White SW Computer Law
|Intellectual Property, Information Technology & Telecommunications Lawyers|
Melbourne Office - PO Box 452, COLLINS STREET WEST Victoria 8007 Australia
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Web site development involves the creation of a presence on the Internet and so introduces the customer to the myriad of legal issues that must be considered. A web site development agreement should determine which legal risks the customer is taking and which risks the developer will bear. A written agreement is an important first step to be completed.
The Internet contains Web sites for an ever increasing range of businesses and individuals. Many businesses use the Internet as a form of advertising and customer support by developing a Web site.
As part of a relatively new and rapidly expanding industry, Web site developers have many issues to consider in order to protect their own interests. Being a new industry, the legal perils of Web site development have yet to be fully examined by the Courts around the globe but there are some dangerous trends developing for developers. There are also a number of commercial and legal issues for businesses to consider when engaging a Web site developer, for example:
Legal issues arise for the developer even before a formal contract is negotiated. The developer may be asked to put forward a proposal, which outlines their ideas for the format of the Web site. This can be an unrewarded, costly and time-consuming exercise if the developer is not eventually engaged to build the Web site. Without an agreement prohibiting disclosure or use of the developer's proposal, the developer may be left without recourse should they discover that their site plan has been incorporated into a site created by another developer.
Copyright ownership is another important consideration, particularly in relation to library code. The Australian Copyright Act 1968 (Cth) sets out:
'literary work' includes:
'computer program' means an expression, in any language, code or notation, of a set of instructions (whether with or without related information) intended, either directly or after either or both of the following:
. . .
(2) . the author of a literary, dramatic, musical or artistic work is the owner of any copyright subsisting in the work by virtue of this Part . . .
. . .
(3) An assignment of copyright (whether total or partial) does not have effect unless it is in writing signed by or on behalf of the assignor.”
Accordingly, unless the copyright in the Web site is assigned to the customer in writing, the copyright will normally be owned by the developer provided that they are not a full time employee of the customer and acting within the scope of their employment at the time when the Web site was developed.
If a variety of different works are incorporated to form a multimedia presentation, the copyright protection becomes slightly uncertain. The extent of the copyright protection is more difficult to determine as the complexity of the Web site design increases. Many Web sites will include graphic, audio, musical and literary works in addition to the computer programs, which hold the site together.
While each component clearly has copyright protection, when you examine the definitions above, the multimedia product as a whole does not, in its own right, neatly fall into any existing category of copyright works, save for possibly being classified as a computer program.
Once the developer has been engaged, the following points should be considered for inclusion in their Web site development agreement:
It is common for a customer to engage a Web site developer to provide a wide range of services including:
Before any contractual relationship is created, the customer should ensure that they have a definite plan for the scope of the project unless they are prepared to spend a large amount of money on a time and materials basis to investigate the options. In a Web site development project variables such as the style, size and included features should be defined before the project commences.
The customer should ensure that the Web site is thoroughly tested to determine whether all hyperlinks perform properly and that the Web site conforms with all the customer's requirements. When testing is complete, the Web site should be ready to go live. Once the development phase is over, the customer needs to consider ongoing maintenance including updating of material and revisions of links.
Before commencing a Web site development project, a customer should consider the following issues:
When drafting the Web site development agreement, an analysis of the potential sources of liability should be used to ensure adequate legal protection is afforded by the agreement.
Records produced by Granite showed that Minnesota residents had both Internet and telephone contacts with Granite and as the defendants had an advertisement on the World Wide Web, accessible by Minnesota residents, it was ruled that the State of Minnesota had jurisdiction to take consumer protection action against the defendants. The customer should consider whether visitors from any jurisdictions should be barred from ordering goods or services from the Web site.
In a similar case, Georgia Tech Lorraine which is the European platform of the American Georgia Institution of Technology was sued by the French-Defence Association because its Web site home page was only presented in English. A 1994 French law requires that public communications such as advertising and restaurant menus must be written in French and if they are also translated, it must be into more than one language.
In another US matter, Cybersell Inc v Cybersell Inc it was suggested that if your Web Site acts only as a means of advertising or as a source of information, the US Courts will not be able to assert jurisdiction. If, however, you sell goods and/or services over the Internet, it is possible that a US resident or business could issue legal proceeding in the US against you or your business. To reduce the risk of such litigation, you should consider having a requirement that the potential customer submits to the laws of Australia governing the agreement before the transaction has been completed.
