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We have two software companies. Company A was formed 15 years ago. Company B was formed a year ago. These two companies do not compete, but they both access certain external APIs and massage similar data.

99.8% of the source code between these 2 companies is separate and different (even different languages/tech stack), but we did share some code to import in some data files to a DB, and access some public APIs. Both company A and B have upgraded these shared files over the last year, although company A originally created them (of course).

We are now selling company A (talks completed, preliminary agreements signed, just waiting for official paperwork to be prepared and to meet in a few days to sign). The group that is buying our company A is aware of company B, and we have a non-compete, even though we don't have competing products.

As we were preparing to package up all the source code for company A, we realized there were these little utility/import files that were also in company B's repository, and company B is dependent on them. These "utility" source files are not by any means the "core" of either app.

However, company B does not have time to clean-room rewrite these files, plus we have to go through re-certification with the API owners if we change our source code (which takes time).

We don't want to stall or risk the sale of company A, but we want to stay within the US law.

So in a situation like this, are these little utility files shared IP?

Is there something we can do before the sale ends to protect us, such as company A selling a branch of these files to company B?

We want to be honest but we don't want to open up a can of worms right before the close of sale, because we are worried that it might cause panic where there is not cause for any.

Any precedents or thoughts here?

Thank you.

  • What does the preliminary sale agreement stipulate about the IP that leads you to believe there could be a problem? Surely your lawyers would have put something in there about potential overlap between A & B even if this specific code isn't spelled out. – ColleenV parted ways Feb 9 '16 at 19:43
  • Thanks for your comments @ColleenV - yeah we didn't see any overlap during the preliminary talks so the sale just covered "all IP". That is what made me concerned since we found a few files that did crossover. We just ended up hiring 2 temps to rewrite/clean-room the scripts since it wasn't worth the risk. :) – PRB Feb 11 '16 at 17:43
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    An option described in an answer to another question might touch on this topic. law.stackexchange.com/questions/25780/… – LincolnMan Feb 4 '18 at 2:14
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Tell whatever lawyer is drafting the "official paperwork" about the problem and ask if it is covered or if you need to change the text or add a rider. If neither company competes, a mutual release/license of existing shared code should be perfectly manageable for an experienced attorney.

  • See my comment to Colleen above. Thanks for your answer Tom - I'll accept it. – PRB Feb 11 '16 at 17:44

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