So, you're going to launch a website? You reserved a really cool URL (web address) and, while barbecuing over the Labor Day weekend, your neighbor offers to design your site. Not only is he promising a "good deal" but he offers to hook you up with his cousin who just launched a mega server for web hosting. You go home gloating about your luck and sketching blue prints for the pool you are going to install when your website takes off and makes you rich!
It's just that easy, right?
Let's take a look.
While some folks might get lucky and go about their business without a hitch, there are inherent risks associated with launching your own website and some of them should not be overlooked. Topics that should be included in a written agreement between you and the website developer include: Ownership of material (including software and coding), maintenance terms, confidentiality and warranties.
Ownership of material, software and coding. Because it is your site and you are paying for the development, you might assume that you will own everything on your site. Beware. Unless specifically negotiated and included in a written contract, you may not own as much as you think you do. It is a good idea to have the elements of the website spelled out in a written agreement with the ownership details of each.
A website generally includes text, pictures, graphics and perhaps video or audio provided by you. Under US copyright law, you own an exclusive copyright to the material if you created it. However, although you are supplying this material and you clearly own it, the material should be included in the list of website elements wherein your ownership of such material is clearly confirmed.
Next on the list of website elements might be third party material. Third party materials include those elements that are not owned by either you or the developer. For example, the developer might use stock photos that he licenses on your behalf. The written agreement between you and the developer must clearly require that the developer attain the rights necessary for use on your website including the right to transmit the material digitally. Additionally, the developer should transfer this license to you upon launching your website.
Software, believe it or not, is another part of the website where ownership needs to be addressed. Software is the behind-the-scenes machine that displays your website and runs the components of your website. Your developer might use third party software from a vendor to which he has a license, or he may use software that he has already developed himself. Whether he uses third party software or some that he has already developed, you will likely not receive ownership rights to the software. At best, you may receive a license that is specific to your intended use. Make sure you understand the scope of the license and its terms to ensure that it is broad enough that you may be able to switch developers, operating systems or even expand your use of the sites to additional business entities. You may pay more for the expanded license but if you foresee the possibility of such changes in the future, you should consider agreeing to the terms of use now rather than later. You should also be aware that even with a license to use the software, your developer will likely retain the copyright to the source code. Thus, should you later want to customize the software you will not be able to do so without access to the source code.
Additionally, you and your developer may create new software that is unique to your website. Since you are paying for the development of this software, you may be able to negotiate complete ownership. The absolute right to the copyright of this software may be desirable if you want to ensure that you are the only entity legally allowed to use the software. However, the developer will likely charge you a hefty fee to create customized software and hand over the copyright. Alternatively, the developer may offer to discount the cost of development and offer you a license. When you choose to license the developed software, you may want to insist that the developer agree not to license the same software to your competitors.
If your developer creates some really dynamite software for you, you may want to consider expanding your business plan and creating a joint venture with your developer where you will actually reap some benefits of the developer's future use of the software. This approach requires serious consideration and is a detailed arrangement that is beyond the scope of this month's newsletter however; such an arrangement should be not be ignored when paying for highly customized software.
Maintenance Terms. Maintenance of the site includes such things as changes, updates, troubleshooting or repairs to your website. You should specify the level of maintenance and the price terms in the written agreement. The agreement should detail the level of maintenance and the terms of payment should maintenance be required beyond that level. If your developer has numerous clients, it is prudent to specify which maintenance issues will receive priority and to place a cap on the amount of time that such maintenance should take.
Confidentiality. As always, when divulging information about your business or allowing access to your facilities, you should require a confidentiality ("nondisclosure") agreement. A carefully drafted confidentiality agreement can protect your trade secrets or, at the very least, serve as your best weapon against unauthorized disclosure of those business methods that give you your competitive edge.
Warranties and Representations. The last thing you want is a cease and desist letter stating that you are using material without a license to do so. You should insist that the written agreement between you and the developer includes a warranty that the developer has obtained all of the necessary rights and licenses for your use of material and source code used on your site. Don't stop there. You should also include indemnification so that should you receive a cease and desist letter, the developer will have to defend the action and you will not be held accountable. Of course, warranties and indemnification in any contract are usually mutual thus, you will also be representing that you are not breaching any contracts by entering the agreement and that you will likewise indemnify and hold the developer harmless.
The foregoing constitutes some of the provisions that should be included in a written agreement between you and your website developer. It is always a good idea to have an agreement reviewed by legal counsel to double check that you are retaining your rights and getting the most out of your deal. Whether it's your neighbor or a high-profile web design firm, it is always a good idea to have your "deal" in writing.
As for your neighbor's suggestion that you hook up with his cousin for the hosting of your site, look for November's newsletter for details on the hosting relationship as well as additional insight on issues concerning your website.
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