Website Retention - A Contractual Maze

An entrepreneurial client recently set up an on-line party planning website – a ‘one stop party shop’.

However, despite his anxiety to proceed quickly, he ran into an unexpected problem, temporarily delaying the launch.

When he decided to dismiss the design and development firm, which he had engaged to develop the website, the firm not only refused to hand over the website, but also argued that they owned the copyright and other intellectual property rights in it. They claimed that all they were obliged to provide to him was a limited, non-exclusive licence.

They even framed an offer, along the lines that they would not claim for their fees if the client released to them, not only what intellectual property rights might have vested in him, but also the underlying business.

The law is very clear - the first owner in the copyright of a work is the creator of that work.

Unfortunately for the client, without a proper agreement, dealing with intellectual property ownership, the website design firm had an arguable case, at least on the copyright point.

Getting into trouble ‘going E’ is all too commonplace, especially where contracts are entered into at speed and on an informal basis. Firms find that they do not own rights for which they may have paid a considerable amount of money.

However, and fortunately for the client in this case, absence of a formal contract was an advantage to him, since the website design firm had the benefit of no contractual limitation, in respect of the quality of their design work or the timing of delivery – claims in respect of both of which could be substantiated.

After some negotiation a deal was struck, whereby the design firm was paid in instalments upon rectifying defective parts of the website, and whereby the client had prior opportunity to test and accept the work.

Website owners and designers should give advance consideration to intellectual property ownership and record what is agreed, in a carefully drafted Website Design and Development Agreement.

The website owner will wish to establish to what it is to be contractually entitled at the end of the design project; the website designer will need to know whether it is to be paid a fixed fee or on a ‘time and materials’ basis and as to the precise extent of the services which it is expected to provide.

Both will need to agree, in advance, apportionment of risk and liability.