Another client wants to buy a challenging work I did for one client

Question

Sometime ago, I did a challenging project for a client as a freelancer, and he uses my work as core of the software he sells. Basically my work is the main feature of that software, and he just ship it as part of his Software and make profit from it. I've been still working with that client on follow up projects.

Now another client approached me and he wants to buys the same work I did for the another client. I guess he is probably a competitor of the first client.

Regarding contract with first client, we have none. We never discussed about ownership of code, and all payment/work is done in good faith so far.

If it matters, both these client are remote and from a different continent than me.

So my questions are:

A) Do I legally own the work or client? Can I legally sell it to somebody else too?

B) What about moral reasons? Is it moral to sell it to their competitors.

C) Any advice in general on how I should approach this situation.

Answer 1

I am not a lawyer, but as far as I understand you have the copyright of the code as long as you haven't given it up. It would therefore seem that you legally may sell to anyone.

You have three options:

1. Tell the original client that others are interested and suggest formalizing the partnership in a contract
2. Don't tell the original client and deal will any potential fallout if they ever find out
3. Inform the original client that you will be selling the product to another client as well

If the original client was under the impression that they had exclusive rights, it will be tricky (or impossible) to agree on a contract - as that exclusivity must cost extra, which will potentially lead to some resentment.

Not telling creates an asymmetry where the first client is in the dark and might believe they have a unique product, whereas their competitor knows they have a non-exclusive product. This is not a level playing field - and they will resent not being told. Whether it's worth risking the relationship to the original client, only you know.

If your bargaining position is good; i.e. the original client needs you more than you need them, being fully transparent and informing them of their non-exclusivity will put you in the clear legally and ethically. In addition, it puts the onus on them to approach you and make an acceptable offer.

Apart from a simple risk assessment of upside compared to downside, your long-term goals should also be considered. Whether you want to be a fully independent software provider or would prefer a closer partnership with the clients makes a huge difference.

Answer 2

From your explanation, "We never discussed about ownership of code, and all payment/work is done in good faith so far."

I DO have a legal degree and can tell you that, according to Common & Contract Law:

1) If the $ is sufficient to cover legal fees, if it ever reached a courtroom, a 1st-year law student could convince a judge/jury that there was a meeting of the minds and mutual consideration exchanged = "contract".

2) Moreover, your lack of ethics (in even considering such a breach of trust) will eventually, deservedly, bite you in the ass. Were it not for this "2d client", the issue would not have arisen. You got paid and "Hell yeah, the 1st client made a profit."

For what did you expect that he paid you? If you'd sold him used car and then sold the title to a 3d party, how is that not fraud or theft?

3) As a successful freelancer myself, reputation & integrity are far more important & profitable than "jumping over dollars to chase pennies".

4) Karma's a bitch. The word will spread. IF you need a piece of paper to treat clients honestly, your jobs will quickly dry up.

5) If this "2d client" has any brains, he'll realize that if you screw one victim, you'll screw him without hesitation.

6) That you use the term, "client", in itself acknowledges that you have a relationship with the original sucker.

I sincerely hope that you get everything you deserve.