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Posted by Nick Salloway on 09 January 2012

Why there could be confusion

Illustration of a keyboard with a copyright symbol key

It might seem like a strange question, and like many other businesses you might assume that because you paid for it, you own your website. However if you paid a third party to design and build your site, the issue of ownership might not be as straight forward as you think.

The reason? Well quite simply, UK law states that unless it is in the commissioning contract that you (or your business) will own the intellectual property (IP) contained within the work that you paid for, the first owner of IP is the person or organisation that was asked to create the work.

You should also note that the creator of the work is under no obligation to agree to transfer ownership to you. You will need to negotiate such a transfer and in order to be effective an agreement about transfer of ownership has to be in writing, signed by the transferor.

Therefore if you commissioned somebody who wasn’t an employee, for example a web design agency, freelancer or even a member of your family, and you didn’t sign a contract that states otherwise, they and not you will effectively own the IP contained within your website.

There are four main types of IP rights which can be used to protect an original piece of work.

  • Patents – Patents protect what makes things work – like what makes a wheel turn or the chemical formula of your favourite fizzy drink.
  • Trade marks – Trade marks are signs (like words and logos) that distinguish goods and services in the marketplace.
  • Designs – Designs protect the appearance of a product/logo, from the shape of an aeroplane to the layout of a website.
  • Copyright – Copyright is an automatic right which applies when the work is fixed, that is written or recorded in some way.

Assuming you have employed a professional agency, prior to commencing work they will have asked you to sign a contract. In all likelihood the contract you signed will have included clauses to protect the agency’s interests by allowing them to retain ownership of elements of their IP, typically the source code which makes up your website.

The reason agencies take this approach to IP protection is because in developing your site, the agency will have used elements of code from previous projects. For example, if they have already developed a contact form, it’s likely that they will use and adapt that code for use on your site, rather than writing an entirely new contact form from scratch. Re-using code in this way saves an agency time and ultimately enables them to make money. If they hand over ownership of their code, they can’t do this.

On the other hand the contract the agency asked you sign should also have contained clauses that provide you (or your agents) with a perpetual license to use or adapt the code produced by the agency on your behalf , provided you (or your agents) do not then copy it or attempt to sell it for commercial gain.

If you did sign a contract like this, the chances are you’re in a good place! You can rest safe in the knowledge that you’re working with a professional agency and that should you decide to move your business elsewhere you will be free to do so.

If you didn’t sign a contract, you may have left yourself somewhat vulnerable if at some point in the future you decide to move your business away from your current agency.

If you find yourself in this situation and your agency does consent to a request for a transfer of ownership, or alternatively they agree to provide you with license to use their IP, this is likely to come at a price.

If you’re very unlucky and your relationship with your incumbent agency has completely broken down, you might find the agency attempting to use IP laws to prevent you from taking any element of your website to a new agency. In this worst-case scenario, you might have little choice other than to completely redesign and rebuild your website from scratch, a potentially time consuming and expensive undertaking.

Once you understand these points, the risks of not owning the IP contained within your website (or at the very least not having a license to use it)  becomes obvious. If you also consider however that your website may be central to how your business operates, and how it generates revenue, the risk of not being in control of your website at all potentially becomes a serious threat to the survival of your business.

Therefore to protect both parties’ interests, I believe a good agency should always proactively raise the issue of IP ownership when negotiating contracts with a new client.

Why? Well quite simply, I believe the agency should understand these issues and it should therefore be incumbent on them to ensure that adequate contracts are put in place; contracts that protect the agency’s IP without potentially prejudicing their client’s business in the event that the relationship ends.

In my view agencies that work in ignorance of these issues and which fail to put such contracts in place cannot be considered to be professional. Neither can any agency that takes advantage of their soon to be former client’s ignorance and puts an unfairly biased contract in place that  enables them to charge a previously undisclosed fee to transfer ownership of the IP when the relationship ends. In my view, agencies that do this damage their own business, their client’s business and ultimately, the reputation of the sector as a whole.

More information on IP law can be found on the Intellectual Property Office website.

 

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