Website Development Agreement, Part 2: Who Owns the IP on Your Site?

Website Development Agreement, Part 2: Who Owns the IP on Your Site?


This is part 2 of a new series advising website development contracts for businesses engaged in e-commerce. Part 1 includes ways to avoid major disasters.

When entering into website development contracts, the more you know, the more likely you are to avoid common pitfalls.

This is your website, but the ownership of intellectual property on the site is not always clear or unambiguous. When you engage an information technology vendor to create a new website, you probably expect that you will own the IP in the final product. Unfortunately, this may not be the case.

IP laws are somewhat complex and may vary by state, as may the type of IP involved. It is important what your IP is and the IT vendor’s IP, and whether any third-party IP licenses need to be protected on the front end.

You don't want to be surprised about who is the owner after your website is delivered. To avoid finding yourself in this situation, it is important to do your homework before you start a conversation with an IT vendor and ensure that the rights and ownership of the IP are clearly identified and distributed in the website development agreement has been done.

What is IP

"Intellectual property," or "IP," is a general term used to describe a variety of valuable, intangible, and protected interests. IP includes patents, copyrights, trademarks and trade secrets. Each of these types of IP has its own unique, distinct characteristics, and each is governed by its own state and federal statutes and common law.

Because of these distinctions, different types of IPs require different treatment and protection in contracts, including website development contracts.

The following IP discussion and summary are high-level descriptions, and are not intended to be specific IP laws that you will encounter in your website development contract as this column is written as generalized advice. You should seek specific legal advice about IP before signing any website development agreement.

The patent

Patents are registered with the US Patent and Trademark Office (USPTO), or a foreign patent treaty or organization, which are not part of nature, for new original ideas. The patent registration process is expensive and time consuming. While "the patent is pending" or until it is secured, its owner cannot claim the patent to exist.


Copyright gives the author the right to make copies or prohibit derivative works. The us In, copyrights to U.S. Is controlled by the Copyright Office. Copyright is created at the same time the author creates the work.

Unlike a patent, there is no requirement that a copyright work be registered. However, the copyright registration process is necessary to file a lawsuit for infringement.

Other countries around the world have similar laws, so the application of copyright laws will likely depend on where your website transfers business.


Trademarks in the US come in three flavors: 1) common law, 2) state registration and 3) federal registration (filed with the USPTO). Each is a little different, but for website usage, you need to understand how trademarks affect you. A common law trademark is one that is not registered, either at the state or federal level.

Common law trademarks are limited to the geographical area in which they are used. Common law trademark protection was enjoyed at the Blue Note Jazz Hall in New York City. In 1995, she sued Blue Note in Columbia, Missouri for using the domain name. The court ruled that there is no possibility of confusion between the common law trademarks in New York City and Columbia, Missouri.

As a trademark owner, you can obtain a trademark registration in your state, but if your website operates across state boundaries, you should consider federal registration. A federal or international trademark registration is specific to the commerce channel rather than the physical location of the trademark.

Given the interstate nature of most e-commerce websites, federal registration is the only logical or viable security.

For example, when Toyota launched its Lexus brand of vehicles, online legal reference provider LexisNexis claimed trademark infringement with Toyota. Fortunately for Toyota, the court determined that confusion between the two was unlikely due to different business types (automobiles vs. online technology company).

Trade secret

Trade secrets are usually controlled on a state-by-state basis. However, this has changed somewhat since the passage of the 2016 Federal Defense Trade Secrets Act. The DTSA can be applied "if the trade secret is related to a product or service, or that has been used for use in interstate or foreign commerce."

Violations under DTSA can be brought jointly with state claims. The DTSA may also be invited to pursue claims of abuse outside the UTS.

In general, the term "trade secret" covers a wide range of proprietary business information. Broadly, to be defensible, this information must be valuable in that it is generally unknown by competitors in the industry, and the owner or holder must take reasonable steps to ensure its confidentiality.

In this sense, it is the opposite of a patent, which the owner secures by registering in the public domain. In the context of website development agreements, you are ready to share or disclose any trade secret information with your IT vendor, you will need to secure written nondisclosure and confidentiality agreements before any disclosures. For example, most software would include access to source code.

IT vendor pre-existing IP

In most instances, the IT vendor will have to agree that any IP used to create your website is the property of the IT vendor and third parties (where the IT vendor is using a third-party licensed IP). Will remain It is important that you obtain a license from the IT vendor in your new website to use that IP, and the IT vendor does not have any third party license for the IP itself.

Regardless of how the IT vendor presents the IP, it is essential that you get a license or ownership to use the vendor IP forever (permanent license), or for a finite period.

Alternatively, you can negotiate for yourself "all rights, title, and interests in IP", so that if you move to a new website in the future, you will pay by yourself to manage your website Gone will be the owner of the IP.

Review IP provisions in proposed contracts and statements of work (SOW)

The biggest approach here is this: Take a closer look at IT vendor website development contracts and SOWs, understand the IPs involved in who owns it now, and who will own it after the website is completed.

Furthermore, as discussed in Part 1, it would be a good idea to talk to customers of an IT vendor to find out what their experience was like - specifically, whether any unknown IP ownership issues pop up.

Of course, it would not be bad to engage an experienced IP lawyer who has dealt with these IP issues and can lend a critical eye to drafting and negotiating website development contracts and SOWs.

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