§ xx:1 Introduction
§ xx:2 --Viewpoint
§ xx:3 Precedents
§ xx:4 --Advertising Agency Agreements
§ xx:5 --Graphic Design Agreements
§ xx:6 --Identity Campaigns
§ xx:7 --Other Antecedents
§ xx:8 Sophistication of the Web Designer
§ xx:9 --The Wild, Wild West
§ xx:10 --Variation in Pricing
§ xx:11 --Art and Technology
§ xx:12 Know the Law Controlling the Client
§ xx:13 A Split of Rights
§ xx:14 --Work Made for Hire
§ xx:15 --Licensing of Code
§ xx:16 Web Linking Permissions
§ xx:17 Letter of Intent
§ xx:18 Web Page Design and Services Agreement
§ xx:19 --Definitions
§ xx:20 -- --Acceptance Date and Release Date
§ xx:21 -- --Client Confidential Information
§ xx:22 -- --Client Content, Client Materials, and
Exclusive Materials
§ xx:23 -- --Client Marks
§ xx:24 -- --Error
§ xx:25 -- --Internet Server and Internet Server Specifications
§ xx:26 -- --Software Deliverables and Web Designer Software
§ xx:27 --Services
§ xx:28 -- --Review Periods
§ xx:29 -- --Usage Reports
§ xx:30 -- --Technical Support
§ xx:31 -- --Backup Archives
§ xx:32 -- --Additional Services
§ xx:33 --Proprietary Rights
§ xx:34 -- --Grant of Limited License by Client
§ xx:35 -- --Artistic and Editorial Control
§ xx:36 -- --Copyright and Trademark Notices
§ xx:37 -- --Rights Clearance
§ xx:38 --Service Fees
§ xx:39 -- --Advertising Revenue
§ xx:40 --Representations, Warranties, and Covenants
§ xx:41 -- --By Web Designer
§ xx:42 -- --By Client
§ xx:43 --Limitation of Liability
§
xx:44 --Indemnification
§ xx:45 -- --By Web Designer
§ xx:46 -- --By Client
§ xx:47 --Term and Termination
§ xx:48 -- --Termination During Performance of Services
§ xx:49 -- --Transfer of Client Site
Appendix xx:1 Letter of Intent
Appendix xx:2 Web Page Design and Services Agreement
§ xx:1 Introduction
The World Wide Web (hereinafter referred to as "Web") has fundamentally changed the nature of the Internet.1 First designed as a communications tool for the Department of Defense, and then adopted by other government research and academic institutions, the Internet has rapidly evolved from institutional origins to an e-mail medium and now to an informational, advertising, and shopping medium. The early notions of a collaborative, free structure, have given way to a thoroughly commercial medium where the pursuit of money is of primary importance just like in other parts of American society. It was inevitable that the Web would become a primary means of disseminating information--along with newspapers, magazines, and television--whether for the public good, as a delivery vehicle of information content, or as an advertising medium. It's easy to use interface and ability to display all types of graphics, sound, text, and video virtually ensured the Web's rapid growth and adoption by companies and consumers.
The Web mirrors all aspects of society and culture. It provides an expressive outlet to any person and organization that has a computer, an online connection and a message or product to disseminate. And since the costs of posting an online web site are many times less than other available media, the Web has drawn all parts of our American society.
It was not long after the advent of the World Wide Web that sites appeared with advertising. Among the first large commercial advertisers was the Quaker Oats Company subsidiary Gatorade with their Cooler Site on ESPN SportsZone.2 The Cooler Site defined a "cool" site by its attitude. It was the first to use a click-thru banner ad; it was the first that was advertising agency driven. Since then, every conceivable type of business has adopted the World Wide Web as a medium of advertising or information. Inevitably, and only as a matter of time, Web site designers have entered the fray offering their services in the design and construction of World Wide Web sites.
