Unless you create your websites yourself, there are many ways to find someone else who would do it for you.

You may hire an established company with an army of designers, programmers, copywriters and artists; you may crowdsource the job; you may find someone who will do it as inexpensively as it gets through websites like FIVERR.COM; you may use templates; you may ask a friend, a co-worker or an employee.

For simplicity’s sake, by “web design” I will be referring to the combination of graphic design, interface design, HTML coding, database programming and scripting, in other words, everything that is involved in creation of modern websites.

This post is not about what makes a good web designer. It assumes that you have found someone who can do the job according to your liking and your budget. This post focuses on issues that you must consider before having someone design a website for you.

I. Who Will Own It?

Just because you paid to have your website designed, does not mean that you own copyright in it.

According to Canadian Copyright Act, it is the person who actually created the work that is the author of the work. The author of the work is also the first owner of copyright in the work, unless the author happens to have created the work in the course of employment, in which case it is the employer who is the first owner of copyright.

Unless a true employment relationship exists between you and the web designer and the creation of the design is within employment duties of the employee, the only way for you to obtain property interest in the copyright to what the designer creates is to enter into a written assignment or license agreement with the copyright owner. Otherwise, the copyright will remain with the designer or his employer. At best, you will be said to have acquired a nonexclusive license to use the design. The scope of the license will be limited to simple use, which may or may not include further alterations by you or a third party.

This means that the website is not your asset, it is not something that you can offer an investor to buy a share of.

Unless the website has absolutely no value to you and you can quickly replace it without using any of the elements of the old design in your new design, always make sure that you have a written agreement with the web designer assigning all rights in the design to you.

This will also ensure that the designer will not have a legal right to “design” the same website for somebody else.

While the agreement does not necessarily have to be printed and signed, it is still the preferred way of documenting contractual relationships. If you should need to enter into the agreement over email, make sure you can properly identify the other party to the transaction.

II. Did the designer really create it?

Make sure that web designer does not use other people’s content without proper authorization.

Just because your web designer can find some nice images on Google, does not mean that you can use them on your website. Just because you can see how javascript works to create interactive experience in other websites, does not mean you can simply copy it.

Unauthorized use of images, scripts, commercial fonts or content will likely infringe copyright of someone who created them. And if you have a successful business, it is you (or your company), not the web designer, that will be sued if the copyright owner decides that you have enough money to go after.

Your contract with the designer should include a provision that would disallow the use of third-party content other than with your prior approval.

It should also contain indemnification provisions. In other words, the designer must undertake to compensate you for any losses that you may incur if you get sued by someone whose works the designer used for your website.

A different side of the same issue is when you enter into a contract with a company, rather than an individual. You need to make sure that the company has properly contracted with all humans who are going to take part in development of your web design. These may be employees, independent contractors or outsourced force. The goal is to make sure that the company indemnifies you if you are sued by these individuals claiming that they have not properly transferred their copyright to the company that you contracted with.

Remember, you cannot tell the copyright owner to sue the party that you dealt with. It is you (or your company) that is using the work without permission. It is you (or your company) that will get sued. All you can do is request compensation from the party that you dealt with. This is one of the few problems with outsourcing work to someone in distant jurisdictions. If you get sued, it is very unlikely that you will be able to recover your money from someone in Pakistan whom you have never met.

III. What are you allowed to do with the design?

Unless you are prepared to be stuck for life with the same designer, make sure you have the right to hire others to modify the work of your designer.

Once a copyrightable work is created, the owner of copyright has a bundle of separate rights in it. One of such rights is to modify or to allow others to modify the work. Make sure that you have obtained the right to keep using the website created by your designer if you were to make changes to it.

You should be able to take some elements of the design and use them as you see fit. You should be able to use these elements in your offline marketing materials (brochures, booklets, business cards). You should also be able to use elements of the design to apply for a trademark.

Otherwise, you may find yourself hostage to a difficult dilemma – either to continue using the services of your initial designer forever or to be forced to redesign the whole website and derivative materials from scratch.

If you think that it is a hypothetical scenario that never happens in real life, think again. See for yourself.

Another issue in this respect is whether you will be required to retain notices about the designer’s authorship of the design. There is no right and wrong answer here, but it is certainly an issue that you need to resolve with the designer before you agree to hire him or her.

