Someone is interested in buying a license to my software tool with sourcecode. If I do this, how safe is my code from leaking out? What is the possibility of it becoming a rip-off rival product with a changed name? Does this ever happen in the industry? Can I get a concrete guarantee from a good contract, or is it never a totally safe thing to do?

First, make sure you are selling it for what it's worth.

Second - the terms of your contract should imply penalties for not safe gaurding the source code amongst other employees, businesses, family memebrs, contacts or any body else for that matter. How much would you want to be paid to take your source code and make it open-source? This is how much protection you will want from the legal document.

I hope that's a start.

non disclosure agreement ^^

thats what you need, the punishment must be very high, or ask you customer why he needs the source code at all,
enhancements could be done by you as well and you could charge for it again

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Original post by sanzoku If I do this, how safe is my code from leaking out?

Fairly safe, provided you take basic precautions. Get a lawyer to draft a license agreement which includes specific non-disclosure terms. A good lawyer will know what you need.

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What is the possibility of it becoming a rip-off rival product with a changed name? Does this ever happen in the industry?

Anything is possible, but not necessarily probable.

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Can I get a concrete guarantee from a good contract,

No, nothing is 100% concrete and a contract is only as good as the lawyer you hire to sue someone for breaching it. Can you afford the large legal costs of taking someone to court?

There are risks in doing business and you can never eliminate them (if there was no risk there would be no reward). However you can minimise them by getting a good lawyer to draft a license and by only licensing to companies that are unlikely to want to create a competing product.

> how safe is my code from leaking out?

What is needed is a License Agreement; you could include a non-compete clause if you feel unsure about the customer. A good lawyer can craft such a document for you. Regardless how the Agreement has been worded, the real challenge is proving your source code has leaked out and a derivative work is being marketed.

> the terms of your contract should imply penalties
> for not safe gaurding the source code
> {...}
> the punishment must be very high

In most legislations, you can't arbitrarily put material breach remedies in contracts; the damage resulting from a material breach must be proven in court. Proving the damage is one thing, evaluating the dollar value of the damage is a completely different story. Again, a good lawyer can help you here.

-cb