§ xx:2 --Viewpoint
This chapter examines web site design agreements from a commercial perspective, i.e., the construction of a web site for a company that advertises and sells commercial products and services. The parties include the "client" that desires to sell its product or services by having a Web presence, possibly an advertising agency, and a web site design firm, the "web designer." Sometimes the agency and design firm are one and the same. At other times, they are different but working in concert to produce an integrated advertising campaign that includes a web site, print advertisements and television commercials.
§ xx:3 Precedents
The Web Page Design and Services Agreement traces its ancestry to several relationships in the communications industry. After all, the Web site is one means of advertising. The lessons learned over the years from advertising help to define the relationship between web site designer and client.
Other relationships also directly affect the web site designer since Web sites are often an amalgam of graphic design, identity campaign, publicity engine, public relations, marketing campaign, and informational campaign.
§ xx:4 --Advertising Agency Agreements
No other area is as similar to Web site design and construction as advertising. Although most Web sites are not the outgrowth of sophisticated advertising campaigns controlled by account executives and other advertising agency employees, the purpose of the site is the same--to advertise goods and services and to make prospective buyers aware of the product, desire it, and purchase it.
The web site design shop will either work with an advertising agency to define and learn about the product, or engage in its own studies. The following list of services is taken from a "standard" advertising agency agreement. Although not used in the Web Page Design and Services Agreement, it is meant to be illustrative of the similarity of services rendered by an advertising agency and web designer.
Services.We undertake to exert our best efforts on your behalf and render to you the following basic services:Unique to the advertising agency, and possibly employed by the Web site designer, will be the study and implementation of a creative strategy for the client.
(a) Study your products or services;
(b) Analyze your present and potential markets;
(c) Create, prepare and submit to you for approval, advertising ideas and programs;
(d) Employ on your behalf, our knowledge of available media and means that can be profitably used to advertise your products or services;
(e) Prepare and submit to you for approval, estimates of costs of these recommended advertising programs;
(f) Write, design, illustrate or otherwise prepare your advertisements, including commercials to be broadcast, or other appropriate forms of your message;
(g) Order the space, time or other means to be used for your advertising, endeavoring to secure the most advantageous rates available;
(h) Properly incorporate the message in mechanical or other form and forward it with proper instructions for the fulfillment of the order;
(i) Check and verify insertions, displays, broadcasts or other media used, to such degree as is usually performed by agencies; and
(j) Audit invoices for space, time, material preparation and services.
Creative Strategy.You will furnish to us all information we consider relevant or that is justly requested by us. Then, and after we have done whatever research, if any, we may be commissioned to do by you, we will propose a creative strategy. Thereafter, both parties will establish and adopt a written creative strategy that appears to be most conducive to achieving your objectives. Work on advertisements, commercials, selection of media art, layout, mechanical production, and program production, if any, shall commence thereafter.Like the advertising agency, approval of work is of the utmost importance, not only to keep the creative process moving along, but to prevent misunderstanding and cost overruns. The approval process used in an advertising agency agreement would need substantial modification for use in our standard Web Page Design and Services Agreement.
Approvals.No advertising, publicity, or program will be placed and no media selection will be made by us without approval by you. The following methods shall be used for approvals:Advertising agency contracts usually include a clause covering facilities contracts for purchasing time and space in media:
(a) Approvals or disapprovals are to emanate from one of your officials, who shall be designated by you by name forthwith, and who may be replaced at will by you by notification to us.You may modify or terminate any advertisement, commercial, publicity, or program to the extent to which contracts made therefor permit, and you may modify or change any work that is being carried on for you by us. Any additional service charges, expense and work caused thereby will be paid by you. No additional payment shall be made by you for changes required to conform to the original assignment description. You shall offer us the first opportunity to make any changes.
(b) Approval of "key copy" shall constitute approval of advertising, publicity and programming based thereon.
(c) Approval of types of media shall constitute approval of individual media, excepting special written instruction to the contrary.
