Why I love software product companies
01 Mar 2023 - Frans Vanhaelewijck
Software product development is a fascinating field, with various benefits that make it unique from other industries. One of the most compelling reasons I love software product companies is intellectual property (IP) protection. In this blog post, I will discuss why protecting intellectual property is crucial and how software product companies can maintain ownership of their creations.
More that just code
First, let’s discuss what intellectual property is. Intellectual property is a creation of the mind, such as inventions, literary and artistic works, designs, and symbols, among others. In the software development industry, intellectual property is of course your software code, but also algorithms, designs, documentation and so are part of your intelectual property.
Make it explicit in all your contracts
As a software product company, protecting your intellectual property is critical to your success. You need to be clear and explicit in your contracts about what you consider your intellectual property. This protection is essential because software development is your primary business, and your creations are your most valuable assets.
How to get paid for new features and retain IP ownership
When a customer requests you to develop a feature specifically for them, it’s crucial to ensure that the intellectual property of what you are making remains yours. While some customers may argue that everything they pay you for is their property, there are strategies you can use to maintain ownership.
One approach that has worked for me a few times is to tell the customer that they are the first company to receive this feature. As such, they get to decide the look and feel of the feature, and you will show them everything you develop while considering their input.
However, you will also explain that developing the feature as part of your product is an extra cost, and the invoice they receive won’t cover everything. That feature will require engineering work to integrate it in the development and test cycles you have, it will need to be kept updated during your product’s life cycle and so on.
Another way to protect your intellectual property is to explain to your customer that you are delivering the functionality she requires by pulling forward a product feature that is already on your roadmap, but did not have a fixed release date. Making sure that this feature is nicely integrated into your architecture requires work and effort. The cost you charge the customer is the overhead involved in this process, but not the cost of the feature itself. Therefore it makes sense that your company retains the IP.
Why Software is the most beautiful industry to be in.
I don’t know of many industries in which you can create something, sell it to a customer and get paid for it and still retain the ownership of what you just sold.
Moreover, your customers are funding (part of) your future developement and as a result, your product has more features and justifies a higher license price!