IT law is a branch of law that has gained momentum with its development in the last twenty years and has increased in importance.
The development of information technologies has brought with it the diversification and regulation of the legislation in this field. Although information and information technologies have developed very rapidly, legislation and regulation have followed all over the world and there are still legal gaps.
We, lawyers, follow the developments and innovations of IT law with interest and offer specific legal solutions and advice to our clients. In this field, we provide consultancy in accordance with Turkish Law legislation and practices in the light of EU Directives and US practices, on issues where there is no legislation in Turkey.
Our Law Firm, which has been working in the field of Intellectual Property Law for many years, has extensive experience in copyrights, trademark registrations and licenses and their reflections in e-commerce.
It also operates in the fields of Internet Law, Start-Up Law and Blockchain Law within the framework of IT Law. In addition to those with technical expertise working in these fields, we provide legal consultancy and contract support in order to avoid legal problems while carrying out their business and to minimize the problems.
LEGAL ASPECT OF SOFTWARE DEVELOPMENT MODELS FOR START-UPS
Software is fast becoming a key requirement among start-ups. Most of the start-up owners are aware of the fact that technology has a pivotal role in business nowadays. Thus, there is indispensable demand for software developer. Regardless from the industry, most of the start-ups need at least a simple website (which is a software as well) to promote their work. So you would well consider negotiating with a software developer in advance. One might think that the only option is to hire a software developer, but we will rebut by explaining other alternatives.
Employment Contract (Employment Law)
Hiring a software developer may seem a safe option in the first place, however you had better have second thoughts on it. The advantageous part of an employment contract is that you will be able to reach the software developer anytime you need. Considering that software might need for support after it is written, it will ease the process. Within the scope of this contract, you can mutually determine the rights and obligations of the developer as well as the authorities, confidentiality clauses, the responsibility for the violation of personal data, intellectual property clauses and so on. As said, it may seem brighter from the outside, however a start-up owner seeks for an affordable option. So let’s take a glance at ‘freelance’ model.
Freelance (Contract Law)
Freelance developers can be profitable, depending on the need of your start-up. For instance, you may be producing glasses that are your own designs. In this case you may not need a complicated software but a basic website for introducing and promoting your goods. Since you will not need a software developer in every step of your production, signing an employment contract will be unnecessary cost which you should prevent especially in the early stage of your business. Even if the relation is freelance, you always have a right to specify your conditions.
Share Transfer (Company Law)
Besides the options explained above, share transfer may be the best suited alternative according to the business plan. Thus, you may prefer making the software developer a partner at your start-up. While you receive software services, the developer acquires for the shares. The first consideration must be the company type which directly affects the transfer. For instance, Joint Stock Company (JSC) provides easier transfer process compare to Limited Liability Company (LLC). JSCs have two different methods on share transfer by issued and non-issued stocks. If the share certificate is issued and registered on behalf of a person, the share must be endorsed and delivered with the deed. However, the delivery of the deed is sufficient in case as the deed is written for a bearer. If the share certificate is not issued, it is possible to transfer through the assignment of the bare share. Besides, In case the total debt is paid, assignment of liability can be made. In this context, the “context” (i.e. a condition) for the transfer of shares in joint stock companies may also be determined in the company mail agreement. In limited companies, the transfer of shares is possible with a contract to be made at the notary public. In this regard, pre-emption right may be granted to existing partners in terms of transferring the shares to third parties.
Share Option Contract (Employment + Company Law)
Apart from the share transfer, Share Option Contract (SOC) provides a permanent solution for negotiating with a software developer. This contract is a combination of a share transfer contract and service agreement. According to the conditions of the SOC, the developer is responsible for taking the necessary action related to software issues and the start-up is liable for transferring the share that determined in the contract. In other words, you will be able to receive software services in exchange to transferring an amount of share. Thus wise, you will not need to create an extra budget for software developer.
To sum up; when it comes to negotiating with a software developer, there are various kinds of economic options. We summarized considerably common alternatives, however you should be aware and choose the best suited contract for your start-up. A professional help will save your business from a high amount of loss.