(d) If no disapproval is received by us within ten days of each submission to you, the subject matter is deemed to be approved.
Facilities Contracts.We shall not enter into contracts for time or space for you unless approval pursuant to Section 7 hereof has been secured. We are authorized to make such contracts in our own name and with a proviso according to which we are financially solely liable for time or space. We shall make our best efforts to enter into all contracts chargeable to you at the lowest rates obtainable from the other party.Facilities contracts can be equated with provisions covering the server where the Web site resides. A large company is more likely to have its own computer servers connected directly to the Internet so a facilities contract is of lesser importance. Exhibit "B" of the Web Page Design and Services Agreement, infra, contains sample server specifications with the web designer providing the "facilities"--Internet servers.
§ xx:5 --Graphic Design Agreements
Graphic design agreements are among the closest analogs to the Web Page Design and Services Agreement. After all, the Web site most often resembles a brochure with layout by a graphic artist for the purpose of informing and enticing buyers. Important provisions in graphic design agreements which may be incorporated into the Web Page Design and Services Agreement include modifications to the specifications, rates and overtime, kill fee, credit, ownership and use of art work and design components, and copyright provisions.
The single biggest problem facing the graphic designer is the indecisive client that continually changes his or her mind about the parameters of the project, type of art used, and copy. Sometimes the client wants to change providers or alter the design after the fact. The following provision addresses these issues.
Modifications.Client will be responsible for all increases in fees and expenses incurred due to changes ordered by Client. Designer retains the first right of refusal to execute changes to the project. All modifications to the job ordered by Client will be entered on Designer's Modification Agreement form and signed off by Client.Rates and overtime provide a constant source of irritation to the graphic designer. They often neglect to fully inform the client of their full rate schedule. This tends to occur with less frequency in the advertising agency-client relationship due to the professionalism of the agency and the fact that whole staffs of account executives, vice-presidents and other officers devote their entire careers to this very problem. The same thing may happen to the web site designer, again, depending on size and professionalism.3
Rates and Overtime.All rates above and beyond the estimate total will be charged as follows: $75.00 per hour. Any job requiring work after normal business hours (9:00 a.m. to 6:00 p.m., Monday through Friday) will be charged at double the normal hourly rate.It's not unusual for a project to be killed or canceled for any number of reasons. The primary goal of the following clause is to protect the designer from losing money when a project is killed because the designer's time is booked well in advance.
Kill Fee and Cancellation. In the event Client terminates the job prior to completion, Designer will receive 100% of the fee for the work completed and expenses actually incurred on a pro rata basis.Credit for work performed, whether it is in the form of a copyright notice or something more descriptive of the contribution of the designer, is sought after. Credit has become something less of an issue with the advent of the Web due to lack of space constraints and the tradition of providing a hyperlink to the Web designer's own site.4
In the event designs [or, brochures, etc.] prepared under the terms of this Agreement are completed and submitted by Designer and rejected by Client, Designer will receive one hundred percent (100%) of the agreed on estimate total as compensation for time and effort devoted to the project. All designs [or, brochures, etc.] will be returned to Designer within fifteen (15) days of its rejection by Client.
Ownership of the physical art specimens (as distinct from copyright ownership) was a particularly vexing problem for designers when they did not want to give up their work or they were not paid. Usage and copyright were always hotly negotiated, and should still be carefully defined in both the graphic arts agreement and the Web Page Design and Services Agreement. A carefully drafted usage provision could bring the designer additional income if the client used the work beyond that initially defined in the agreement. For example, initially, work may have been commissioned solely for one time use in a brochure. The success of the brochure's imagery could then compel the client to use the work in other media.
In many graphic arts agreements, the designer endeavors to retain copyright in as much of the work product as possible; the Web Page Design and Services Agreement contains a work made for hire provision effectively denoting the client as the author thereby vesting ownership in the client. A typical clause from a graphic arts agreement follows:Ownership and Use of Art Work.All work produced by Designer under this Agreement will remain the property of Designer until Client makes final payment. Client takes only such rights as are set forth above under "Usage." Client will not have free use of said work in any manner until Client makes final payment to Designer.
