Staking Out Your Piece of Cyberpace

Today establishing a presence on the Internet can be key to implementing a successful business model. That web presence must reflect the image of your business and draw visitors to your website. A “rock star” web image may suit a rock star but may not be suitable for selling plumbing supplies. Often companies seek outside assistance from professional software developers to create their website and to provide additional services such as, website hosting. The purpose of this article is to discuss how you document the relationship between the developer and the customer to address short term and long term issues.

Documenting the Relationship

Just as with other business relationships, a written agreement should be put in place between the company and website developer who will create the website. What are some of the issues that a company such as Widget World should consider when entering into a website development agreement?

  • Who will obtain the domain name for the website? The domain name is your address on the world wide web so it should be held in the name of Widget World.
  • Does Widget World have a brand identity that will be displayed on the website? Does Widget World have registered trademarks?
  • Who will own the computer code that operates the website? Who will own images and other materials displayed on the website?
  • Will third party materials such as stock photos be used in developing the website?
  • What is the development schedule and scheduled “go live” date?

Ownership Rights

Under the U.S. Copyright Act, unless the parties agree otherwise in writing, the developer can own the work product it created. To a developer the ability to own the work is extremely beneficial since it allows the developer to reduce development costs and development time by reusing specifically code developed for other customers.

The developer may insert Widget World’s product information, client profiles or other similar data into a website framework that was previously developed. In the end, the developer will create a blend of proprietary information received directly from Widget World and use its own software code to build a website to meet the Widget World’s needs. The resulting website, however, creates an unclear blend of ownership rights.

A website development agreement provides Widget World and the developer a mechanism for clarifying ownership rights in the website by defining the ownership elements of the website. If the parties decide that they will each continue to own the components of the website they contributed, Widget World can require that the developer license the work product it created to Widget World and permit unlimited usage. As to the components the developer used in creating the website, Widget World should include provisions in the development agreement that restrict the developer’s use of those components from use with Widget World’s competitors, for example.

Additional provisions will of course be necessary in any such agreement. An indemnification provision should be added to protect both parties from an intellectual property (trademark or copyright) infringement claim by a third party. The parties will also likely come to an agreement for services to be performed after the website is up and running.

Website Updates and Support

Often the major focus in establishing a presence on the web is to get the site operational as soon as possible; little consideration is given to the need for ongoing updates and support. Websites exist to attract visitors, so the content of the website must be fresh. If the content is not fresh, visitors may come once but will not return. When additional content is prepared, the developer would be responsible for ensuring that the content is promptly added to the website.

Technology changes rapidly, which means that a website will require software upgrades to remain current. If the developer also hosts the website on their server, they will be responsible for maintaining the system hardware and software for that server. An agreement to provide website services should also contain a component addressing server maintenance support as well as upgrades to the website to take advantage of more sophisticated technologies.

The issues mentioned above along with the requisite representations, covenants and warranties would be addressed in a comprehensive web site development agreement.

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