TweetFollow Us on Twitter

Time Bomb
Volume Number:9
Issue Number:10
Column Tag:Legal Eagles

Time Bombs, Stop Devices and Other Stuff

What are the legalities of such code?

By Paul Goodman, Esq., P.A.S., New York, New York

Case in point. Bob Bytes, a custom business software developer accepts a project from Wonder Widget, a local widget brokerage, for the development of an integrated accounting package. Since both parties were in a hurry to get started, neither took the time to memorialize their agreement in writing, but there was an oral agreement that Bob would be paid $3,500 per month for the development which was projected by Bob to take four months. Unfortunately, due to circumstance unforeseen by either Bob or Wonder Widget, the project dragged on for three additional months and then for three more without a definitive end in sight. After ten months, Wonder Widget started to object to the increased development time and costs and started to blame Bob for the problems. Bob, on the other hand, blamed Wonder Widget for constantly changing the program specifications.

After Wonder Widget delayed in paying several of Bob’s weekly invoices, Bob became nervous and thought of an idea to help assure payment of his fee should their relationship fall apart. Bob planted into the software a few conditional statements which locked up the software at a predetermined date. Since Bob had never supplied any source code to Wonder Widget, and Wonder Widget had never requested it, Bob had Wonder Widget just where he wanted them. If they wanted to use the software and access to their data, they would have to pay Bob just what he wanted and thought he deserved. Without the source code, Wonder Widget had little that they could do but to pay Bob.

Let’s look at another possible ending to the story. Instead of paying Bob, Wonder Widget decides to make a stand. They hire a lawyer who brings a law suit against Bob charging breach of contract and intentional interference by Bob with Wonder Widget’s property, that is, its data which was now inaccessible. They also ask for punitive damages. To make matters worse, Wonder Widget’s lawyer brings a motion for an injunction requiring that Bob immediately remove the software stop he has placed into the software until the court can make a final determination on the law suit.

Most programmers will recognize this scenario as one they have either thought about themselves or heard about from other programmers. However, we are sure that there would be quite a bit of disagreement in the programming community about whether or not Bob had the right to place the preprogrammed stop into the software and what the outcome of the law suit would be. In this article, we will look at several scenarios involving attempts by programmers to use time locks or other similar code to help protect what they perceive to be their rights and review the possible legal consequences of these actions.

Wonder Widget v. Bob Bytes

As you’ve seen, Wonder Widgets has sued Bob for breach of the software development contract and for interfering with its data. They also asked the court to issue an injunction forcing Bob to remove the time lock so that they can use the software prior to the final decision in the lawsuit. Bob would undoubtedly counter-sue for the additional programming fees he felt that he was entitled to.

What would happen in this case? What would each side claim and who would prevail in the end? Unfortunately for the programming community, this issue is so new that the court’s have provided little or no guidance to follow. Let’s look at what each party might perceive as their rights and which positions might hold up in court.

Bob Bytes would probably claim that he is entitled to shut down the software since he has not been paid his entire development fee and therefore, the software would still be his. He would also probably analogize the situation to the repossession of a car when the purchaser fails to make their car loan payments on time. Finally, given the original fact pattern, since there was no written agreement between the parties, Bob might emphasis what may be a valid claim to the copyright in the software.

As you might expect, Wonder Widgets might see things a little differently. They would claim that the software was merely the subject of a disagreement over the final development fee, a dispute that should be settled in court. Since they had already paid an overwhelming proportion of the fee to Bob, he had no right to prevent there use of the software. They would also claim that this was very much unlike the repossession of a car since because in that situation, the bank would have both a contractual and statutory right under the Uniform Commercial Code to repossess both of which were absent in this case. Finally, if Wonder Widgets had a smart lawyer, she might point out that not only has Bob Bytes shut off the software, he has also denied Wonder Widgets access to its data and thus, jeopardizing the continuity of its business.

What would be the outcome? To the surprise and possibly, the chagrin of programmer’s everywhere, a court would probably find in Wonder Widget’s favor and possibly order the immediate removal of the time lock. We say probably because, as already mentioned, there is very little legal precedence for judges to rely upon and, as you probably, suspect, the courts have had very little experience in understanding and dealing with computer-related issues. Let’s look at this in some more detail. While Bob Bytes might eventually prevail on at least some of the contract issues (payment for the work he performed), he might be found liable for any damage he caused to Wonder Widget’s business. An enlightened judge might also issue an injunction requiring the programmer to remove the time lock until the ultimate issues in the law suit are decided. This is because what legal precedent does exist seems to suggest that programmers do not have a right to self help remedies such as time locks unless that right is spelled out in an agreement between the parties. This is based upon several factors maybe the most significant of which is that the hiring party, who has been led to rely upon the use of the software to operate their business, will sustain far greater damage from the shutting down of the software than the programmer will, since the programmer would have a so-called “adequate remedy at law” in the form of a breach of contract law suit. In addition, the fact that a significant portion of the development fee had already been paid might lead to a finding that the contracting party is entitled to receive value for that payment in the form of the use of the software. This would be true even if the programmer is found to own the copyright in the software, since the courts have regularly found that even in the absence of a written contract, a party who hires a programmer and pays the development fee (or at least significant portion thereof) will have an implied legal right to a non-exclusive license to use the software. Since Wonder Works would be found to have a right to use the software, the court’s would most likely find that the shutting down of the software would be in violation of that right.

