In recent years numerous internet companies have been making their mark on the world. The business marketplace has changed substantially and the vast majority of businesses have an internet presence and many are based solely online. The domain name, website and underlying source codes and software can be extremely valuable, so who actually owns them?
To answer the above question you have to think about what elements actually make up a “web business”.
The first element that comes to mind is of course the front end of the website that can be viewed by the public, clients, customers etc, in addition there is the domain name, software, source codes, information displayed on the site itself, database, the list goes on.
Recent case regarding bespoke code dispute
I was contacted recently by a new client who had contracted with a website designer to build a website for his company. He entered into the standard terms and conditions of the developer without paying too much attention, going on the assumption that as the website was his idea and he was paying someone to build it for him then surely it would belong to him.
In many cases a website is now developed using fairly standard code, often derived from open source content management systems such as wordpress or joomla, with optional plugins and it is then perhaps tweaked so that the look and feel are to the client’s requirements. However, some websites are much more complex and can still require a significant amount of bespoke coding. This bespoke work can have advanatages with a very novel idea or interactive element on a site which you don’t want to be easily replicated and it is also generally the case that if something goes wrong with plugins or open source software which significantly damages your site, you may have no comeback on this legally.
Unfortunately for my client the agreement clearly stated that all intellectual property rights to the software, source code and design of site belonged to the developer who then granted a non exclusive licence to my client for use of this. Not much good to him when he wanted to sell the website but was unable to do so without the approval of the developer, nor could he make changes without the developers permission and perhaps worst of all, there was nothing in the agreement to prevent the developer from selling the underlying site to a business competitor of my client who could then set up a similar site using code which my client had paid to have developed. This as you can imagine had a fairly detrimental effect on the value of my client’s business.
In respect of software, this can be protected by copyright, however because the software can be tied up with all of the other elements mentioned above, copyright can be a tricky issue.
Generally the two most valuable Intellectual Property Rights (IPRs) connected to a website are copyright and database rights. What many people don’t realise is, that under UK law, the rights to this IPR will automatically vest in the developer on the basis that he created the work even though the client is actually paying for this to be developed. It is important to ensure that this default position is protected against by having a comprehensive agreement in place. Depending of course on the scenario you may not agree that the IPR should be transferred to the client however in the circumstances set out above, if the agreement had been drafted in favour of my client it would have provided that the IPR be transferred to the client on receipt of payment.
You should specify that the ownership of all the IPRs in the website, including specification, content and any software which the developer produced is to be transferred to you. Otherwise as with my client if you want to sell the site or modify it in any you may not be able to do so.
However not every agreement is that straightforward. The developer may not wish to assign all of the rights to the client, if for example the site relies on any underlying source code that belongs to the developer and was perhaps developed separately to the website. In this case you must try to get a worldwide licence to use the material. In addition it would be sensible if all of the source-codes are not being assigned to the client to make sure they are held in escrow on very specific terms to protect for example if the developer becomes insolvent, this is to try and ensure that the client still has a right to these materials and will have all the information necessary for a third party to provide updates etc in this situation.
Every agreement is of course different and has different issues but if you are paying for it and think you own it, make sure you do!
More IP law content here.
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