#Hack4Detroit Hackathon Contract Bait and Switch

Fair warning that I’m not a lawyer and I may not fully understand the contract. It’s included inline for your reference.

TL, DR; #hack4detroit requires a contract be signed on the day of the event that was not previously mentioned before registration fees. The contract states that participants are liable (unlimited personal liability) to pay for any lawyer fees and lawsuit damages if the City of Detroit is ever sued for the submitted software [clause 17]. The contract also states that all IP is transferred to ownership of the City of Detroit (which I am okay with) and the City is granted a perpetual, royalty-free license to “use” any derivative software. Wired aptly elaborates on the hackathon “indemnification” liability situation perfectly here (great read).

(Update 4:39 PM – jonasrosland on HN mentioned that it would be better for the hacker to maintain IP and grant a licence to the City to use the software for purposes stated. This makes a lot more sense than the IP transfer which I was originally okay with.)

This weekend Automation Alley from Troy, Michigan pulled a quick one on a lot of software developers that were just trying to have fun making some cool apps for Michigan. I wanted to take part, but I ended up signing up for the 24-hour hackathon, paying $20, donating my weekend for the event, driving 40-minutes downtown, parking, walking to the event, and then leaving after an hour to drive home.

#hack4detroit is a hackathon where participants can come to make cool software to help Detroit and possibly win a $5K prize. :) Pretty cool, right? I thought so, because when I heard of the event I signed up right away! It’s fun to get together with other software developers at hackathons and I’ve been in the Code Michigan events before and that is always a blast.

My problem arose when I entered the 4th floor of Grand Circus (Detroit’s tech epicenter) and there was a registration table. The registration table is where you get your t-shirt and sign some documents – harmless. The first document was a 1-page release form for allowing the event to use pictures of you so when they take pictures of the event they can publish them freely – cool. :)

But then then the second document was an 8-page contract between Automation Alley, the City of Detroit, and the Participant. When I took a look at the contract I thought to myself “Hm, why am I seeing this for the first time at the registration table on the day of the event, 10 minutes before the event starts?” They could have had this on their website before I’d even signed up weeks ago. If it was on the online registration page I would have had a chance to go over it in detail without time-pressure.

I let the greeter know that that I’ll need some time to read over the 8-page document and she replies “Alright, just bring it back when you want to sign it because I need to witness you sign it”. It seems to be a serious document.

Now here’s the problem. I’m not a lawyer, and neither are any of the other participants in this event (I’m assuming). And we’ve been given 30 minutes to review a document that may include unknown liabilities (which this contract does).

It made me wonder who organizes an event to put participants in this situation, and do I really want to sign a contract that they’ve pressured me into? I was especially surprised because my expectations for Automation Alley were high, as it is self-advertised goal is “[…] enhancing the region’s reputation around the world“.

Here is the contract in its entirety. The most important part is page 3, clause 17: Indemnification: it states in “non-legalese” that I agree to take responsibility for claims against the City’s use of hackathon code.

What if I accidentally infringed on a patent? I’m liable. What if there’s a bug that causes somebody harm? I’m liable. What if anything? I’m liable. Liable in the sense that they can clear out my bank account and take everything I own.

#hack4detroit

It took me 40 minutes to read and re-read this document four times and afterward, I was faced with a dilemma: This is going to be a fun event with really smart, fun people, do I want to be the only person that is a stick-in-the-mud about a contract? Everybody else signed the document, am I silly for even taking this so seriously? I consulted with an event organizer Beth Niblock (CIO of Detroit) and she informed us that “You’re probably thinking about it too hard”. Yikes! That made me even more concerned.

I’ve been taught the hard way to never sign anything I don’t fully understand, and the Indemnification clause alone made the $5K prize money seem tiny compared to the unlimited liability I’d be exposing myself to.

So after I spent an hour reading the contract and thinking, I decided not to submit an app to the City of Detroit.

I packed up my things and left. What a shame.

I wanted to make an awesome app.

 

How could they fix this in the future?

  1. Most importantly, put the contract online before registration so that we can read it before we register for the event.
  2. Take out the one-way indemnification clause from the contract or limit total cost to Participant to Participant’s prize winnings.
  3. Remove the perpetual, royalty-free license for derivative work from the contract.  (Updated) Replace the IP transfer with a perpetual, royalty-free license to the City to use the software for purposes stated.
  4. Remove the waiver of jury trial.
  5. Remove the waiver of right to sue (is this even enforcable? I suspect no)
  6. Include reasoning for each clause so that the non-lawyer participants can understand why clauses have been included.

 

 

So I’m still not sure if I made the right decision, but I couldn’t sign that document and feel good about it. Was I taking the indemnification clause too seriously or was I right to go with my gut?

7 thoughts on “#Hack4Detroit Hackathon Contract Bait and Switch”

  1. “all IP is transferred to ownership of the City of Detroit (which I think is reasonable) and the City is granted a perpetual, royalty-free license to “use” any derivative software (which I think is unreasonable)”

    Pretty sure you got the “reasonable” and “unreasonable” reversed from what you intended.

    Also, IANAL either, but I’m pretty sure this “contract” would be unenforceable because of the way it was presented. You would have a very strong case that you were coerced into signing, and that there was no “meeting of the minds” which is a legal requirement for a binding contract.

    1. Thank you for your feedback Ron. I’ve revised the text to simplify the wording and maintain original intent.

      I agree with you that the contract was dubious. Somebody else mentioned that it may be unenforceable because it is all one-sided and there is no fair exchange (“Quid pro quo”).

      Certainly an interesting experience.

      P.S. Your website got a chuckle out of me: “I wear many hats, but graphic designer is not one of them” 😀

  2. “All IP” is an unreasonable requirement by the city. “The city is hereby licensed to use and relicense …” retains all the city’s rights but leaves originators free to repurpose (like the Python licenses always have).

    Please, if you are new to open source, don’t try to establish your freedoms by restricting those of others. Just do your best to make everything as free as you can.

  3. While I largely agree that being asked to sign a large, burdensome contract under time pressure is bogus, one thing did occur to me in reading your post:

    Last year at #hackDPL (the precursor event to this one), the winner (to my understanding) kind of hosed over the cash-strapped library, leaving all the involved parties in something of a jam. Without all the details, it sounded like they walked away with the $5000 and then wanted to charge a lot more on top of that in order to release the work; very much against the spirit of the event. So I can get why the event organizers expanded the scope of the agreement.

  4. 17c. was really the part to strike out of the agreement.

    But you know if you are uncomfortable with any legal agreement, then you shouldn’t sign.

    Really they should only ask you to sign before they decide that your app is the winning app. If you are not winning anything then they should not ask you to sign.

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