Taking all this all into account, what should the programmer who wants to use a locking device to enforce their right to payment do? Here are some guidelines. First and most importantly, have a written agreement with your client disclosing the existence of the time lock. Next, make sure that in the event that the software is shut down, the user will have the ability to access and use their own data. Also, avoid inserting any device or activating it over telephone lines. Finally, make sure that any locking device is activated only in good faith and in response to a dispute where the rights are clearly in your favor.

Commercial Development Situations

Let’s explore this issue some more by changing the fact pattern a little. Let’s say that Bob Byte’s client is not Wonder Widgets but rather is, So-So SoftWorks, a software publishing company. So-So has contracted with Bob for the development of a software product to be published on a commercial basis. Bob is being paid for the work on a flat fee basis, with the total development fee being paid over a series of milestone payments. Since Bob had trouble collecting some of the milestone payments on a timely basis, he has inserted a time-based locking device into the software with the goal of preventing publishing of the software should he not be paid.

Is this situation any different that the other where Bob was doing custom development work for a commercial software publishing customer (of course, differences in the two situations can be easily found, the question really is, are they legally significant)? The key question really is, assuming that Bob completes the development but does not get paid the final portions of the development fee, would Bob be liable for any damages sustained by So-So if they could not publish the software due to the time lock? The answer to this question is even more unclear than the previous one and the courts have provided even less guidance. While the automatic activation of the lock would not deprive So-So of access to any of its data (as was the case in the Wonder Works situation), it would prevent So-So from publishing the software. In addition, So-So may have already paid a significant amount of the development fee for the software. Thus, this situation leads itself to the same type of analysis as the previous example. That is, the programmer is using a “self-help” remedy to enforce his perceived contractual rights and the commissioning party having rights to at least part of the software by virtue of having paid for (at least part of) the development.

As with the previous situation, if the contract between the parties permits the programmer to lock the software in the event of non-payment, then the programmer would have a strong basis to support his or her claim to the right to shut down the software. If So-So claimed an offset against the final portions of the development fee, rather than just arbitrarily refusing to pay, Bob’s case would be somewhat weaker. A programmer might have a basis to support this claim (although a somewhat weaker one) if the contract conditioned any assignment of rights to full payment. Although, if the shut down of the software occurred prior to the completion of the final version of the software, such a contract condition might not apply. Absent of any type of contractual right to place a locking device in the software, a programmer might be treading on thin ice. If you are a programmer in this type of situation you should think carefully before proceeding. In the event that the software is shut down prior to it’s duplication and publication by the publisher, the damages would be rather limited, that is, those costs associated with missing the shipping date for the software. However, if the shut down occurred after the software was duplicated and sold, damages to the publisher could be substantial including the cost of a total recall of the software and the damage down to the publisher’s business reputation with its distributors and end users.

Publishing Situations

A third possible situation is that of the software publisher who purposely has a locking device placed into their commercially distributed software in order to enforce their rights against the end users. There are several possible situations. One is the publisher who distributes a time-limited demonstration version of their software. This is a version which will fully function, but only for a set period of time afterwards it will lock up. A second is the publisher who sells software which requires a key to activate the full version of the software. Finally, there is the publisher who sells software based upon a periodic (such as an annual) license and equips the software with a locking device which automatically activates unless the licensee/purchaser pays the annual fee and obtains a password to unlock the software. The key (no pun intended) to any of these arrangements is that the end user is made aware of their existence so that they can reasonably anticipate when the software will stop working. In the case of demonstration versions, the time limitations on the software should be made well known to the user during system start-up and in the documentation. A warning displayed starting a few days prior to the software shut-down would also be a good idea. If you sell your software pursuant to a yearly licensing arrangement, make sure that the user who wishes to timely renew the license, is warned far in advance of the shut down, can renew promptly and is not inconvenienced in any fashion while trying to renew. Finally, make sure that the end user can access any data credited via other means, so that a denial of the use of the software does not also deny use of their proprietary data. Following these guidelines should help defeat any claim brought by a disgruntled end user.

