The programmer asked me what profit sharing arrangement I desired.
What the heck do I do now?
Should I hire a lawyer to write up a contract?
If the programmer makes me this software without a contract, who owns it?
Let’s suppose he makes this software and we begin selling it. We share the profits according to some orally agreed upon ratio…let’s say 50/50.
Then he and I part ways. Who owns the software? Can he found his own company and sell it? Can I? If I continue selling it or hire other programmers to work on it, do I owe him royalties?
IANAL, but I do develop software. You need a simple contract that makes it clear you’re hiring him to do the work in exchange for something (payment, profit sharing, etc.). That makes his effort “work for hire”, so you own the copyright. Without some explicit work-for-hire agreement, he would automatically own the copyright on anything he created whether or not he got the idea from you. You should also specify that the software (source code, GUI, and documentation) should include copyright statements with your name/company. While this isn’t necessary to enforce a copyright, it will make it clear (to him and others) that the copyright is yours and his effort was work for hire.
If you own the copyright, then you will retain all rights if you and he part ways. He could not continue to sell the software without your permission. Also, this will allow you to find another developer to maintain/enhance the software if he becomes unavailable or uncooperative. Your original profit-sharing agreement might remain in force even if he doesn’t continue to be involved, so you might want to add some time limit or other terminator on his sharing. Just imagine if Bill Gates had hired a programmer to bang out the first demo and promised him a 50/50 split indefinitely.