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If your business is acquiring the services of a web development and internet marketing firm or if you are  a web development and internet marketing firm, you need to know this.

Intellectual Property

Who Owns the Web Development Code

For developers, here is your explanation:

//Default Copyright Holderif (Creator==”Employee”) {

Ownership = “Employer”;

} else { //Creator is Independent Contractor

if (Agreement==”Work for Hire”) {

if (Work == “Nine limited categories of works) { //Does not include web development

Ownership = “Employer”;

} else {

Ownership = “Creator”;

}

} else {

Ownership = “Creator”

}

}

For the rest of us, you should understand this is a commonly missed issue. The general rule is that the creator owns the creation. It is also generally understood that if an employer hires a creator to create, the creation is owned by the employer. This is only true in an employer-employee relationship, but not when the creator is an independent contractor.

If the creator is an independent contractor, then the work must be specified in writing as a “work for hire” and be part of a work described in the Copyright Code–which of course has not been updated in the last few decades to include software and web coding. Therefore, copyrights must be otherwise assigned and specified in an agreement–often left out, even unintentionally by the parties.

On the other hand, issue of ownership may be a point of negotiation. Where the developer is providing a customized shopping cart or CMS system, it may be in developer’s best interest to ensure it retains these rights so that they may license the software to another client.

Who Owns the Content?

Again, the similar analysis above also applies to those writing your blog posts, ghost writers, etc; however, this assumes the work is eligible for copyright protection. For example, tweets are too short to be copyrightable and likely so are meta tags and descriptions in use by SEO services.

Stock Images

Without discussing the additional considerations surrounding SOPA, rights to the images that developers use for your website need to be properly assigned whether it is from the developer or purchased through a stock image broker.

Other Intellectual Property

Trademarks, patents, and trade secrets definitely come into play here, but they are not unique to web development or internet marketing. Trademarks issues are often resolved by use of the employer of the mark in the market place and patents are usually clearly defined.

Trade secrets are something both the developer and the employer should be concerned. In such an arrangement, there may be a large amount of confidential information that either party would want to remain secret but is shared out of necessity or convenience to the other party, including, employer’s customer data, business process, or methods; or developer and internet marketers strategies and methods.

Outsourcing

Much of development and internet marketing is outsourced and jurisdictional issues come into play all across the board. For example, if there is a lawsuit, in which location will it be held? Are you going to be willing to fly to India to resolve a dispute? Are the laws that you would normally rely upon be even enforceable against the other party? If you do not know the answers to these questions, you are opening yourself up to a lot of risk.

Performance

Just like any service agreement, specifying real milestones, deliverables, a timeline, and a scope of work will be a great tool to make expectations uniform and prevent disputes.  Developers have a tendencies to not put these items in detail to avoid be held accountable to setback and unforeseen obstacles.

Link Ownership

Where SEO providers include link building as part of their service, documentation as to how back-links will be handled when the service agreement terminates–specifically links that are put in websites that the SEO providers actually control.

Security

Where web developers will be working or creating a site that collects or holds sensitive data, determining who would be responsible for a security breach that could have been easily prevented should also be contemplated. In general, the employer may still be liable for a security breach even if it was a grave mistake, such as not encrypting passwords or credit card info, by the web developer. An indemnification clause should be considered as a negotiation point or insurance depending on the level of sensitivity of the data.

Liability Because of Acts of the Other Party

In addition to the issues described above, parties may be held liable from third parties for actions they may not have caused. For example, if web developer uses copyrighted images for the site without permission, the site owner may be held liable for infringement. In another example, a business owner may be liable for the statements made by an internet marketing firm for its representations or more specifically its misrepresentations.  Though in a number of these cases, the business may have a valid defense, without an indemnification clause, all the legal costs, at least initially, will be coming out of that year’s budget for the business.

Bottom line, watch out for these issues and do not use template agreements–they likely do not contemplate a number of these issues.

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