How to retain website ownership and control

While the number of businesses establishing and maintaining a website increases, so too does their vulnerability to their web hosts.

While the number of businesses establishing and maintaining a web site increases, so too does their vulnerability to their web hosts.

For example, what happens if your web host claims you have not paid your bill but your records indicate that you have? Jessica Gallaghre’s experience was that her web host took her site offline, resulting in her small Maryland-based art sales business going bust. Gallaghre was able to convince her web host that they had made a mistake, but this was no comfort once the damage has been done.

The potential damage that could result from your businesses website going down highlights the importance of contracting with your website developers and hosts to ensure that you retain ownership and control of your website.

The first objective is to retain ownership. The Copyright Act 1994 provides the rules in relation to who owns the copyright in an original work, including a website. The act provides a residual rule for ownership to be retained by the author of the work, or the website developer. This rule is qualified where a person commissions and pays the website developer to create a site on their behalf.

It is, however, possible, and we have seen many cases, for the website developer to contract out of the commissioning rule, resulting in the developer retaining ownership under the residual authorship rule. The effect of this is that, even though you have paid your website developer, you don’t own your site - they do. The developer then merely grants you a licence to use “their” site. Depending on the terms of your licence, you may be prevented from dealing freely with your website.

The second objective is to ensure that you retain sufficient control over your website so that it can be completely portable between any web host provider. This is addressed by contracting with your web host to recognise that the activities of developing and hosting a website are distinct. Ensure that when the hosting agreement terminates you are able to take your website to another host can achieved by retaining ownership in those essential components that are necessary to the operation of the site.

A more serious situation can occur where, instead of you merely terminating your relationship, your web host is in financial difficulties and at risk of being liquidated.

Where your web host licenses the code that is required to support your web site you will want assurance that you will be able to gain access to that code if your host is liquidated. The problem arises because, when a company enters liquidation, the company ceases to have control over its affairs. A liquidator is appointed to act on behalf of the company. However, there are a number of restrictions on what they can do.

The key to gaining access to your code is to rely as little as possible on the actions of the web host company. This is achieved by providing the code to a third-party escrow agent where, on satisfaction of certain conditions such as the web host being in liquidation, the code is released to you.

Knowing how to contract to maintain ownership and control of your website means that you are less likely to be at the mercy of your website host in the event of a dispute, and are able to continue trading without disruption.

Parkinson is a partner and Fuller is a senior solicitor in Clendon Feeney’s technology law team. This article, together with further background comments and links to other websites, can be downloaded from www.clendons.co.nz. Send email to Averill Parkinson.

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