Copyright.This Agreement does not create a "work made for hire" relationship between Client and Designer. "Work made for hire" is used here as defined in 17 U.S.C. § 101 (1976). Copyright in all work and images authored by Designer for Client will vest in Designer. Additional "buyouts" of rights beyond that enumerated in "Usage," above, shall be negotiated in good faith by the parties to this Agreement.§ xx:6 --Identity Campaigns
Clients use identity campaigns to establish trademarks and trade dress.5 Agreements for identity campaigns are often similar to advertising agency agreements. The most important aspect of identity campaigns is the proper choice, selection, and clearance of trademarks for use by the client. Similarly, the web designer may be asked to develop trademarks, or to use already existing client trademarks. The web designer should work closely with client's trademark counsel if new marks are to be developed.
§ xx:7 --Other Antecedents
Other antecedents include marketing and publicity agreements.
§ xx:8 Sophistication of the Web Designer
The variations in the sophistication of web designers seems limitless and nothing creates more uncertainty in a client than variation in pricing. It is not uncommon to hear that one web designer has asked for a fee of $1,000 while another has asked for a fee of $100,000. Why the one hundred-fold difference?
§ xx:9 --The Wild, Wild West
The rush to the Internet, and especially the World Wide Web, has created a gold rush mentality with many types of persons and companies jumping aboard. Some are early adopters, some are competent, some are inquisitive, some see opportunity (whether honestly or dishonestly) while some always seem drawn to the latest and greatest gimmick. Most definitely, many are not competent business persons.
The business climate for the Web, subject to this gold rush mentality, manifests itself in many ways. Two of the most interesting are the "wild, wild west" mentality, where no law resides on the Web or in cyberspace, and the great variation in pricing among web site designers. The report of the Working Group on Intellectual Property Rights, authored by the Information Infrastructure Task Force, addressed the former question with clarity, if not humor:
Finally, there are those who argue that intellectual property laws of any country are inapplicable to works on the NII or GII because all activity using these infrastructures takes place in "Cyberspace," a sovereignty unto itself that should be self-governed by its inhabitants, individuals who, it is suggested, will rely on their own ethics--or "netiquette"--to determine what uses of works, if any, are improper. First, this argument relies on the fantasy that users of the Internet, for instance, are somehow transported to "chat rooms" and other locations, such as virtual libraries. While such conceptualization helps to put in material terms what is considered rather abstract, activity on the Internet takes place neither in outer space nor in parallel, virtual locations. Satellite, broadcast, fax and telephone transmissions have not been thought to be outside the jurisdiction of the nations from which or to which they are sent. Computer network transmissions have no distinguishing characteristics warranting such other-world treatment. Further, such a legal free-for-all would transform the GII into a veritable copyright Dodge City. As enticing as this concept may seem to some users, it would hardly encourage creators to enter its confines.6§ xx:10 --Variation in Pricing
Many factors account for a variation in pricing among web designers. Among them are cost structure of the various businesses and the perceived and actual sophistication in art and technology. The gold rush-like nature of the Internet means that many, many types of persons and businesses offer their services as web site designers. As explained in the previous section, their motivations vary for adopting the Web as their preferred place of business.
Many web site designers maintain a tight control over their pricing, knowing how much it costs for them to deliver a service. Some have no idea, and some think that because the Web is a mining town, they show their greed by quoting prices far in excess of what the market will bear and what they can actually deliver.
§ xx:11 --Art and Technology
The variation in skills in art and technology of web site designers or design businesses is so great as to almost defy imagination. Some are accomplished artists, some are fine technologists, some are neither, and it's difficult to find both. It's probably better to find a good technologist, one who can facilely manipulate HTML, CGI scripts and Java. The art can be left up to the advertising agency or a person or company already providing the identity and advertising to the client.
