even know if its your code? or are you guys saying the code or algorithm in question is new under the sun?


#19

Codes are definitely different. Two people can think of the same idea but the line by line logic behind the algorithm cannot be exactly the same. That logic is the real IP


#20

One question, how do you determine ownership of a code base? Let’s assume you ( X ) hire a developer to build a mobile app with features A, B, C, and it turns out sometime in the past he had built an app with features B, D, and E for another client ( Y ). So the very logical thing to do is copy the implementation of feature B from the old project. At this point who owns the code? Client X or Y or the developer?? Tricky

I am of the opinion that business/ideas are way beyond just code and little emphasis should be placed on it. Every developer can create an eCommerce platform to rival Konga in features or a Taxi app with just as good as Uber but that doesn’t mean they can copy the business.