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Education

Remember that shareholders have statutory and
common law rights that are real, and these rights
should be weighed when deciding how the various
partners in the project will collaborate. Having
your partnership terms sorted out is also essential
Legal ease: before entering into key customer relationships or
relationships with potential buyers or licensees.

• Holder of IP: The developer should decide what
corporate entity will own the intellectual property that
forms the root of the product. An ISO, for example, may
Payment technology own a handful of processor relationships and decide
to develop intellectual property that is complementary
to their payment offerings. The ISO should discuss
licensing – Part 1: with their IP lawyer and their accountant the idea of
placing the IP in a new and separate entity.
How to build This helps with selling the IP at a later date. It also
helps to insulate the ISO business on the one hand,
for licensure and the IP development business on the other hand
from the liabilities of the other.

By Adam Atlas Embrace shapeshifting revenue models
Attorney at Law Once upon a time, developers created products and
licensed them for a fee. That legacy assumption is not
pportunities abound to automate numerous necessarily the best for the model you are building.
processes and migrate various pieces of busi- Freemium licensing, open source licensing or other forms
ness operations to cloud services. In plain of deploying a new product might—in the bigger scheme
O English, much of what businesses do is now of things—be preferable to a classic model of building and
being uploaded to the cloud through an ever-growing licensing.
selection of apps, platforms and systems.
The key takeaway here is that developers in the payments
While programmers are in high demand, they need space should be open minded and ready to smash their
direction from business visionaries who see an untapped original assumptions concerning pricing and revenue.
opportunity for data storage and processing for a specific Failure to keep an open mind on this topic may result in
niche of merchants or other users. Under the right turning down what appears to be a bad deal—but is actually
conditions, new apps and platforms often become the a foot-in-the-door for a much larger opportunity. Also, the
subject of licensing, partnership or other acquisitions that pace of change in blockchain and other payments-related
help the developers draw value from their hard work in technologies may likely favor survival of the flexible.
creating the product.
Obtain IP rights from developers
The Green Sheet proposed the idea of a series of three Assigning intellectual property rights after a product
columns that focus on this part of the payments industry, has been created is a disaster. All persons involved in
viewed from a legal perspective. This first article in the the development of a payments product should sign
series focuses on the ground level. What can a developer suitably drafted employment or independent contractor
do—right at the starting blocks—from a legal perspective agreements that each include intellectual property rights
to add value to their project? assignments.

Legal on day-one, but why?
These contracts are the legal building blocks of the product
Ironically, some of the most important and far-reaching that will be created. Without them, the asset for licensing
legal work in payment application or platform development or sale is wobbly.
is done at a project's outset. The following are all legal
themes that should be addressed—or at least discussed— Don’t copy
at a project's inception. Developers may be tempted to pinch code from a previous
project to save time. Don’t. If the finished product
• Partnerships: The developer should reflect on who is contains code that was copied without permission, that
contributing to the development of the new intellectual defect could haunt the product forever and even result in
property (IP) and how they wish to share in the risks its destruction. If a finished product becomes the subject
and potential benefits (that is, profits) of the project.
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