§ xx:12 Know the Law Controlling the Client
In many instances, the client may be subject to certain regulatory or consumer protection laws. The web designer should have at least an awareness of the existence of these laws, and if unsure, should contact the client's general counsel for further information so that the site will be in full compliance.
§ xx:13 A Split of Rights
One of the most important, and often the most negotiated, sections of the Web Page Design and Services Agreement concerns the right to control copyrights in the web site. The client will want all rights in the work; the web designer will want all rights in the work. The best resolution to this matter lies somewhere in between. Before giving all rights to one party or the other, examine what rights might be reserved to the web designer given the nature of the web; those rights would be to reusable computer code whether HTML, standard Java applets, CGI or PERL scripts.
Traditionally, as in our advertiser-client relationship discussed supra, the client would own all rights. Many novice designers fight for their copyrights when they could further their careers by giving up the copyrights, creating better client relations so that additional work comes later. The designers wish may now come true, at least in part.
§ xx:14 --Work Made for Hire
In a work made for hire relationship, the employer or party commissioning the work, is considered the author and therefore the owner of the work.7 A web site falls neatly within the definition of collective work,8 and also audiovisual work,9 and would therefore qualify as a work made for hire.
In Section 2 of our sample agreement, we define several pieces of property as defined by their origin. "Client Materials" are the copyright property of the Client and include "text, statistics, graphics, artwork, photographs, and other such materials supplied by Client." "Web Designer Software" is the copyright property of the Web Designer and includes "all software owned or licensed by Web Designer at the time this Agreement is executed or hereinafter acquired, and which is employed by Web Designer in connection with the Client Site, including but not limited to HTML coding, PERL, CGI scripts, Java or JavaScript applets, search engines, personalized page generators, and user tracking and hit counting software authored by Web Designer or used under license by Web Designer." The "Exclusive Materials" are created by the web designer on a work made for hire basis and are defined as "materials made by Web Designer for the exclusive use of the Client, whether using Client Materials or made solely by Web Designer, or modified by the Web Designer for the Client." The "Exclusive Materials" are made on a work made for hire basis, thus the Client will own them. There is a backup assignment of rights in case the "Exclusive Materials" do not qualify as a work made for hire.
Intellectual Property Rights. Client Materials shall remain the copyright property of Client. Web Designer Software shall remain the copyright property of Web Designer. Exclusive Materials shall be made as a contribution to a compilation and/or an audiovisual work and is done as a "work made for hire" as that term is defined under U.S. copyright law. To the extent that the Exclusive Materials do not qualify as a work made for hire under applicable law, and to the extent that the Exclusive Materials include material subject to copyright, patent, trade secret, or other proprietary rights protection, Web Designer hereby assigns to Client, its successors and assigns, all right, title and interest in and to the Exclusive Materials, including all copyrights, patents, trade secrets, and other proprietary rights therein (including renewals thereof).§ xx:15 --Licensing of Code
A traditional advertising agency or graphic design agreement might call for all the work product to be made under the work made for hire provisions of the Copyright Act of 1976. In the case of a web designer, certain tools and reusable code will be incorporated into the web site. The code might consist of HTML, Java, CGI and PERL scripts. In a sense, these are the stock-in-trade of the web designer. As such, he or she will only want to grant a non-exclusive license for the use of the code. The web designer can then use the code again and again in multiple sites without the problems normally associated with the reuse of materials: instant identification of a design or graphics in more than one advertising campaign.
