You are developing a new website for a client. You may think that it’s the client’s site and their business, that they paid for your services, so they own the intellectual property. But this may not be the case. As a web or app developer, you can retain the intellectual property (IP) in the work you have created. This article outlines the best ways to protect your IP using three types of agreements — development agreements, licence agreements and agreements for employees and contractors.

Understanding the Basics

Copyright is the usual IP that protects web or app development. Under Australian law, copyright automatically exists in any original work. This includes all work done from conceptualisation through to the delivery of the final product. For example, copyright will protect design notes, wireframes and the code.

Although web development is not specifically referred to in the Copyright Act 1968, it is considered a type of ‘literary work’ as it is coding language. This means that the creator of the work owns the exclusive rights to use, publish, amend and distribute in any way that they wish. However, if a client commissions a developer to create an app, the contract will give the client some ownership rights. Therefore, IP ownership of web or app development work is usually not straightforward as the developer assigns some IP to the client. However, you do not want to assign all the IP. For this reason, it is essential to have a well-drafted Development Agreement to outline your rights.

Development Agreements

You should provide every client with a Development Agreement before starting any work. A development agreement will address the following:

 

Term Explanation
Scope of work The work to be completed and whether the client can change the scope after development has started, including whether extra payment must be made to do so
Payment The amount the client pays to the developer, when it is to be paid and how it is to be paid, including deposit and late payment conditions
Termination How the agreement may be ended by either client or developer before the work has been completed, including whether any payment must be returned
The extent or limitations of intellectual property What IP the developer assigns to the client, and what IP the developer keeps

 

The development agreements that we draft for our clients contain two important terms.

1. The Developer Retains all the Background IP

Background IP usually refers to sections of code that you use for many clients. If you assign all the IP rights to your clients, you may find yourself in a position where you cannot use your code with subsequent clients, as that will be infringing on the intellectual property of your previous client. By protecting the background IP, you can use it again when you work with future clients, making it easier to complete the job.

2. The Client Retains all the New IP

New IP relates to the work done specifically for the client’s website. This may also refer to any custom coding or wireframing created based on the client’s instructions. You might prefer to own this IP too, but most clients would not accept those terms. Assigning all the IP to the client protects them as it means you cannot share the client’s product with others. This also gives the client more value, making your offer more attractive.

Licence Agreements

Intellectual property rights are often contentious. You want to retain the rights to the work you have created, but your client wants to own what they paid for. A compromise is a licence agreement. This allows you to retain the rights in your work and also allow the client to use their website. A licence agreement should:

  • apply to the material delivered under the development agreement;
  • not have a limitation in time;
  • be granted worldwide;
  • allow the client to amend and modify;
  • allow the client to sub-licence to another developer; and
  • be fully transferable.

Employees and Contractors

In many cases, developers will work alone. However, larger work may require them to hire subcontractors, or establish an agency and hire employees. This creates the potential for IP disputes, as employees or contractors may have a claim to the work they create. Therefore, when hiring an employee or engaging a subcontractor, it is important to include in the employment or contractor’s agreement specific terms that address who will own the IP.

Employment Agreement

Intellectual property created by employees in the course of their employment belongs to the employer unless the employment agreement states otherwise. For any existing IP that the employee brings to your business, you should include a provision in the employment contract that assigns relevant existing IP or, at a minimum, licenses the right to use it.

Contractor’s Agreement

When you subcontract development, you must expressly identify who owns what. Usually, a contractor will have pre-existing intellectual property, such as their software or programs which they use to create new work. This is often referred to as the contractor’s ‘tools of trade’. Ownership of the ‘tools of trade’ should remain with the contractor for the same reason you want to retain the background IP you use for your clients. However, any new IP created in the course of the contractor’s work should be owned by you. In the absence of a contract, it is implied that a contractor will own the IP that they create so make sure you have it in writing!

Key Takeaways

With web and app developers popping up around every digital corner, your biggest priority will be establishing yourself in the market. However, do not neglect your IP rights. Well-drafted development agreements, licence agreements and employment agreements will help you avoid running into any trouble down the track.

If you need help preparing your IP agreements, call LegalVision’s IP lawyers on 1300 544 755 or fill out the form on this page.

Alexandra Shaw
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