| Many
emerging companies contract out the development of
their Web sites to third-party developers. The
contract with the Web site developer should
address several key areas, including ownership and
intellectual property rights, the development
process, functionality of the end product,
problems that may arise and corrective measures
required to be undertaken, covenants of the
developer, confidentiality and other provisions.
The following is a checklist of issues.
A. Ownership and intellectual property
issues. The development agreement should
clearly address the issue of ownership of and
intellectual property issues related to the
content, screens, software and information
developed, including:
|
 |
The
Web site developer is an independent contractor
performing a "work for hire" service
under the Copyright Act
|
|
All
screens, graphics, domain names, content and the
look-and-feel of the site developed shall be owned
solely by the company, together with all
underlying software, object code, digital
programming, source code and the like.
|
|
Whether
the developer retains rights to use any materials
or software it gains from its creation of the Web
site
|
|
All
intellectual property developed in connection with
the site will be owned solely by the company
|
|
The
developer, in developing the site, will not
infringe or violate the copyright and other
intellectual property rights of third parties
|
|
If
the developer is bundling or using any prior
intellectual property that it owns and of which it
wishes to keep ownership, the company will receive
a perpetual, irrevocable, worldwide royalty-free
transferable license to the same
|
|
Which
party is responsible for securing various rights,
licenses, clearances and other permissions related
to works, graphics or other copyrighted materials
to be used or otherwise incorporated in the Web
site.
|
|
A
copyright notice will be displayed on designated
parts of the company´s site
|
| B.
The development process. The development
agreement can address various issues associated
with the development of the site, progress
payments and acceptance procedures, including:
|
|
A
timetable and budget for completion of the site,
including specific payment milestones as progress
is made on site development.
|
|
A
mechanism allowing for change orders by the
company regarding the specifications for the site,
without the change orders resulting in exorbitant
additional costs or delays.
|
|
The
developer will provide timely documentation and
source codes for all software associated with the
site.
|
|
The
developer will train employees of the company to
use and maintain the software associated with the
site, both initially and at the time of each
upgrade; the number of business days and the
location of the training can be specified.
|
|
The
developer assumes responsibility for transferring
the site -- including all software -- to the
company´s server and (if applicable) agrees to
oversee the site´s installation on that server.
|
|
The
developer provides alternative interface designs
for the company to review and decide upon.
|
|
A
commitment by the developer to a period of joint
beta testing of the site and a subsequent
"acceptance testing" period during which
the company may evaluate the site on its premises
to make sure the site functions as anticipated and
in accordance with the agreement.
|
|
The
company will have the right to reject the site if
it does not meet designated specifications, and
the company has certain options regarding
corrections at the time of a rejection.
|
|
A
copyright notice will be displayed on each page of
the company´s site.
|
| C.
Functionality of the site. The development
agreement should clearly specify the anticipated
functionality and technological requirements from
the site, including provisions that address:
|
|
Use
by the developer of the most current technology in
development of the site.
|
|
The
maximum download time for any Web page.
|
|
The
inclusion of a user option for a low-graphics
version of the site in order to minimize download
time.
|
|
The
site is compatible with the latest versions of
Internet browser software, especially the
Microsoft, Netscape, and AOL browsers.
|
|
The
number of users that will be able to
simultaneously access the site, as well as
response time for user requests.
|
|
How
the site will be properly integrated with the
company´s intranet or other data server
structure.
|
|
Additions,
corrections or modifications to the site can be
made by the company without interference with site
operations.
|
|
Security
safeguards, procedures and firewalls that the site
must contain.
|
|
The
expected functionality of online credit
verification and acceptance procedures.
|
|
The
scope and procedure for the company being able to
easily access, record and compile information
about the site´s users and customers.
|
| D.
Problems and corrective measures. The
development agreement should address the problems
that may arise and the developer´s duty to
promptly correct them, including:
|
|
Any
bugs and failed links, including maximum time for
correction.
|
|
The
revision of the site to comply with the
functionality specifications.
|
|
Any
particular warranties or disclaimers by the
developer.
|
|
The
developer agrees to ensure that any software for
the site is free of any viruses or disabling
devices.
|
|
The
rights of the company to terminate the agreement
and the liability of the developer upon such
termination.
|
| E.
Covenants of the developer. The development
agreement may impose a variety of additional
duties on the developer, such as:
|
|
The
developer will, if requested by the company,
publish information about the site with a mutually
agreeable set of search engines and directions..
|
|
The
developer will not, during development or
thereafter, use the company´s trademarks, service
marks or logos, except with the company´s express
written approval.
|
|
The
developer will not use its service affiliation
with the company for its own promotional purposes
without prior written consent.
|
|
The
developer will comply with all applicable laws in
connection with its activities.
|
|
The
developer will maintain satisfactory insurance and
will provide proof of its policies.
|
| F.
Confidentiality. The company will want to
obligate the developer to keep all confidential or
proprietary information that it learns about the
company or its customers strictly confidential,
and not use such information other than in
connection with the developer´s obligations under
the development agreement. The agreement may also
require that the developer´s employees and
consultants working on the project execute a
Confidentiality and Invention Assignment
Agreement. The agreement may also address the
issue of whether the developer is permitted to
subcontract portions of the development project.
|
| G.
Miscellaneous. As in any good contract, the
following types of clauses should be considered
for the development agreement:
|
|
In
the event of a dispute, the prevailing party will
be entitled to recoup its attorneys´ fees and
costs.
|
|
Whether
disputes will be handled by litigation or
arbitration.
|
|
What
governing law will govern and where any disputes
must be brought.
|
|
The
contract contains the complete and entire
understanding and agreement of the parties.
|
|
The
agreement can only be amended in writing.
|
|
The
agreement is not assignable by the developer.
|