Web Designer Software.The Web Designer Software is and shall remain the property of Web Designer. Web Designer grants to Client a perpetual, irrevocable, worldwide, non-exclusive, royalty free license (or, in the case of third-party software, sublicense where allowable) for Client or its agents or assigns to use, modify, copy, transfer and maintain the Web Designer Software in conjunction with the operation and maintenance, and updating of the Client Site.§ xx:16 Web Linking Permissions
During the majority of the life of the Internet, the Internet world was viewed as a cooperative community where documents and information were freely exchanged under an implied license as long as copyrights and copyright notices were respected by the user. Documents and programs were released to the public on a "shareware" or try-before-you-buy basis, or at least with the understanding that a document would be properly cited and credited. Copyrights were recognized by authors and users. The Web was created in the same spirit. Links10--which merely point to Internet addresses, or, in the vernacular URLs (uniform resource locators)--provide a means to bring related and disparate information together with just the click of a mouse or arrow key. The graphical nature of the Web, rather than its text-based companions in the E-mail, gopher and FTP world, has made it enormously popular with all types of individuals and businesses, making the use of the Web more like a trip to a well-stocked magazine stand.
Older forms of media such as television and print do not normally suffer the problems of association that web linking creates. For example, an advertiser wishing to extol the healthful virtues of its products may provide a link from its web site to a Surgeon General's report or a National Institutes of Health study thereby creating an (intentional?) implied endorsement of the product. In order to prevent these problems, the web designer should be aware of the problems that a link makes and seek permission when linking to another site.11 Links which create a frame incorporating another site's contents pose especially difficult problems of unwanted association, endorsement or sponsorship.
The client and web designer should discuss as a policy decision whether linking will be allowed outside the client site, and what types of links the client permits. All links to outside sites should be cleared with the owner of the other site.
§ xx:17 Letter of Intent
The Letter of Intent reproduced infraat Appendix xx.1 sets forth the basic relationship between the Web Designer and the Client. The Letter of Intent is used so that the Web Designer can proceed with confidence in the construction of the web site even though the parties have not yet fully negotiated a complete agreement. Also note that the intellectual property provisions are in nearly identical form to those used in the Web Page Design and Services Agreement. A clear idea of the party's respective intellectual property rights from the outset of the negotiation provides crucial knowledge and confidence to the parties so that they can commence their relationship without hidden problems.
The initial paragraph opens with a statement as to the enforceability of the terms of the Letter of Intent.
This Letter of Intent is not enforceable as a binding obligation or commitment of either Client or Web Designer except as expressly provided herein, which provisions shall survive the termination hereof. Such a binding agreement will arise only when all material terms have been set forth in a definitive written agreement, or sets of agreements, executed and delivered by the officers of both parties.The following paragraph notes the further negotiations will take place but during that time, the web designer will commence construction of the site by a set completion date.
This Letter of Intent follows a preliminary discussion between representatives of Client and Web Designer on _____________________________, during which it was concluded that further negotiations concerning the proposed Agreement would be appropriate, but that design, construction, and maintenance would commence on the first version of the Site with a completion date prior to or on _____________________.In Section 1, the parties agree to prepare a Web Page Design and Services Agreement within forty five days of the completion of the Letter of Intent.
Confidentiality is an extremely important aspect to both parties for two reasons. First, if the parties fail to come to an agreement, more often than not, they prefer to keep that fact confidential. Second, due to the highly competitive and changeable world of the web, the purpose or content of the site may be a trade secret until launch giving the client a significant lead over the competition.Web Page Design and Services Agreement.Client and Web Designer shall prepare a definitive written Web Page Design and Services Agreement concerning the Site, including but not limited to terms regarding design, construction and maintenance services, payment, advertising procurement and representation, warranty, indemnification, copyright, and term and termination, among other common provisions. Client and Web Designer shall use their best efforts and negotiate in good faith with the intent of executing the Agreement within forty five (45) days following the date of the last party's signature to this Letter of Intent.
Section 4, No Concurrent Negotiations, provides some measure of security to the web designer as it prevents the client from negotiating with other web designers until the abandonment of negotiations by the parties to the Letter of Intent.Confidentiality. The parties shall keep in confidence the fact that they are considering entering into the Agreement, the existence of this Letter of Intent, and any and all of its terms and conditions, and any documents or information related to the proposed Agreement and/or Letter of Intent. Neither Client nor Web Designer shall disclose any information referenced in this paragraph to any third party.
