Web Development Series

The Web Development Series articles were written in 1997 to highlight the negotiation issues involved in web development from the perspective of the site owner and developer. The first three articles were originally published on the Institute of Continuing Education Web Site. The last article was written for the ILPN (now defunct) web site. Although the articles were written over five years ago, many of the discussion points apply equally to today's development environment.

Representing the Web Developer

Originally published in 1996

Internet Web page development is a service occupation that was virtually non-existent just a few years ago. There are now thousands of businesses actively involved in Web page development.

Engaging in Web page development as a business provides numerous opportunities and risks. While some of the risks are readily apparent, there are no clear guidelines in other areas given the new and unique nature of the Internet.

The U.S. Copyright Act definition of "work of authorship" includes literary works, musical works and accompanying words, dramatic works, pictorial, sculptural, and graphic works, motion pictures, video games, and computer programs.

A Web page may consist of a combination of all of the foregoing. Moreover, the work may be include content created or provided by the developer, the client or an unrelated third party.

The most visible part of the Internet Web site is the visual and audio presentation of the work. Underlying the readily apparent content is computer programming that allows the work to be accessed and experienced.

The programming may be simple HTML (hyper text markup language) commands or incorporate sophisticated features that allow tracking of people accessing the site, real time interactive "chat", live programming, on-line purchasing, and automatic e-mail, among others.

The complexity of business and legal issues facing the Web developer is in large part a function of the nature and scope of the Web site. A large dynamic site incorporating a variety of multi-media and interactive features creates more potential pitfalls than a small site with original content of the developer or the client.

A well defined agreement spelling out the rights and obligations of the parties is critical in any Web development project. The developer will generally want to include terms covering the following matters to protect its interests:

• Pricing. Detailed provisions regarding pricing and timing of payments are of paramount importance. Care must be exercised in fixed fee arrangements, as change requests and modifications to the site may turn a potentially profitable project into a loser. When the site is deemed "accepted" such that final payment is due must also be clearly spelled out.
• Ownership. In the case of original content, the independent developer is generally the owner of the work it creates absent a "work made for hire" arrangement. To the extent the client insists on ownership of the site content, the developer should attempt to retain ownership of the underlying computer programming and grant a limited use license to the client.
• Content Copyright. Care must be exercised in selecting content for the site. To the extent that the content was developed by an unrelated third party, a license permitting use of the material in the site will be required and should be factored into the pricing. The client should also be obligated to indemnify the developer for copyright, trademark and other intellectual property infringement claims resulting from client provided content.
• Warranty Limitations. The developer should insist on a disclaimer of warranties with respect to the site. This area is particularly problematic when simple proposals are used in lieu of detailed writings spelling out the obligations of the parties. Many development proposals are written as sales tools. As such, they may create unintentional warranties when client expectations in terms of appearance, attraction and the like are not met.
• Liability Limitations. The developer, will generally want to exclude consequential damages and limit liability to the fee (or a depreciated portion of the fee) paid for creation of the site. In addition, the developer should disclaim liability for third party services, such as host servers arranged by the developer.
• Termination Fees. To the extent that the client insists on a right to terminate the project prior to completion, the arrangement should provide for payments to the developer on termination.
• Demonstration Rights. A successfully Web site may serve as an excellent marketing tool for the developer because of the ease in which other parties may access a site. The developer should obtain a license to use Web site content for demonstration and marketing purposes.
• Maintenance. Site support obligations, including the scope of domain name registration and maintenance, should be clearly spelled out. The client must be advised of services, such as substantial modifications to the site, that are not included in annual maintenance fees.

Aside from traditional business and legal issues involved in the creation of a multi-media work, there are a number of issues regarding Web site development for which there is no legal precedence or guidance. New issues continue to crop up as new applications and development tools are created and the still infant Web evolves.

For example, bulletin boards, chat line, listservs and automatic e-mail create the potential for commission of copyright and trademark abuse, as well as libel and other torts by third party users. The developer should disclaim liability for third party actions and exercise care in advising clients of the risks associated with moderated and unmoderated activities.

Internet privacy issues are largely unsettled but are attracting increased media and government attention. Certain "powerful" site features, such as tracking hits, using "cookies" which track the type of browser a user is operating and sites visited by the user, and other tools which track user profiles, while attractive to clients, may create unintended liability.

Site security and tampering may also be a concern. If the site will reside on the client's server, who is liable if there is data loss, tampering, and other security breaches? The allocation of risk for these types of activities should be clearly spelled out in the development agreement.

Finally, aside from contractual protection, prudent Web page developers should continue to monitor legislation, case law and commentary regarding new and evolving issues unique to the Internet. By staying on top of the issues, developers can more effectively evaluate the risks and benefits of certain types of Web development related activities.