In Summary

Like many other areas of computer law, the rights of a programmer to deny usage of a software package through the use of a programming device is highly unsettled. While the legal opinions expressed in this article are to some degree speculations, they are all educated opinions based on reliance upon existing legal precedence from similar or related areas of the law. It was our goal in writing this article to present sufficient information to make the programmer who is considering employing a time lock or similar device to make an educated decision before doing so or to convince them to seek expert advice beforehand. After representing programmers for over seven years, we understand that many programmers have strong opinions on this issue (as well as many others) and feel that it is their inalienable right to use a time lock. However, as has been stated, this may not be the case. Therefore, we hope that this article will help you evaluate your rights and the potential liability for improper action. As always, just as your clients hire you to provide expertise that they don’t have, don’t hesitate to hire expert legal advice when you are unsure of the potential consequences of your actions.

 
AAPL
$524.94
Apple Inc.
+5.93
MSFT
$40.01
Microsoft Corpora
-0.39
GOOG
$536.10
Google Inc.
-20.44

MacTech Search:
Community Search:

Software Updates via MacUpdate

VMware Fusion 6.0.3 - Run Windows apps a...
VMware Fusion allows you to create a Virtual Machine on your Mac and run Windows (including Windows 8.1) and Windows software on your Mac. Run your favorite Windows applications alongside Mac... Read more
Tweetbot 1.5.1 - Popular iOS twitter cli...
Tweetbot is a full-featured OS X Twitter client with a lot of personality. Whether it's the meticulously-crafted interface, sounds and animation, or features like multiple timelines and column views... Read more
Mac DVDRipper Pro 4.1.7 - Copy, backup,...
Mac DVDRipper Pro is the DVD backup solution that lets you protect your DVDs from scratches, save your batteries by reading your movies from your hard disk, manage your collection with just a few... Read more
PDFpenPro 6.2 - Advanced PDF toolkit for...
PDFpenPro allows users to edit PDF's easily. Add text, images and signatures. Fill out PDF forms. Merge or split PDF documents. Reorder and delete pages. Even correct text and edit graphics! Create... Read more
PDFpen 6.2 - Edit and annotate PDFs with...
PDFpen allows users to easily edit PDF's. Add text, images and signatures. Fill out PDF forms. Merge or split PDF documents. Reorder and delete pages. Even correct text and edit graphics! Features... Read more
Monolingual 1.5.9 - Remove unwanted OS X...
Monolingual is a program for removing unnecesary language resources from OS X, in order to reclaim several hundred megabytes of disk space. It requires a 64-bit capable Intel-based Mac and at least... Read more
Maya 2015 - Professional 3D modeling and...
Maya is an award-winning software and powerful, integrated 3D modeling, animation, visual effects, and rendering solution. Because Maya is based on an open architecture, all your work can be scripted... Read more
Starcraft II: Wings of Liberty 1.1.1.180...
Download the patch by launching the Starcraft II game and downloading it through the Battle.net connection within the app. Starcraft II: Wings of Liberty is a strategy game played in real-time. You... Read more
Sibelius 7.5.0 - Music notation solution...
Sibelius is the world's best-selling music notation software for Mac. It is as intuitive to use as a pen, yet so powerful that it does most things in less than the blink of an eye. The demo includes... Read more
Typinator 5.9 - Speedy and reliable text...
Typinator turbo-charges your typing productivity. Type a little. Typinator does the rest. We've all faced projects that require repetitive typing tasks. With Typinator, you can store commonly used... Read more

Latest Forum Discussions

See All

This Week at 148Apps: April 14-18, 2014
Spring Into Our App Reviews   | Read more »
Have a Special Dead Trigger 2 Easter Bas...
Have a Special Dead Trigger 2 Easter Basket Full of Goodies, Courtesy of Madfinger Games Posted by Rob Rich on April 18th, 2014 [ permalink ] Dead Trigger 2 | Read more »
Almost All of Playdek’s Library is on Sa...
Almost All of Playdek’s Library is on Sale Right Now, and You Should Check it Out Posted by Rob Rich on April 18th, 2014 [ permalink ] Playdek has released quite a few great iOS ports of board and card games over the years, and now most of them... | Read more »
Zynga Launches Brand New Farmville Exper...
Zynga Launches Brand New Farmville Experience with Farmville 2: Country Escape Posted by Tre Lawrence on April 18th, 2014 [ permalink ] | Read more »
David. Review
David. Review By Cata Modorcea on April 18th, 2014 Our Rating: :: MINIMALISTIC IN A DIFFERENT WAYUniversal App - Designed for iPhone and iPad David is a minimalistic game wrapped inside of a soothing atmosphere in which the hero... | Read more »
Eyefi Unveils New Eyefi Cloud Service Th...
Eyefi Unveils New Eyefi Cloud Service That Allows Users to Share Media Across Personal Devices Posted by Tre Lawrence on April 18th, 2014 [ permalink ] | Read more »
Tales from the Dragon Mountain: The Lair...
Tales from the Dragon Mountain: The Lair Review By Jennifer Allen on April 18th, 2014 Our Rating: :: STEADY ADVENTURINGiPad Only App - Designed for the iPad Treading a safe path, Tales from the Dragon Mountain: The Lair is a... | Read more »
Yahoo Updates Flickr App with Advanced E...
Yahoo Updates Flickr App with Advanced Editing Features and More Posted by Tre Lawrence on April 18th, 2014 [ permalink ] | Read more »
My Incredible Body - A Kid's App to...
My Incredible Body - A Kid's App to Learn about the Human Body 1.1.00 Device: iOS Universal Category: Education Price: $2.99, Version: 1.1.00 (iTunes) Description: Wouldn’t it be cool to look inside yourself and see what was going on... | Read more »
Trials Frontier Review
Trials Frontier Review By Carter Dotson on April 18th, 2014 Our Rating: :: A ROUGH LANDINGUniversal App - Designed for iPhone and iPad Trials Frontier finally brings the famed stunt racing franchise to mobile, but how much does its... | Read more »