If the negotiations result in the Agreement, the Agreement may contain further terms and conditions respecting confidentiality.
Section 6, Preliminary Terms, provides the basis for which the parties will define their relationship. Especially with respect to the intellectual property rights provisions, discussed at § xx.14 supra, the parties want to know as early as possible what their rights encompass. The license at section 6(b)(i) provides a protective feature to the client in the case of the failure of negotiations but the prior launch of the site. It provides the client with a license to use the web designer's code for a period of six months after the termination date which will allow the client to seek out a new web designer and launch a new site.No Concurrent Negotiations. Until the negotiations envisioned by this letter are abandoned by either party, Client will not directly or indirectly undertake negotiations or enter into arrangements with any other entity engaged in the development of World Wide Web sites.
§ xx:18 Web Page Design and Services AgreementLicense.In the event of termination of this LOI without the parties entering into the Agreement, the parties agree to immediately commence negotiations for a fully paid license in the amount of $____ per month to use the Software Programs throughout the universe in subsequent World Wide Web sites for a period of six (6) months from the termination date.
The Web Page Design and Services Agreement covers both the design and construction of the web site and the maintenance of the site on the computer server. Many agreements of this sort do not include server services. It is incumbent upon the attorney to find out at a very early stage of negotiation whether server services are included.
The contract reproduced here is only a guide. Many other issues will arise and will have to be addressed. Use of the contract without modification would almost certainly lead to problems. Note that some sections and concepts are brought together in the explanatory text where they are related causing some sections to be dealt with out of numerical order. Some sections, such as miscellaneous terms and conditions, are included in the agreement but not discussed.
§ xx:19 --Definitions
The first major article of the Terms and Conditions lays out the basic definitions used in the agreement.
§ xx:20 -- --Acceptance Date and Release Date
The acceptance date is the date that the client legally accepts the completed site per the agreement specifications. The release date is the date that the site is available to the public.
§ xx:21 -- --Client Confidential InformationAcceptance Date. The term "Acceptance Date" shall mean the date Client accepts the Client Site as a whole delivered to Client by Web Designer.
Release Date. The term "Release Date" shall mean the date on which the Client Site is fully operational and publicly available to users of the World Wide Web.
As in many other technology agreements, confidentiality is of the utmost importance to the parties.12 The definition describes both what is and is not confidential information.
A variation of this definition is used a second time at section 6 of the Web Page Design and Services Agreement in order to impress upon the party the need for and importance of confidentiality.Client Confidential Information. The term "Client Confidential Information" shall mean Client possessed and controlled information pertaining to and including but not limited to the following subject matters: (i) marketing and advertising information and research; (ii) technical materials; (iii) Client Content as defined herein; (iv) passwords, access codes or keys generated by encryption programs; (v) Client business affairs plans; (vi) information gathered from the Client Site pertaining to user preferences and demographics; (vii) proprietary materials whether or not protected by copyright, trademark and patent, and trade secret information, in oral, graphic, musical, written, electronic or machine readable form; and (viii) the existence and terms of this Agreement.
The restrictions on use and the obligations of confidentiality contained in this Agreement will not apply to any item or combination of items of Client Confidential Information that the receiving party can demonstrate, (i) is then in the public domain by acts not attributable to such party; (ii) is disclosed to a third party on an unrestricted basis by the party to whom it belonged; (iii) is hereafter received on an unrestricted basis by the receiving party to whom it belonged; (iv) is hereafter received on an unrestricted basis by the receiving party from a third party source who to the receiving party's knowledge is not and was not bound by confidentiality obligations to the disclosing party; or (v) was known to the receiving party as shown by its written records prior to the date of disclosure hereunder.
