Is your web site owned by “some guy in Romania”?
We had an interesting issue come up this week. A new client called us wanting to get an estimate for the preparation of a new “Terms of Service” agreement prepared specially for his web site. This client was in the process of having a new version of his web site developed and wanted the terms added before he launched.
In discussing the nature of his business I inquired about the development work being performed. The client responded by enthusiastically telling me that he was having most of the code for the new site developed by “some in Romania named Vladimir”. My client went on to tell how wonderful and responsive Vladimir was but that he had never actually spoken to him. My client’s level of confidence in Vladimir was impressive. He would communicate via email with to Vladimir who then code the project so that it was done within a few days. My client seemed very pleased with this arrangement, the price and the work product.
I inquired further as to whether there was any written agreement concerning the terms of this development project. Somehow I was not all that surprised to hear that there had been “nothing formal” created but that “everything was in the emails” and that he got along great with Vladimir so that he expected no problems.
Under US copyright law, if you have no agreement laying out the terms under which you engage another person to perform development work on your site there is a very distinct possibility that you may not own parts or all the rights to the work created. Furthermore, without a formal agreement you have no guarantee that the work is not taken from other projects owned by third parties that could at some point demand that you stop using the code or material or you could simply find yourself on the wrong end of a lawsuit. Even if your right to use the materials is never questioned you could well find the same exact code in use elsewhere on another customer of Vladimir’s web sites – possibly your competitor – and may learn that you have no right of any kind to prevent such use or any other additional use in the future. Furthermore, all agreements are not the same. If you are presented with a form by your developer or other vendor it is a safe bet that the form they present to you significantly leans in their favor and against you on significant terms.
Hiring counsel may constitute an additional expense. However, if you hire counsel to read and approve 10 such agreements it would likely cost you less overall than if even one becomes a problem that you are forced to deal with down the road. Banks and venture capital companies conduct a due diligence process in the course of providing any investment funding as would any potential purchaser of your company. Issues such as these are guaranteed to arise in the due diligence process and by then reaching Vladimir after 2 years of silence might not be as simple as you might hope.
The availability of solid legal advice on day to day legal issues and agreements is one of the best investments you can make for your company. Our client now has a solid vendor/developer agreement with Vladimir that establishes clearly that my client owns the exclusive rights to the portions of his web site that Vladimir created together with assurances that the works are original and do not violate the rights of any third party. He also has a new solid and effective Terms of Service agreement.
About: Jeffrey A. Cohen is a partner in the El Segundo, California office of Cohen & Richardson, LLP. Mr. Cohen can be reached at JCohen [at] InternetLitigators.com. The reader is cautioned that the information contained herein is not legal advice and is not a substitute for legal advice. There is no attorney client relationship created by this information.
September 24th, 2007 at 6:20 pm
[...] Austin, Mitch Keeler and our newest writer Jeffrey Cohen! Be sure to check out his monthly “Lunar Legal” column created especially for our [...]
September 25th, 2007 at 4:36 am
So all is soved after all ………..
September 25th, 2007 at 4:45 am
Content excellent but presentation makes it most difficult to read. Wider margins would help greatly.
September 25th, 2007 at 5:04 am
Vladimir is a russian name. If that guy wanted to pose as a Romanian he had to use Vlad ( like Vlad Dracula ).
A simple root trace and he will find out from were this guy writes his emails.
September 25th, 2007 at 7:18 am
An excellent point and one that both customers and developers often overlook.
May I also add that, if the project involves modification of ready-made open source code, it may come with its own license, whose terms must be observed.
Regardless, a clear and explicit resolution is always good to have, for all those involved.
September 25th, 2007 at 9:55 am
In my case, I have several possible clients for this internet law matter, the basic and simple question is:
Is there an international law so powerful that can get local people to resolve by the lawforce an internet problem ? I live and work in Guatemala Central America and here we do NOT have internet laws.
It´s important to question this because otherwise the only people resolving something and getting money are the lawyers themselves.
We must be realistic and the best defense is prevention.
September 26th, 2007 at 1:01 am
Code is not infinitesimal therefore if an effect in a program is needed it is quite easy for two or three or even hundreds of programmers to come up with the same bit of code to achieve that effect.
So the idea of claiming a bit of code to be copyright is completely against Common Sense. It would mean in a few years time that to write a program would need agreements being signed with dozens if not hundreds of thousands of people to include their bit of code to complete a program.
Ah I see what a brilliant plan by Lawyers to fill their pockets at everyone else’s expense.
September 26th, 2007 at 10:58 am
Failing to ensure that your code is original or properly licensed is leaving yourself open to significant exposure. Licenses exist for a reason and failing to follow their terms is a short sighted mentality that will very likely result in consequences down the line, particularly if your business is successful. Stealing code is unlawful – end of story.
In many instances determining whether there is a violation in a particular use is not straightforward. The fact that there are professionals trained in the relevant legal requirements and familiar with the latest interpretations of the law is not a conspiracy by lawyers against their clients. Having a lawyer familiar with the Internet & Technology on your side (along with an accountant) is one of the best possible business investments you can make as an online service provider.
If you steal/misuse someone’s code regardless of how much of it you steal, you can count on the fact that there is someone out there that will eventually notice, particularly if your business is successful.
September 26th, 2007 at 11:06 am
I heartily agree that the availability of legal advice is one of the best investments we can choose to make for our companies. Even if the fees seem harsh to start, Mr. Cohen is right in saying the costs of getting into trouble with them later could be worse. Thanks for the great addition to the LP newsletter – truly appreciated.
September 26th, 2007 at 9:16 pm
Hi,
So its obvious that you’ve never done any software development. Otherwise you would know that the whole original vs. ??? is the crux of the biscuit. Vlad, only exist electronically. He can disappear. And, if he has been lying though his teeth, your recourse is exactly what?? How do you know that he isn’t stealing every credit card number entered at your site. He’ll sign anything, why should he care. As long as the check clears.
It’s amazing how many suits worry about this stuff and don’t understand their real exposure. There are very specific things that should be excluded/included to protect yourself. No one should directly contract with a 3rd party they haven’t met to code software of any significance to them or their company unless they are an expert on coding such software and can vet the product. The address for service shouldn’t be Romania.
I only use open source products, etc. The whole issue goes away. Everybody owns the code. It can’t be stolen, it can’t be owned. If Joe Blow thinks the code is his advantage, in most cases, he’s dreaming.
Take the easy way out.
September 27th, 2007 at 11:08 am
Even “suits” will tell you that legal documents only go so far. Ultimately, whether it is suppliers, vendors, or service providers (or lawyers or accountants) the reputation of who you choose to deal with is still key to your business. I think what Gary is trying to say is that people can breach even the best written agreements so you still have to make sure that you are not betting solely upon their holding up their end of the bargain, particularly if you choose to deal with someone that is outside the US – and I agree. However, that doesn’t mean that you don’t have to have your legal house in order at the same time. Gary’s other point is one of Jurisdiction in legal disputes which I will cover in a future entry however suffice it to say for the time being that he is correct that if you don’t know who you are dealing with or where they are actually located, enforceability can be nearly impossible. An appropriate due diligence process should be conducted for any agreement or relationship of any significance.