In the US case of Patmont Motor Werks, Inc ( "Patmont" ) v Gateway Marine, Inc, et al ( "Gateway" ) Patmont issued legal proceedings against Gateway and Anthony DeBartolo ( “AB” ) as a result of AB using Patmont's trade mark on a web site which mentioned Gateway's name and address as a contact point. AB's use of the trade mark was found by the Court to merely be descriptive of the type of motorized Scooters which he was offering for sale. AB and Patmont had also entered into an licensing agreement which had been terminated by AB. A clause of the agreement prohibited AB from using Patmont's trade mark as part of any e-mail address. The Court correctly found that AB's use of the trade mark Go-Ped as part of the URL www.idiosync.com/goped was not a breach of this term.
The use of trade marks on your web site should be considered no differently to the use in any other form of advertising. If the trade mark is merely used to describe a product that you are legally selling, it would be difficult for the trade mark owner to claim that such use was an infringement of their rights. It is always good commercial practice to make a note on your web site or advertising material which states the owner of the trade marks which you have used. If you have any doubts as to whether your use of the trade mark would be permitted by the owner you should obtain written permission before the marks are used. The customer and developer should clarify who has the responsibility to determine whether trade marks used on the site infringe any other parties. intellectual property rights.
The Court reversed the decision of the District Court to grant a motion for summary judgment based upon the opinion that Data's use of the domain name was likely to cause confusion and found that the matter should be tried to determine the likelihood of confusion. The Court found, amongst other things, that the District Court did not properly assess the significance of evidence of numerous other instances of third party use of the DCI mark such as the incorporation of “DCI” into over ninety web sites. The Court questioned whether Data's use of a domain name was merely a means of communication, or whether the domain name was used to identify its goods and services.
It cannot be assumed that the ownership of a trade mark alone gives the sole right to use the corresponding domain name. However, in some instances, such as for the “.com” domain names, the relevant domain name registry may have a policy that requires a domain name user to justify the continued use of a domain name if the owner of the corresponding registered trade mark objects to the other party's use of the domain name.
In Australia, you may apply for a domain name which has some relationship with your company or business name or which is a combination of two or more common words. Without a pre-existing registered trade mark and/or substantial market recognition of your company or business name it may be very difficult to have a domain name reallocated to you should another party register it before you do.
The allocation of domain names around the world tends to be on a first come, first served basis. It is possible that there will be more than one business or individual interested in owning certain easy to remember domain names. In the UK matter of Pitman Training Ltd v Nominet UK, two businesses which originated from a break up of the Pitman business both claimed they had the right to own the domain name “pitman.co.uk”. Pearson was the first to register the domain name as its own. During the time when Pearson's Web site was being developed, unknown to it, its registration was transferred to PTL. Both PTL and Pearson spent money advertising their Web sites. When Pearson realised its domain name registration had been transferred, it persuaded Nominet, the body responsible for registering domain names in the UK to reassign the domain name to Pearson. PTL commenced legal proceedings against both Pearson and Nominet to regain control of the domain name. PTL was unsuccessful as not only had it been the second party to apply for the domain name, it was also bound by reason of the original break up and sale agreement to only use the word “pitman. in conjunction with the word training, unlike Pearson which was able to use the word “pitman” alone.
In June 1998, the High Court of New Zealand handed down orders in the matter of Oggi Advertising Limited v Cameron Bruce McKenzie and Ors. McKenzie had registered the domain name www.oggi.co.nz, allegedly for a Canadian, Mr Elliot Oggi. Oggis Advertising claimed that McKenzie and two other defendants had sought to take advantage of the fact that Oggi Advertising had not registered the domain name, by registering it themselves and seeking financial gain to relinquish same. Following case law from the US and the UK, the Court ordered, amongst other things, that the first three defendants be restrained from dealing with the word “oggi” or the domain name ”www.oggi.co.nz“, or any similar name or domain name which would be likely to dilute the value of Oggi Advertising's trade name or trade mark and that the domain name ”www.oggi.co.nz“ be assigned to Oggi Advertising.
There is similar case law in many jurisdictions, which suggest that the registration of domain names with the intention to profit from the sale of the domain name to a party whose trade mark or trading name is similar to the domain name will give rise to a claim against the parties registering the domain name for actions including trade mark infringement and misleading and deceptive conduct.
Web site developers and customers need to keep up to date with changes to legislation and new case law as we are seeing rapid change in the application of laws to the Internet. In the coming year, the Broadcasting Services Amendment (Online Services) Act and reforms to copyright laws will be two issues that will need to be considered when drafting a web site development agreement.
Web site development is largely about trade and consequently involves potential disputes. Developers and customers should both make sure that they protect themselves with an appropriately drafted Web site development agreement, which, amongst other things, allocates the risks between the parties and clarifies the ownership and use of the intellectual property created.
WHITE SW COMPUTER LAW
OCTOBER 1999 www.computerlaw.com.au © White SW Computer Law 1999 This article is a guide only and should not be used as a substitute for proper legal advice, readers should make their own enquiries and seek appropriate legal advice.