Friday, May 16, 2008

Securing Ownership Rights In Your Web Site

by Jon Fischer

You have expended considerable time and resources to have your web site developed. You web site is the heart of your online business. But are you sure that you actually own it?

You may be surprised to learn that the firm that did the development work for you may actually be the copyright owner of your web site. If you retained an independent development company or individual to create your site, ownership of your site may be at risk unless you properly contracted with the developer to assign the copyright to you. In short, you may have paid a lot of money to have your site developed, only to find in the end that the developer, and not you, is the copyright owner. If you are in charge of having the web site developed within your company and ownership of the web site later becomes an issue, this may be very difficult to explain to your manager or the board of directors.

Copyright Laws Specify Who Is The Author

The two legal factors involved will be the United States Copyright Act and the contract that you may or may not have entered with the developer. It is fairly clear under the Copyright Act that the developer would be considered to be the "author" of the web site if the developer was an independent contractor and not a bona fide employee. It is the "author" of the work that has the rights that the copyright act provides.

Works Made For Hire

For a website developed in house by an employee, the company would be considered the owner of the copyright. This is because works created by employees are considered to be "works for hire." With a "work for hire," the employer has the right to copyright the work and to assert all of the rights of a copyright owner.

There are cases where an independent contractor can be considered to have made a "work for hire" that vests rights in the company that contracted for the work, but the conditions for this would be very difficult to meet in the case of a web site developed by an outside firm or individual. There are 3 requirements in order for a work created by an independent contractor to be considered a "work for hire."

The first requirement is that the work be specially ordered or commissioned by you. In most cases, this test will be met if you have contracted the web developer to create your web site from scratch and not based upon a site that the developer has previously created.

The second test is more difficult to meet. The work has to fit within one of the narrow statutory categories which will rarely apply in the case of outsourced web development work. The third requirement is a written agreement that includes a clear agreement between the parties that the work would be considered to be a work made for hire. This requires very specific wording.

Reliance On Work for Hire Status Is Not Enough

One common mistake is to assume that simply placing "work for hire" language in the contract will preserve the copyright in the party contracting for the work. This language alone is not enough. All three requirements must be met and in the usual web development relationship these conditions do not exist. So many people believe that they have the copyright to their work because they used a "work for hire" clause in their contract only to find out later that this clause does not protect their copyright.

Uncertain Ownership Can Devastate Your Business

It is no surprise that this issue of copyright ownership can have devastating impacts on your business. Without properly addressing the issue, the developer and not you would not have the right to file for copyright protection. These rights include the right to control derivative works (modifications) and the right to control publication of the work (posting on the Internet) among other rights.

Practical Solutions To Uncertain Ownership

These potential problems are best solved at the time you enter the contract with the web developer. Most developer provided contracts will be relatively silent on these issues. Silence actually benefits the developer who would usually then be the author of the work under Copyright Laws. This does not benefit the client though.

So what should the client do about this potential problem? Ideally, the original agreement with the developer should require that the developer assign all copyrights in the work to you. The contract should contain language making this assignment and it is also a good idea to require in the contract that the developer provide you with a stand-alone assignment of copyright in a form that is satisfactory to you.

From the developer's standpoint, web developers often use templates of work that they have done for other clients when taking on new project. You can always satisfy the developer's concerns by licensing back to the developer certain portions of the work that would permit the developer to use the basic structure of your project as a template for a subsequent project. In doing this, you may be able to negotiate on the pricing aspects of the project and it could work to your benefit. Just be careful not to give too much back to the developer so that the developer can just change the logo and some colors and use your unique layout for another client. You might also consider prohibiting the developer from using your template in connection with a business that competes or otherwise is in a position to take business away from you.

The last alternative that can be used is to have the development company retain the copyright and license the use of the content to the client. This is clearly not the preferred course for the client, but is a method often proposed as a compromise by the developer.

Regardless of the method that you use, be certain that when you pay for development work that you are contractually given the right to use, and preferable exclusively control the content that you have developed.

About the Author

Jon Fischer is the owner of the following Legal and Business Sites.
http://www.weblawresources.com
http://www.automated-incorporating.com - Incorporation and Bylaws