If you have started a business recently, chances are you have also considered the necessity of launching a web site. These days, having a beautiful, functional web page is just as important if not more so than having a great business card.
Unless you’re already talented in that department, you’ll probably need to hire an independent consultant to build and maintain the site for you. But before you sign that first check, there are some things you ought to know.
In her article, Web Site Development Agreements: A Must to Protect Your Company if Hiring an Independent Contractor to Develop Your Company’s Web Site, Maria E. Recalde, Esq. sets forth some very important guidelines about design contracts, liability, and content ownership.
For example, did you know that unless your contract specifies otherwise, your web designer actually owns all of the original content of the site including graphics, sound, content, and source code. If you want to use this material for applications outside your web site, you may have to lease or purchase it from them, or risk violating copyright laws!
This article is chock full of information that every business owner, website coordinator, and web designer should consider. A must-read!
WEB SITE DEVELOPMENT AGREEMENTS:
A MUST TO PROTECT YOUR COMPANY IF HIRING AN INDEPENDENT CONTRACTOR TO DEVELOP YOUR COMPANYS WEB SITE
By Maria E. Recalde, Esq.
Hiring an independent website developer to create and/or maintain your company’s web site raises significant legal issues, including those concerning ownership of and liability for the material posted on the web site. It is therefore imperative that a company retaining an independent web site developer have in place a well-drafted agreement setting forth the rights and obligations of both the company and the developer. In addition to such general contract provisions as specifications, pricing, timing, delivery and termination, among others, the agreement should, at a minimum, specifically address the following issues:
Ownership of the Content of the Web Site
In the absence of an agreement to the contrary, the independent web site developer will own the copyright in the original content of the site created for the company, including all graphics, text, sound and source code. This may limit the ability of the company to freely update and/or modify the content and design of the web site and to hire anyone the company chooses to undertake such a task. Moreover, copyright ownership by the independent web site developer, allows the developer to use derivative materials on other sites, thus undermining the distinctive value of the company’s web site.
To avoid such problems, the agreement should contain an appropriate work for hire provision and an assignment that will vest the ownership of the content of the web site in the company. (The assignment is necessary in the event that any of the elements of the web site are found not to constitute works for hire under the Copyright Act.) If the developer is unable to assign the copyright, either because components of the web site have been licensed from third parties or certain components are part of the developer’s personal library of materials, then an appropriate license to use such components should be included in the agreement. In addition, since the overall concept of the web site may not be protectable under copyright law, a provision should be included in the web site development agreement specifically preventing the developer from using a similar concept for another web site it develops.
Third-Party Rights for Material Contained Within the Company’s Web Site
Material produced by the independent web site developer could potentially infringe on a third-party’s rights, including copyright and trademark rights. As the publisher of the site, the company could be held liable for infringement of third-party rights for material contained within the company’s web site. The unauthorized use of a third-party company logo as a link button on a web page to a third-party web site, for example, may constitute trademark infringement. Similarly, the unauthorized use of photographs or images owned or copyrighted by third-parties on the companys web site may constitute copyright infringement.
To address these issues and protect itself against actions arising out of material created by the independent web site developer, the company should include in the web site development agreement a provision requiring the developer to obtain written permission to use any third-party intellectual property. This provision should specifically require the developer to identify third-party material and to provide the company with proof of permission to use. A representation and warranty should be obtained stating that the developer and the company have the right to include such third-party materials in the web site. An indemnification provision should also be included — the developer should bear sole liability in the event that materials it has designed for the web site infringe upon any third-party rights. It is important to note, however, that to the extent material on the web site was created by the company, if such material infringes on the rights of a third-party it would not fall under the developer indemnity provisions of the web site development agreement.
Acceptance Testing and Relevant Approvals
Acceptance testing and related approvals of content, layout and graphic design provisions should be included in the web site development agreement. Sufficient time should be provided under the agreement to permit testing of the web site to determine that it operates correctly and that the content is acceptable. The expected purpose and functionality of the web site should be described in sufficient detail to ensure that acceptance testing can be conducted. Both from a legal and business perspective, before the web site is made available to the general public for the first time, the company should seek the advice of legal counsel on the content of the web site and ways of reducing potential exposure to liability.
The technology surrounding the Internet is changing rapidly which means that parties to Internet agreements, including web site development agreements, are faced with considerable uncertainty. Standards are changing. New technologies are being developed. A well-drafted web site development agreement, however, should properly allocate risk, providing a substantial degree of protection to the company and setting reasonable expectations for both the company and the independent developer.
This article is intended to serve as a summary of the issues outlined herein for informational purposes only. While it may include some general guidance, it is not intended as, nor is it a substitute for, legal advice. The opinions expressed in this article are those of the author.
Maria E. Recalde is a shareholder at Sheehan Phinney Bass + Green, P.A, admitted to practice in Massachusetts and resident in the firm’s Boston office. She chairs the firm’s Corporate Department and is a member of the firms Intellectual Property and Technology Practice Group. Her practice concentrates on the rapidly changing areas of technology and intellectual property transactions, litigation and counseling. She may be reached at firstname.lastname@example.org.