Web Development Pitfalls and Legal Issues to Address When Someone Else Creates or Manages Your Business Website

May 6, 2015

Imagine the following scenario:

It’s Monday morning and you open your web browser and type the domain name of your website into the address bar. You want to send a link to a blog post that may be of interest to a customer.

Instead of your beautiful, responsively-designed website, you find a page that looks like this:

domainforsaleMust be a typo, you think. This is what happens when you haven’t had your coffee yet. You type the URL again.

Same result.

How could this have happened? How long has my beloved site been gone? Is this why I’ve seen a decline in sales and referrals?

This is the second post in a series about Internet Law. If you have a website or are considering updating an existing website, it is important to understand the ownership and control issues that can arise, especially when you hire a third party to register a domain name, create, update or manage the website. Failure to set out the details of the relationship in a contract can prove to be costly and difficult to fix in the future.

Domain Name Registration and Assignment

Domain name registration is accomplished by paying an annual fee to a domain registrar, such as Hover or GoDaddy. In the event that registration fees aren’t paid for some reason, the domain name registration could expire and be purchased by someone else.

I’ve seen situations similar to the one I describe above when a web developer registers a domain in their own name and either goes out of business, passes away, or is otherwise unable to receive the annual registration notices. In that situation, the domain registrar sent notices to the web developer but since they were unable to receive the notices, the domain registration expired. Since the domain name included common words and received a large amount of traffic, upon expiration the domain name was registered by a third party who is in the business of buying and selling domain names.

The business owner was forced to either purchase the domain name from the third party, or enter a potentially lengthy and costly dispute resolution process with the registrar. In the end, it was more cost effective to purchase the domain name for several thousand dollars, however this problem and additional cost could have been avoided in the first place had the registration been made in the business’s name rather than the web developer’s name.

In order to check the registrant of any website, you can search for the domain name here. Keep in mind that most domain registrars offer services that will allow a registrant to keep their identity private behind a proxy service.

Assignment of Ownership or License of Certain Rights

When a web developer creates a website, it is primarily governed by copyright law. Unless the website design and copy qualifies as a work made for hire, all rights are automatically owned by the web developer as the author. Thus, it is important to set forth the transfer of these rights or the license of some of the rights to the business in the web development agreement.

It is also important to make sure that the web developer warrants that it is only using intellectual property that it has the right to use in the development of the website in order to help prevent the business from being brought into a costly infringement dispute. The business may also want to set forth certain restrictions about the manner in which its trademarks or other intellectual property are used.

Other Considerations

There are many other considerations to take into account when drafting or negotiating a web development agreement, including:

  • What are the scope of the services to be provided?
  • To what extent are standard templates being used versus custom development?
  • What triggers a payment obligation?
  • When will certain portions of the project be delivered?
  • Who is responsible for hosting and maintenance?
  • Are there ongoing support obligations?

Consulting an attorney before entering into an agreement for web development services can help you navigate the issues relevant to your business and achieve your goals in the relationship. Whether you are creating your first website, have an existing site or are updating it, a comprehensive review and analysis of the contracts and ownership of the domain registration and website material can save you time and money in the future.

Matt Landis is an attorney at Russell, Krafft & Gruber, LLP, in Lancaster, Pennsylvania. He received his law degree from Widener University and works regularly with business owners and entrepreneurs. Matt’s favorite calendar app is Fantastical 2 for iPhone. Yes, Matt has a favorite calendar app.