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IP rights re: website developed as contractor

 
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benE
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PostPosted: Mon Jul 12, 2010 3:17 pm    Post subject: IP rights re: website developed as contractor Reply with quote

Hi there, I'd really appreciate some advice around my IP rights as a 3rd-party contractor.

I work as a freelance programmer, and in this role, I have developed a website for a client of mine. We don't have a specific contract, apart from emails where we agreed prices, and specification documents that outline the work to be delivered.

We have never spoken about ownership of the final website / source code, it isn't referred to in any emails or documents.

In these circumstances, I believe that I am the author of the work created, and given that I haven't assigned the rights to the client (or anyone else), the Intellectual Property remains mine. However, the client has an implied licence to use the source code / website that I've created for them.

What I really need to understand is exactly what is meant by the implied licence.


  • Is this a lifetime licence?
  • What exactly does this licence let the client do? Do it mean that I simply have to let them use the website for their own purposes, or if they asked for it, would I be obliged to give them the source code?
  • If they want another 3rd-party developer to take over the source code from me and develop it, do I have to give it to them? Or do I solely have to give them access to use the product of the code, ie. a working website, and if they want any changes to the source, they have to contract with me to make those changes?


Any help on clarifying this would be greatly appreciated Smile

Regards, Ben
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AndyJ
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PostPosted: Mon Jul 12, 2010 8:19 pm    Post subject: Reply with quote

Hi Ben,
First of all it is worth stating that UK law does not officially recognise the code for a website as being a literary work for copyright purposes. The law does recognise computer programs, but as far as I am aware the courts have not ruled on whether the code for a browser to construct a website on a viewer's screen constitutes a computer program or not. Clearly there are parallels and some differences. The remainder of my response is based on the premise that your source code does have the same protection as a computer program.
So given that, you are right that in the absence of any formal agreement between you and your client, you own the copyright in the websites you develop. And also you are right that when a client commissions and pays you to develop a website for them, it is implicit that they will be able to use your work without any further constraints. But as you have highlighted, exactly what they can do in terms of further exploiting the site is not at all clear. This is where in future you should consider having a standard agreement available for commissions. Theoretically unless the client has mentioned future development at the commissioning stage, all he is entitled to from you is use of the site you created. It does not entitle him to find someone else to modify (see below) your copyright work. However in the real world things aren't really so straightforward. As you are well aware no-one actually needs to come to you to your source code because by definition it is available to download and copy by anyone. Even the more esoteric bits, such as Flash, can be de-complied relatively easily so really all your intellectual property is out in the open and you have a hard job to protect it. Personally I would suggest the approach you should take is to price for a one-off job and then agree a separate fee for maintenance and further development work (possibly on an hourly basis), so that if at any stage the client does take his business elsewhere, you can let go of your work (even though still owning the copyright) without too many qualms.
The difficulty you face is somewhat like a portrait painter. You do the work and own the copyright, but the client gets to keep the work and can hang it in their toilet (=put in on the www), sell it or even destroy it and you have no say in the matter. Most websites will have a very short shelf life before they either need updating or completely replacing. This is as much to with technical changes (browser features, IPv4, HTML5 etc) as it is to do with the actual content. And of course the client may well be providing much of the actual site content - images, product details, databases, etc to slot into your structure. This makes deciding a time limit for the implied licence very difficult. And it may also be implicit in the licence that it is exclusive to the client. If you design site for the Acme Vacuum Cleaner Co, you would be constrained from selling the exact same site (with different wording) to the Whizzo Vacuum Cleaner Company.
As you will have noted, I haven't really answered your questions because there are two answers in each case: the 'legal' one and the real world one. I don't suggest that a court would find it any easier to give straight answers either, because obviously a court would only become involved after the event when the facts of the case were known, whereas you are (hopefully) asking hypothetically.
Remembering my first point about your code and computer programs, one final point worth bearing in mind is that several special rules apply to computer programs:
Section 21 of the Copyright Designs and Patents Act 1988 says that adaption is not permitted. Adaptation
"in relation to a computer program, means an arrangement or altered version of the program or a translation of it; ...
(4) In relation to a computer program a “translation” includes a version of the program in which it is converted into or out of a computer language or code or into a different computer language or code"

However, the Copyright (Computer Programme) Regulations 1992 permit computer programs to be de-compiled in certain specific circumstances in order that other programs may be made compatible with them. This is only permissable when there is no other means of obtaining the relevant data. So with your code it might be seen as lawfull to develop the website by adding additional code to yours in order to extend the functionality (say by adding a shopping cart feature) which would obviously need to hook into you code at various points. Furthermore Section 50C of the Copyright Designs and Patents Act 1988 (as amended) says:
"50C. Other acts permitted to lawful users.
— (1) It is not an infringement of copyright for a lawful user of a copy of a computer program to copy or adapt it, provided that the copying or adapting—
(a) is necessary for his lawful use; and
(b) is not prohibited under any term or condition of an agreement regulating the circumstances in which his use is lawful."

I have to honest and say I have no idea whether that provision could be applied in the case you mention, but it gives an indication of how the courts might view the respective rights of you and your client in the event of a dispute over a site you designed.
If this is more than a hypothetical inquiry, I strongly urge you to speak to a good IP lawyer for more detailed advice. But what ever it is, I suggest you look into the idea of having a standard agreement (such as this:http://www.own-it.org/contracts/22) for all future business.
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benE
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PostPosted: Tue Jul 13, 2010 1:48 pm    Post subject: Reply with quote

Hi Andy, many thanks for your reply.

I'll clear up a couple of the unknowns you had.

