You put 1200 hours into this. If that is really true, that is 6-8 months worth of your time and investment. It's going to hard to just throw that out, and to be honest you shouldn't.
It sounds like your co-founder is extremely strong willed. This can make for a good trait if used well. On the flip side these people are not fun to work with.
Who do you think would be more successful with the code?
How can you generate value from your work?
Can you opensource the code?
And then both of you can use it, and fork it? Most likely if you are a coder, having a well developed opensource project will do wonders for you being able to find your next role. And if you decide to start a company from the code via a fork, you could actually sell it because you are the original author, and you could dual license it. Since the code was not work for hire and there were no legal contracts as to the nature of the code you could probably do this. Get a lawyers advice.
Also since you are the developer behind the code base you can probably fork the code faster than your friend.
If your friend wants to buy the code from you, maybe you can do a rev share deal with your code and his business. There would be terms to transfer the IP, but I am sure you can figure that out if you need. In this case the code would stay private, and you would still have authorship rights to it, but he would have a rev share license to use and to derive from it.
I strongly thing that anyone that has asked you to throw out 6 months worth of work is giving bad advice, but this is a difficult situation and you can't expect maximum value out of this.
Your goal should be
- get something for your time
- part ways with this founder
- leverage this experience and code base to find a new oppertunity
page 48
Sun Tzu - Without a way to retreat, an army fights with double or triple the spirit it would have on open terrain, because death is viscerally present.
If you offer your enemy a retreat they may take it.
He can't simply use the code he wrote, because his partner will have a claim on it.
Similarly, his cofounder probably can't simply pursue the business by having the code rewritten.
The best he can say is that he has something his former cofounder wants: a free and clear path to pursuing the business independently. Likewise, his former partner has something he wants.
It's worth talking that out, but if things gridlock, he's better off just doing something else.
Well, the code was developed without a contract, and was never shared. IE. it was not a work for hire. It was not documented, even if it was implied.
He also never agreed to any trade secret documents or IP documents with his potential co-founder.
did you sign any incorporation papers?
It's a creative work, and... although his friend that intended to start a business didn't do what was necessary to lock up the code either. they both foobared this.
It might be hard to start a business with that code, but I am pretty sure he would not be liable for damages if it was opensourced.
By this logic and after legal advice, if one were to open source the code, it would be usable by both parties, and he would still have the technical advantage.
This is the leverage he can use to control the agenda of the discussions. Opensource gives him an advantage over his potential co-founder, one that can not be undone.
Also, if both parties agree to keep it closed, then they might agree to some partnership in each others new company.
I would advise against the freeBSD or MIT licenses, a good copyright lawyer will know which license will still allow for a derivative work, since you wont want to use the code just as a library.
I have hacked on projects with friends and for a variety of reasons have decided to move on. These recommendations are part of how we have discussed how to amicably move on. We are still friends today.
We wanted to sustain value in what we did, but decided that building a business around the idea was maybe not the best idea.
The world would be a lot simpler if logic like this was sufficient to dispose of legal issues as severe as "someone who I call my cofounder believes he owns 60% of my business".
It is evident that the other founder isn't wealthy and would have an equally hard time fighting this legally. Furthermore, it is evident that although the other founder may have a claim, it will be circumstantial at best. The op is in a more powerful position. It would be foolish to back down.
You are not the other founder by any chance, are you?
You're getting downmodded because of that last sentence.
With regards to the non-silly part of your argument: I actually agree with everything but the last sentence of your first graf. The poster here has "a good case". Would probably even win. The problem is: if the "other founder" wants to, he can trivially drag this out over ~18 months. During that time period:
* The business is going to suffer as this guy wades through pointless legal drama
* He's going to hemorrhage money --- money that could be plowed into company development --- on legal fees
* Under normal circumstances, nobody is going to consider investing in a company that is embroiled in legal drama over its ownership
* Even if he gets a favorable outcome in court (the odds favor this outcome but do not strictly require it), he'll probably still end up conceding some degree of ownership
He's been dealt 7 - 2. He's paid the blind. I'm saying that going all in on 7 - 2 is a stupid play. If he invests 18 months in developing a new company, his odds are almost certainly better.
He doesn't have to let the other guy "win"; he has the same axe hovering over the other guy's neck. The business is tainted; maybe they can do a buyout, but otherwise, they're both going to have to walk.
No, I am getting downmodded because my advice to fight on is against popular opinion. The reason for my last sentence is quite evident. You have written numerous comments advising the op to walk away.
Your argument that he cannot afford the legal fees and thus should not pursue the business is not well founded. Furthermore, he never said he was looking for investors. In fact, I am led to believe that the product is almost market ready and the op is able to dedicate the time to completing it.
The "friend" is obviously in the same boat financially as the op. Neither one can afford to drag out a court case for an extended period of time and the only incentive to do so would be if the software succeeds. In that case the gentlemen could settle favorably and still "win".
It sounds like your co-founder is extremely strong willed. This can make for a good trait if used well. On the flip side these people are not fun to work with.
And then both of you can use it, and fork it? Most likely if you are a coder, having a well developed opensource project will do wonders for you being able to find your next role. And if you decide to start a company from the code via a fork, you could actually sell it because you are the original author, and you could dual license it. Since the code was not work for hire and there were no legal contracts as to the nature of the code you could probably do this. Get a lawyers advice.Also since you are the developer behind the code base you can probably fork the code faster than your friend.
If your friend wants to buy the code from you, maybe you can do a rev share deal with your code and his business. There would be terms to transfer the IP, but I am sure you can figure that out if you need. In this case the code would stay private, and you would still have authorship rights to it, but he would have a rev share license to use and to derive from it.
I strongly thing that anyone that has asked you to throw out 6 months worth of work is giving bad advice, but this is a difficult situation and you can't expect maximum value out of this.
Your goal should be
http://books.google.com/books?id=l3GD2EgazCkC&q=retreat+...page 48 Sun Tzu - Without a way to retreat, an army fights with double or triple the spirit it would have on open terrain, because death is viscerally present.
If you offer your enemy a retreat they may take it.