A lawyer’s favourite adage is ‘never assume’. How true that expression is when it comes to two parties contracting for some development work for a website and each assuming that it will own the copyright in the finished product, even though the contract makes no provision for any such thing…...

It is not uncommon for a person (let us call this person ‘the client’) to commission a developer to build a website and then the parties fall out. Even if there is no contract between the parties (or in cases where there is, the contract is silent), the client often believes that he/she owns the copyright in the resulting work.

It has always been the case at common law (i.e. English case law) that, in the absence of prior agreement between the parties (and this had best be in writing for certainty), copyright vests in the author of the work, namely the developer or designer. Given the above result, many people will be alarmed to find that they do not own the piece of software for which they have often paid a substantial sum of money.

The Client

So what rights does the client have to use the software or to exploit it in this situation, e.g. by way of sale to third parties? The precise nature of the rights which the client will acquire will very much depend upon the circumstances of the case. For instance, if it was made clear by the client that he/she would be wanting to sell the software to third parties, although there was no express term as to the ownership of copyright, it is more likely that the client will acquire not only a licence to use the software for the purposes for which it was commissioned, but also the right to license it to third parties.

In most cases, the law states that the party commissioning the software, in the absence of any express agreement relating to copyright ownership, will generally acquire a licence in relation to the software upon the following terms:-

• a non-exclusive, personal, irrevocable and royalty-free licence to use the software
• for the life of the copyright (ie. seventy years from the end of the calendar year in which the author (ie designer/coder) dies, or where the designer/coder is a company, from the end of the year in which the software was published)
• no automatic right to sub-license to third parties
• a right to repair, maintain and upgrade the software in accordance with the requirements of the client’s business.

It is a rare case where a court (if it came to that!) might imply an actual assignment of copyright in the work (i.e. so that the client becomes the owner of the copyright), in the absence of prior agreement between the parties. The only time this would arise would be if the client needed, in addition to the right to use the software, the right to exclude the developer from using it and the ability to enforce the copyright against third parties. An example of when this situation might arise is where the purpose in commissioning the work is for the client to multiply and sell copies in the market for which the work was created, free from the sale of copies in competition with the client by the developer or third parties.

The Developer

So what rights does the developer acquire in these circumstances (other than owning the copyright in most cases)? As mentioned earlier, the developer can re-use the code he/she has used to build the software for the client, provided that any of the client’s confidential information has been removed. Given that, by implication, the developer retains copyright ownership in the software, he/she will be in a position to assign copyright in the software to the client for a further sum. Alternatively, as intimated, the developer could license the software to a third party or redevelop it for a new client, provided there are no remnants of the client’s confidential information.

As can be seen, it is never advisable to enter into a contract for development of some software (which would include a website) without there being something in writing, particularly in relation to copyright. A small investment in ensuring that such matters are written down can ensure that the rights of each party are clearly and adequately protected. In the case of the commissioning party, that will mean that there are no surprises when it comes to claiming ownership or indeed, selling the software or website to third parties.