Price Scanner via MacPrices.net

Deal Alert! 13-inch MacBook Pro on sale for $...
Best Buy has the 13″ 2.5GHz MacBook Pro on sale for $999.99 on their online store. Choose free shipping or free instant local store pickup (if available). Their price is $200 off MSRP. Price is valid... Read more
Free HopTo 2.2 Helps Enhance Your Productivit...
The HopTo app helps you do more on your iPad by providing more and easier adaccess to files and documents. Version 2.2 adds Egnyte and HopTo’s Mac OSX File Connector. If you already have the hopTo... Read more
National Distracted Driving Awareness Month:...
As the country recognizes National Distracted Driving Awareness Month, Sprint is reminding wireless consumers to focus on driving while behind the wheel, to not text or email while driving, and to... Read more
13-inch 2.4GHz Retina MacBook Pro available f...
Abt has the 13″ 2.4GHz 128GB Retina MacBook Pro available for $1229 including free shipping. Their price is $70 off MSRP. Read more
iMacs on sale for up to $160 off MSRP this we...
Best Buy has iMacs on sale for up to $160 off MSRP for a limited time. Choose free home shipping or free instant local store pickup (if available). Prices are valid for online orders only, in-store... Read more
iPad Airs on sale this weekend for up to $100...
Best Buy has WiFi iPad Airs on sale for $50 off MSRP and WiFi + Cellular iPad Airs on sale for $100 off MSRP on their online store for a limited time, with prices now starting at $449. Choose free... Read more
Apple restocks refurbished Mac minis starting...
The Apple Store has restocked Apple Certified Refurbished Mac minis for up to $150 off the cost of new models. Apple’s one-year warranty is included with each mini, and shipping is free: - 2.5GHz Mac... Read more
Hyundai Brings Apple CarPlay To The 2015 Sona...
Hyundai Motor America has announced it will bring Apple CarPlay functionality to the 2015 Sonata. CarPlay is pitched as a smarter, safer and easier way to use iPhone in the car and gives iPhone users... Read more
Updated iPads Coming Sooner Than We Had Thoug...
MacRumors, cites KGI securities analyst Ming Chi Kuo, well-respected as an Apple product prognisticator, saying that Apple will introduce an upgraded iPad Air and iPad mini in 2014/Q3, meaning the... Read more
Toshiba Unveils New High And Low End Laptop M...
Toshiba has announced new laptop models covering both the high-end and low-end of the notebook computer spectrum. Toshiba 4K Ultra HD Laptop Toshiba’s new Satellite P55t features one of the world’s... Read more

Jobs Board

Position Opening at *Apple* - Apple (United...
…customers purchase our products, you're the one who helps them get more out of their new Apple technology. Your day in the Apple Store is filled with a range of Read more
*Apple* Solutions Consultant (ASC) - Apple (...
**Job Summary** The ASC is an Apple employee who serves as an Apple brand ambassador and influencer in a Reseller's store. The ASC's role is to grow Apple Read more
*Apple* Inc. Research Data Specialist - Appl...
…of Worldwide Market Research & Intelligence. The team is responsible for conducting Apple branded consumer market research. It is also responsible for analyzing data Read more
*Apple* Automotive Parts Department position...
Apple Automotive is one of the fastest growing dealer…and it shows. Consider making the switch to the Apple Automotive Group today! At Apple Automotive, we Read more
*Apple* Solutions Consultant (ASC) - Apple (...
**Job Summary** The ASC is an Apple employee who serves as an Apple brand ambassador and influencer in a Reseller's store. The ASC's role is to grow Apple Read more
All contents are Copyright 1984-2011 by Xplain Corporation. All rights reserved. Theme designed by Icreon.