If you are planning on hiring someone to develop your website or particular functions for your website, there are some key items you should first consider. Many of these considerations relate to intellectual property, which is comprised of various rights created to protect the result of creative efforts. Those rights can be embodied in such things as patents, trademarks, copyrights, trade secrets, rights of publicity, confidential information, license rights, and contract rights.
Ownership of intellectual property items can be tricky when it comes to who actually does the work to take an idea from concept to final product, and it can be even more complicated if multiple people are involved. Here are five tips to protect yourself when working with website or software developers.
1. Get it in Writing First
You should make sure that there is a written agreement between you and your developer before the developer starts the work. This seems basic, but many people are so excited about getting their websites started that they may just rely on a quote from the developer that does not really cover any of the many variables that this relationship creates. It is important to make sure this is done before the developer starts the work because the parties may have different ideas about the relationship, and who will own what when the final product is complete. Trying to negotiate terms after you and the developer have spent considerable time on the project is difficult and can lead to a contentious relationship.
2. Ownership of the Creation
One of the key terms in your agreement with the developer should address who will own the final product. In a relationship where the developer is an independent contractor, the developer is the owner of the intellectual property that was created by the developer. Even if you had the idea for a specific design or function for the website and you paid the developer to produce that work, the developer is the “author” of the code and they own the copyright unless your agreement says otherwise. Therefore, if you are to be the owner of the work product, you must have the developer agree to an assignment of all rights related to the work product to you or your company. Most developers will agree to this, but they may have some exclusions for templates or tools that they have used. If there are portions of the project that the developer cannot assign, you should receive a perpetual license to use such items from the developer.
You should make sure that your agreement requires the developer to indemnify you in the event you are sued by a third party for using code that you received from the developer. There has been an increase in the amount of patent claims based on website functions, and your developers are in the best position to know if they are using original work in your final product or if they used code from somewhere else. This is difficult for developers also because some code has been in use for a long period of time by many websites and patent owners may be just now seeking to enforce their rights. See “Legal: Ecommerce Owners Liable to Patent Trolls?,” my previous article on that topic, for more information.
4. Payment Terms
The agreement with your developer should have some basic milestones for payment. This will also help both you and the developer set a timeline for completing the project. You should make sure that any changes to the cost of the project are done in writing. Projects evolve through the development process and the original scope of the project may look very different in the end. If you and the developer are discussing and documenting cost throughout the process, you are less likely to have conflicts in the end.
Your website may be more than just another retail site. You may have ideas regarding processes, a particular market, or functions that are not readily visible to the rest of the world. Therefore, your agreement with the developer should contain confidentiality provisions to protect your trade secrets, or ideas for future development. What may constitute a trade secret extends beyond what may be patentable, and includes any formula, pattern, drawing, device, machine, or compilation of information — including customer lists — that is used in a business and that gives the business an opportunity to obtain an advantage over competitors who do not know it or use it. Requiring confidentiality can protect a public disclosure of something that may be patentable. This is important because a public disclosure of a patentable item can start your one-year period to file your patent application. Once that one-year period is up, you can no longer patent that item.
Care needs to be taken to make sure that you understand and agree on the key terms with the developer before you begin working with the developer on a project. To enforce that agreement, it must be in writing. There are several other terms that the agreement should cover, but the above are key terms that will help reduce conflicts and protect your ownership of the final product.