Who Owns Your Web Site?

It seems like a silly question, doesn't it? The usual answer would be…”well, I paid good money to have my web development company build the site. Of course I own the web site.” It would probably come as a surprise to you to learn that you actually may not won your web site at all. If you, like the vast majority of Internet based businesses had your site developed by an independent development company, you may not own your web site at all, even though you may have paid good money to have the developer create the site. The developer may actually own your site in the legal sense.

The ownership of your web site, when created by an independent contractor, is determined by an interplay between the United States Copyright Act and the agreement that you may have entered with your web site developer. Generally, under the Copyright Act, the “author” of the work, the party that does the work to create the web site, will be considered the copyright owner. An independent contractor that does the development work is generally considered to be the author of the work for Copyright Law purposes.

If the work is considered to be a “work made for hire” under the definition that is contained in the Copyright Act, you will be considered to be the “author” of the work with the right to claim a copyright. If you have your web site created by a bona fide “employee,” the work will be a “work made for hire.” However, there are three requirements that must be met in order for a work that is created by an independent contractor to be considered a “work made for hire.” If all three of these requirements are not met, the independent contractor will be considered the author of the work with all copyrights to the work.

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. In order to be considered a work made for hire, the work must fall within one of the statutory categories. These categories are limited to (1) contribution to a collective work; (2) a part of a motion picture or other audiovisual work; (3) a translation; (4) supplementary work; (5) a compilation; (6) an instructional text; (7) a test; (8) answer material for a test; or (9) an atlas. As you can see, most web site creations will not fall within one of the above listed categories and will therefore not be considered “works for hire.”

If the web site does fall within one of the categories listed above, there is a third requirement that must be met in order for the web site to be considered a “work made for hire.” This third requirement is that there must be an agreement that is signed by the parties that expressly makes the work a “work made for hire.” Specific language must be used in connection with the work for hire clause.

The issue of who owns your web site can have very significant and potentially devastated effects on your online business. Let’s assume that you had a web site developed by an independent contractor. The agreement with the developer did not contain a “work for hire” provision. The developer would be considered to be the author of your web site and has the right to assert the copyrights to the work. Let’s also assume that the developer took the initiative and registered a copyright application with the United States Copyright Office. He would have the right to make this registration because he is the “author” of the site. Later you decide to have some modifications done to your site. You call your original developer who quotes you a development fee that you feel is too high. You shop around a bit and find someone who you think will do a good job for about half the price that the original developer quoted you. You deliver the files for the original web site to the new developer who does the modification to your complete satisfaction. You pay the new developer for the work and have the new developer place the new material online.

Before you know it, you are receiving certified mail from the original developer accusing you of infringing on his web site by having someone else modify the original work. Legally speaking, absent other facts, the original developer would be correct in his assertion. As the owner of the copyright on the original web site, the original developer has certain exclusive rights that are protected under the United States Copyright Laws. One of those exclusive rights is the exclusive right to create “derivative works” based upon the original work. Derivative works would likely include the modifications that you had the second web developer perform. These modifications would constitute infringement of the original developer’s copyright. He would be entitled file a copyright infringement actions against you, and perhaps even against the second developer. He could sue you for his actual damages that resulted from the infringement. Because he filed a Copyright Registration, he would also have the option of electing to take statutory damages instead of going through the process of proving his actual damages. Statutory damages can be in amounts up to $25,000.00 or, if the original developer could prove that your infringement was “willful,” up to $100,000.00. These statutory damages apply even if the original developer could not show that he was damaged at all by the infringement. In addition to the statutory damages, the original developer would be eligible for an award of attorney fees against you.

Let’s assume another scenario. Let’s assume that your original developer was also your web site host. The hosting agreement permits you to terminate with thirty days prior written notice. Your site is developed an online, but you decide to go with another host for whatever reason. You give the original developer written notice to terminate the hosting agreement. You wait the full thirty days and then have another company begin hosting your site. Almost as soon as the site reappears online via the new host, you receive a certified letter claiming copyright infringements. And guess what? This may also be a correct assertion of copyright infringement. One of the exclusive rights of the copyright owner is the right to control all reproduction of the web site.

When the web site was transferred to the server of the new host, the web site was reproduced. To make matters worse, you receive a call from the new host who informs you that he also received a letter from the original developer alleging that the site, which is now resident on the new hosts’ server, violates the copyright of the original developer. The new host regrets to inform you that under the Digital Millennium Copyright Act, he will have to take your site off-line.

So what can you do about this potential problem? How can you assure that you will have the right to do what you wish with the web site that you paid to have created? There are three possible solutions to this situation:

Have The Developer Assign The Copyright To You. From your standpoint, this is the ideal solution. The web development agreement that you enter into with the developer should include provisions requiring the developer to assign the copyright in any work that he creates to you. It should provide that a separate, stand alone copyright assignment be executed and that the developer will cooperate with you by executing all documents necessary for you to file a federal copyright registration covering the works. This will not be the ideal solution from the perspective of the web site developer though. If the developer assigns the entire copyright to you, any subsequent use by the developer of any component contained in your site will infringe upon your copyrights. This can present a problem for the web site developer because many developers often start new projects based upon prior sites that they have developed. Regardless, the developer could not use your trademarks or copyrighted work that you provide in the new site. But the general layout and structure is often used in subsequent projects. For this reason, the developer will be hesitant to assign the entire copyright and may wish to be paid additional amounts if he does agree to assign the copyright to you.

At A Minimum, Be Sure that The Developer Gives You A License To Use The Site. Most web site developers, if pressed on the issue, will agree to give you a license to use the site they create for you. Under the licensing scenario, the developer keeps the underlying copyright and gives you the perpetual right to use your page.

The question often raised by developer license is what scope and conditions are contained in the license agreement. Do you have the unlimited right to use the web site for any purpose you may chose? Do you have the right to have third parties modify the web site without violating the developer’s rights? Do you have the right to have others host your web site, or is the license tied to the developer’s hosting services so that it terminates when you try to have someone else host the site.

The bottom line is, if you agree to take a license of the site from the developed, be certain that the conditions attached to the license give you the rights that you desire and need. If there is any question whether you have certain rights, have the license agreement amended to specify them. Remember one simple concept in licensing law…. The developer only licenses away the specific rights that are described in the agreement. If the right is not spelled out in the agreement, you do not have it.

Enter A Work For Hire Agreement With The Developer Or Include Work For Hire Provisions In The Development Agreements – But Caution…. Specific clauses can be included in the web development agreement that makes the work product of the developer a “work made for hire.”

Remember from reading above that if you commission a work made for hire, you will be considered the “author” of the work and have the original copyright. However, be cautious if electing this alternative. Remember that a work created by an independent contractor can only qualify as a “work made for hire” is it falls within one of the statutory categories listed above. If it does not fall within one of those categories, and if it is created by an independent contractor, the original copyrights will not vest in you, regardless of whether the agreement with the developer states that it is a “work made for hire.” This is contrary to the understanding that many people have about the work for hire rules. Many people rely upon the work for hire clause included in a contract as giving them the original author rights to copyright. This reliance is misplaced with respect to most web development projects.

As such, you should not rely upon this alternative unless you are certain that all elements of the work fall within one of the categories described above.

Take An Assignment Of The Copyright And License Back Certain Rights To The Developer. This can also be used as a middle of the road option and can satisfy both the interests of the developed and your interests. Under this scenario, the developer would agree to assign all copyrights to you and would execute a copyright assignment. You could then license back to the developer the rights that the developer specifically requests to allow the developer to utilize certain components of the web site in future works.