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.