So, let’s recap:

1. Always have your agreements with the designer in writing (in hardcopy or at least electronically);

2. Make sure the contract properly identifies the other party (is it an individual or a company? the party’s full name and address? if the other party is an individual, consider taking a copy of their ID);

3. Make sure you own the right to what you are paying for;

4. Make sure the designer undertakes not to create copies of your website for others;

5.  Make sure the designer undertakes not to use third party materials (including images, scripts and fonts) unless you OK each such use;

6. Make sure the contract contains a provision that will allow you to recover your losses from the designer if you are sued by a third party whose materials the designer used without your approval;

7. If you are entering into a contract with a company, make sure the company indemnifies you if you are sued by the company’s own disgruntled employees or contractors;

8. Make sure you have the right to make modifications to the website without having to hire the same designer;

9. Make sure you have the right to use materials used in the website in your offline marketing materials without having to hire the same designer.

10. Make sure to settle the issue of whether you should identify the name of the designer on your website and marketing materials.

If a designer that you are planning to hire, or a web design company, or a design crowdsourcing website refuses to address these issues in a formal agreement, think twice whether it is a good idea to put yourself in the position when you would be paying for the privilege of being taken hostage by the designer’s whim.

A side note to designers, design companies and crowdsourcing websites: if you do not address these issues in your agreements with clients (or if you don’t even use written agreements with your clients), you are doing your clients a great disservice. In fact, offering your clients not only great design services but also legal peace of mind will be an important competitive differentiator for your business.

A thorough agreement drafted by an experienced copyright lawyer will cover all of these and many other issues. You see, the negotiation process tends to go much smoother before any work have been done and before the money has changed hands. Typically, the cost of helping parties resolve a dispute is much higher than the cost of preventing it by proactively answering all the “what ifs” and “how comes” in the text of a contract. That’s in addition to the indirect costs of the time wasted on unproductive activities rather than what brings you pleasure or generates money.

Today I am extremely excited to announce the arrival of a new service, IP Strategy Review.

Most business owners with great ideas that need to be protected try to control their legal bills by not going to see a lawyer until they need to be saved. Some try to proactively limit the scope of lawyers’ involvement by googling something and coming to see the lawyer with a very specific (and often unhelpful) request.

No business can make strategic decisions about protection of its most valuable assets, unless it understands what these assets are and how they can be protected. With IP Strategy Review, I provide to you, at a fully predictable flat rate, a customized strategic solution outlining which areas of IP can help protect your ideas and intellectual property and which legal steps can be taken to achieve that protection.

IP Strategy Review provides a true benefit at a predictable cost, without forcing the client to pay for unnecessary services. It is a consultation during which we will discuss your business and determine which strategies would make sense from the legal, business, PR and economic points of view.

This service develops upon my two policies: I never sell my clients unnecessary services and I always prefer to sell value to my clients, not my time.

It comes in three packages. Please visit the IP Strategy Review Page for more details.

In my post Perception of the Law, I wrote that for most clients, the law is seldom anything more than a matter of risk management.

The first thing that comes to mind when one hears about risk management is, of course, insurance.

Some time ago I met with David W. Hamilton, the president of Front Row Insurance Brokers, a company that arranges insurance for feature films, TV, documentaries, commercials, new media, fairs and festivals, museums and art dealers, musicians, tour liability, recording studios - you name it.

I invited David to share some information about what his firm does, and this is what we came up with.

 So if a company wants to get insurance against risks relating to infringement of IP, what kind of insurance policy would it be?

This is what is called Errors and Omissions Insurance. It covers legal liability and defense for the production company against lawsuits alleging unauthorized use of titles, formats, ideas, characters, plots, plagiarism, unfair competition or privacy, breach of contract.

It also protects against alleged libel, slander, defamation of character or invasion of privacy. This coverage will usually be required by a distributor, broadcaster or financier prior to the release of any theatrical or television production. Production financing will usually not flow until E&O coverage is in force.

 What is involved with getting the E&O Insurance for a film?

1. Applicant and its counsel should continually monitor the production at all stages, from inception through final cut, with a view to eliminating material which could give rise to a claim.

2. The script should be read prior to commencement of production to eliminate matter which is defamatory, invades privacy or is otherwise potentially actionable.

3. Unless the work is an unpublished original not based on any other work, a copyright report must be obtained. Both domestic and foreign copyrights and renewal rights should be checked. If a completed film is being acquired, a similar review should be made of copyright and renewals on any copyrighted underlying property.

4. If the script is an unpublished original, the origins of the work should be ascertained - basic idea, sequence of events and characters. It should be ascertained if submissions of any similar properties have been received by the applicant and, if so, the circumstances as to why the submitting party may not claim theft or infringement should be described in detail.