1. The code I'm referring to is code that is hosted on the server and code that is compiled into a single file. It is never seen by website visitors, although it does generate the HTML code that the browser reads as part of it's function. The other part is effectively a database engine and powers the interaction the site has with the user. In this sense I think it would be recognised as a program.

2. Thus, the point you make about being in the same position as a portrait painter is not correct - nobody is able to access the "engine" of the website without my giving it to them. Somebody could take the design and presentational elements via the browser and build their own engine, but those elements are not the most valuable - the time comes in building the engine.

3. I accept your point about a 3rd party being able to add, for example, a shopping cart to the site that sits alongside. This is technically possible and clearly doesn't have anything to do with me. But, in order to change or modify the existing functions of the site, the client would need my source code.

4. Your point about contracts is also taken. To be honest, it protects me slightly to NOT have this as an explicit part of a contract, since no client would ever grant me the rights or be willing to pay an increased fee for owning them themselves. Thus I lose Sad I don't raise the issue because that leaves me something to negotiate with in case of problems, which in 10 years in business has never happened, but unfortunately now could.

5. Finally, I know that I need to talk to a proper IP lawyer, but I'm hoping it won't get that far, and for now I need some indication of my legal position in order to let me negotiate. If my clarifications above don't help you give me any clearer answer, then so be it. But if they do, it would be much appreciated! There's no chance I would even think of getting near any legal action without professional advice, but at the moment I just need a bit of guidance in order to assess my position.

Regards, Ben
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AndyJ
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PostPosted: Tue Jul 13, 2010 3:08 pm    Post subject: Reply with quote

Hi Ben,
Thanks for the additional information. Clearly I was talking about HTML/CSS/javascript/flash type applications rather than server side ones. That does make a difference because as you say neither the client or a casual user can access the source code. Who owns the server? And equally important, in which country is the server based? If the client has his own server then clearly he has physical control over your code, but if the server is operated by a third party and the client doesn't have any login privileges your code is much safer. The reason for knowing where the server is located is because that can determine which legal system might adjudicate on a copyright issue. The US system, for instance, treats a situation such as yours in a slightly different way, where 'work for hire' (http://en.wikipedia.org/wiki/Work_for_hire) gives the commissioner copyright in certain circumstances.
I appreciate what you say about keping things informal in your dealings with clients, but should matters develop into a dispute it is generally more expensive to sort things out afterwards where there is no prior agreement. In such circumstances, a court may feel that you as a professional offering his services to a layman owes a duty to the client to explain these issues, and by not so doing you could be treated less sympathetically by the court. You can of course draw up any terms you want in an agreement to reserve as many of your rights as you wish, and clearly the fee you charge will in part reflect how much of your rights you give up.
Because the engine you have developed can, presumably, be used on other web sites, my comments about the Acme Vacuum Cleaner Co don't really apply. So this strengthens your position. In a sense you in a similar position to other software producers who issue End User Licence Agreements (EULAs) to people who purchase their products. You could equally issue a similar licence to your clients which specifies what they can and can't do with your intellectual property.
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benE
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PostPosted: Wed Jul 14, 2010 8:04 am    Post subject: Reply with quote

Hi Andy, to answer your questions:

1. The website is hosted on a server in the UK, operated by a 3rd-party host with whom I have a reseller account. Nobody has the access details to the account except me.

2. OK, so I'm effectively giving my client a EULA. So I could retrospectively issue them a EULA laying out what rights they do and don't have? Would it be reasonable to say that they have rights to use the compiled code in whatever fashion they desire - which means that they can host it wherever and with whomever they want, but that they don't have rights to the source code itself? This would protect me in that in order to make updates to the source they'd need to get me to do it. Would a retrospectively-issued EULA stand up in court?

3. I take your point about my professional duty, but surely the client also has a duty to inform themselves appropriately when doing business with 3rd parties?! Basically, they don't take legal advice in order to save money, this isn't my responsibility. Sorry, this is a bit of a tongue-in-cheek response Wink

Many thanks for your thoughts Smile

Ben
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AndyJ
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PostPosted: Wed Jul 14, 2010 10:07 am    Post subject: Reply with quote

Hi Ben,
Before / during the contract negotiations you can set any terms for the EULA that you choose and obviously you can then compromise if you wish if the client doesn't like a particular term. What you both then agree forms the contract on which you do business. Unfortunately you can't retrospectively impose terms on the other party without their agreement. Effectively producing a EULA now would be varying the existing contract, which needs the consent of the other party.
It sounds as if you may have difficulty in persuading your client to accept your EULA, in which case, unless it was implied in the earlier contract that you had the right to issue the EULA, your EULA may not be recognised as a valid agreement.
Just to go back to first principles, copyright and licensing are two sides of the same coin. Licensing is the main method for exploiting the value of your work. A licence can contain any number of stipulations about the length of time, territory, types of use etc another person can make use of your intellectual property and it can be either exclusive to them (ie nobody else, including you can use your copyright work while they have the exclusive rights) or non-exclusive. But obviously all this must be known to the client at the time they are agreeing to hire you. It would be sensible to include your general trading terms on the back to any written estimates/quotes, and invoices that you issue, and have them on your website.
If the client chooses not to read the small print and the terms are what a court would term 'reasonable' or fair, then the client could not plead ignorance even if you had not specifically drawn their attention to the terms. Only non-standard or potentially unfair terms would need to be specifically highlighted during negotiations. But generally speaking the courts do take into account the level of knowledge it would be reasonable to assume both parties have when reaching an agreement which isn't on paper. Clearly if the client had the same level of knowledge as you about the work they could build the websitte for themselves. Presumably they have come to you because you offer a service they cannot perform for themselves, hence my earlier comments.
I hope this helps. If matters do escalate into a full blown dispute, the early advice of a good IP lawyer could save you a lot of expensive litigation.
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