South Africa: Designing Web Sites And Other Interactive Media - Some Legal Considerations

There is a perception amongst some people that due to the dynamic, new and groundbreaking nature of the Internet and technology in general that either the legal considerations are not important, are too complex or that traditional legal concepts are non-existent and therefore do not apply when creating a web site or other interactive media such as WAP applications or flash files.

Most people who are having an online initiative created by a web site designer are usually horrified to learn that, unless the parties specifically agree otherwise, they will not be the owner of the newly created web site. After spending what can amount to thousands of rands the client ends up with little more than a lovely web site that according to our law is owned by the designer or developer.

Even the most experienced business people get caught! In the excitement of becoming part of the new economy and the information age, the caution that would normally be applied to a normal business situation is thrown to the wind. The legal considerations relating to the creation of a web site or other interactive media are critical and must be addressed.

On the other side, web site designers are often technically minded people and do not think to protect themselves contractually when agreeing to develop a web site.

An analogy can be drawn to the designing and building of a house. Would you let someone build you a house on their property without entering into a contract with them stipulating who shall own the house? Alternatively would you like to take on the obligation of building the house if your obligations and liability are not strictly defined?

Problems often arise through the failure of the parties to properly define their respective rights and obligations in suitably correctly drafted and binding contracts.

People are often of the opinion that the signing of legal agreements will only hinder the process of creating a web site and that there is no value added by entering into agreements. This is not true! In fact a good Specification Agreement and Interactive (including web sites) Design Agreement can add a tremendous amount of value. At the very least, the process enables the parties to focus on potentially problematical areas and to deal with these in advance (not later in arbitration or a court). Some of the legal considerations that should be taken into account will be dealt with below.

Before beginning with the design the parties should carry out a scoping exercise to determine the functional specification of the web site. The purpose of this is to establish what it is that will be designed. The document that is produced as a result will protect the designer from a "shifting of the goal posts" during the design phase and ensures that the client gets what they were expecting. A change control procedure should be agreed to deal with changing circumstances. Issues such as fees, limitation of liability and ownership of copyright to the specification should be dealt with.

The parties should agree on a timetable according to which the client will provide the necessary information to the designer, the designer will have the beta and final versions of the web site available, the period during which the client shall perform acceptance testing and the date by which the web site should be accessible on the world wide web.

As the creator of the web site the designer is the holder of the copyright therein and therefore unless the parties agree to assign the relevant copyright in the web site from the designer to the client the designer shall be the owner of the web site.

The designer should retain ownership of the copyright to the underlying computer code and scripts and a client could be granted a licence in this regard. It is also essential from a client's perspective that the designer should obtain and secure the right to use any third party software that is included in the web site or that provides back end functionality. Example would be to obtain a licence to use any Java beans or Microsoft applications included in the web site. The licence fee for such applications could be in the form of a percentage of transaction revenue, which could have a significant impact.

It should be the responsibility of the designer to include tools and mechanisms that will advertise and promote the newly created web site. After all a great web site is useless if no one visits. The designer for example should be obligated to include the correct metatags so that the robots of search engines will accurately find the web site.

It is common practice within the industry at the moment that domain names are registered in the name of the designer of the web site and not in the name of the client. It is the client who has paid for the domain name and therefore the client should be the owner. If this has already taken place then the designer should assign all the rights to the domain name to the client.

The parties should agree on the project price for design and the payment terms. It is in the client's interest to pay only once they have accepted the online initiative. However the parties could agree to a staggering of payment.

Designers should be looking to protect themselves from the risks associated with clients giving them information or content to include in the web site which they are not entitled to use or which might be illegal, defamatory or otherwise infringes the rights of third parties.

The design and hosting of a web site are two different subjects and should be dealt with in two separate agreements. A designer might not provide hosting services or a client may wish someone other than the designer to host the web site.

Copyright 2000 Harty Rushmere Attorneys. All rights reserved.

This newsletter is for educational purposes only and must not be considered as legal advice. Your individual situation may not fit the generalisations discussed. Only your attorney can evaluate and advise you on your individual situation.