5. Prior to final title selection, a Title Report must be obtained.

6. Whether Production is fictional or factual, it should be made certain that no names, faces or likenesses of any recognizable living persons are used unless written releases have been obtained. Release is unnecessary if person is part of a crowd scene or shown in a fleeting background. Telephone books or other sources should be checked when necessary. Releases can only be dispensed with if the Applicant provides the company with specific reasons, in writing, as to why such releases are unnecessary and such reasons are accepted by the Company. The term “living persons” includes thinly disguised versions of living persons or living persons who are readily identifiable because of other characters or because of the factual, historical or geographic setting.

7. All releases must give the applicant the right to edit, modify, add to and/or delete material, juxtapose any part of the film with any other film, change the sequence of events or of any questions posed and/or answers, fictionalize persons or events including the release and to make any other changes in the film that the applicant deems appropriate. If the person is a minor, consent has to be legally binding.

8. If music is used, the applicant must obtain all necessary synchronization and performance licenses from composers or copyright proprietors. Licenses must also be obtained on prerecorded music.

9. Written agreements must exist between the applicant and creators, authors, writers, performers and any other persons providing material (including quotations from copyrighted works) or on-screen services.

10. Whether the production is factual or fictional, if distinctive locations, buildings, businesses, personal property or products are filmed, written releases must be secured. This is not necessary if non-distinctive background use is made of real property.

11. If the Production involves actual events, it should be ascertained that the author’s sources are independent and primary (contemporaneous newspaper reports, court transcripts, interviews with witnesses, etc.) and not secondary (another author’s copyrighted work, autobiographies, copyrighted magazine articles, etc.).

12. If the Production involves actual events, it should be ascertained that the author’s sources are independent and primary (contemporaneous newspaper reports, court transcripts, interviews with witnesses, etc.) and not secondary (another author’s copyrighted work, autobiographies, copyrighted magazine articles, etc.).

13. Shooting script and rough cuts should be checked, if possible, to assure compliance with all of the above. During photography, persons might be photographed on location dialogue added or other matter included which was not originally contemplated.

14. If the intent is to use the Production on Videotapes, Videocassettes, Videodiscs or other technology, rights to manufacture, distribute and release the Production must be obtained, including the above rights, from all writers, directors, actors, musicians, composers and others, connected to the work, including proprietors of underlying materials.

15. Film Clips should not be used unless licenses and authorizations for the second use are obtained from the owner of the clip or party authorized to license the same, as well as licenses from all persons rendering services in or supplying material contained in the film clip; e.g., underlying literary rights, performances of actors or musicians. Special attention should be paid to music rights as publishers are taking the position that new synchronization and performance licenses are required.

16. In addition, dead persons (through their personal representatives or heirs) have a “right of publicity”, especially where there is considerable fictionalization. Clearances must be obtained where necessary. Where the work is fictional in whole or in part, the names of all characters must be fictional. If for some special reason particular names need not be fictional, full details must be provided to the Company in an attachment to the Application.

17. Consideration should be given to the likelihood of any claim or litigation. Is there a potential claimant portrayed in the Production who has sued before or is likely to sue again? Is the subject matter of the Production such as to require difficult and extensive discovery in the event of necessity to defend? Are sources reliable? The above factors should be considered in your clearance procedures and recommendations.

 How much does the E&O insurance cost?

Premiums for E&O vary based on the content of the production. Every project is unique and requires a unique, custom E&O policy.

To give some idea about the cost of a typical policy: industry standard three year policy for a straightforward documentary would cost $3,000 to $4,000, while a similar policy for a feature film would normally cost $5,500 to $7,000.

 Does insurance eliminate the need for lawyers?

Not really. To get insurance, you would need to have your lawyer review clearances, which means your lawyer will need to sign a document declaring that all important IP-related issues have been dealt with. Insurance companies also have their lawyers clear the application.

Insurance is not a "get out of jail free" card. It is meant to provide protection if something unexpected happens, not to back up a sloppy or, worse even, rogue business.

Unless you are serious about getting your legal work done properly, no insurance company is going to do it for you.

Many new entrepreneurs dismiss the importance of having a sound IP strategy from the very start. The usual excuse is, “I’ll make sure my business starts making real money and then I’ll deal with this law stuff.”

I call it a lose-lose scenario. The two alternatives are: (1) the business never makes it; or (2) the business becomes successful, but immediately it finds itself defenseless against all those who want a free ride on its success.

Think about Coca-Cola – would they be where they are today if they decided to wait until they sold a few hundred thousand bottles before they figured out how to protect their most important assets - their know-how and trademarks?

If your business involves creation, use or licensing out of content and you do not have a meaningful IP strategy, then you are not being serious about your business.