§ xx:22 -- --Client Content, Client Materials, and Exclusive MaterialsConfidential Information. Client and Web Designer acknowledge that in the course of dealings between the parties, each party will acquire information about the other party, its business activities and operations, its technical information and trade secrets, of a highly confidential and proprietary nature. All such confidential information will be clearly labeled or otherwise identified as such by Client upon delivery of such information to Web Designer. Each party covenants to the other that each agrees not to use such confidential information for any purpose except the performance of this Agreement, and not to disclose any such confidential information to any person unless such disclosure is authorized by the other party in writing. Web Designer will use and maintain appropriate security measures to honor all of its obligations under this Agreement. The foregoing obligation of confidentiality will not apply to information that, (i) is or becomes generally known or available by publication, commercial use, access to the Client Site, or otherwise through no fault of either party; (ii) is known by either party and is not subject to restriction; (iii) is lawfully obtained from a third party who has the right to make such disclosure without restriction; or (iv) is released for publication by either party in writing.
The client will provide the web designer with all types of content including text, graphics, photographs, numbers and sounds, the "Client Materials."
Inevitably, the web designer will modify those items in some way. The content should be defined.Client Materials. The term "Client Materials" shall mean text, statistics, graphics, artwork, photographs, and other such materials supplied by Client. Client Materials shall include Exclusive Materials (as hereinafter defined), including through the conversion of materials to a format ready for display on the Client Site.
In order for the site to be unique, the client should insist that a large amount of the various types of content made for the client by the web designer should be original and for use exclusively by the client.Client Content. The term "Client Content" shall mean the Client Materials modified by Web Designer for use on the Client Site.
§ xx:23 -- --Client MarksExclusive Materials. The Term "Exclusive Materials" shall mean materials made by Web Designer for the exclusive use of the Client, whether using Client Materials or made solely by Web Designer, or modified by the Web Designer for the Client.
The client's trademarks are among its most valuable commercial properties.13 The web designer should be aware of appropriate trademark usage which should be set forth to client's exacting specifications at Exhibit C to the Web Page Design and Services Agreement.14
Additional trademark usage requirements with respect to use and approvals are set forth at section 4.1 of the Web Page Design and Services Agreement. The web designer should agree to all reasonable demands of the client when it comes to trademark usage.Client Marks. The term "Client Marks" shall mean the registered and unregistered trademarks, service marks, logos, or trade names owned, controlled or licensed to or by Client.
§ xx:24 -- --ErrorTrademark Usage. Except as set forth in Exhibit "C" (attached hereto and made a part hereof), Web Designer shall not use any Client Marks in any manner inconsistent with the specifications set forth at Exhibit "C," permit any third party use and shall submit to Client for prior written approval all proposed uses of the Client Marks, and shall not use the Client Marks without such approval from Client as set forth in Exhibit "C." Client reserves the right to review any prior approved use of the Client Marks and to require changes in any prospective use, and Web Designer agrees to comply with any such requirements.
The nature of computer code and the most minor software bug can cause a site to crash without warning. Thus, an Error is defined and dealt with exhaustively under the technical support sections of the agreement.
§ xx:25 -- --Internet Server and Internet Server SpecificationsError. The term "Error" shall mean any failure or crash of the Client Site or Software Deliverables associated therewith whether operating on the Internet Server or as transmitted to users for display on commonly used browsers such as Netscape's Communicator or Navigator or Microsoft's Internet Explorer, or not in conformance with any of the specifications listed herein or with the terms and conditions of this Agreement.
This particular agreement has the web designer providing the Internet server. A third party may also provide this service. The specifications for the server, security, and traffic volume should be precisely defined.
The Internet server specifications should be very detailed. The specifications included herein will give the reader an idea of what to expect.Internet Server. The term "Internet Server" shall mean a computer server with an Internet connection configured according to the specifications of Exhibit "B," which is incorporated herein as if fully set forth hereat, operated by Web Designer and on which the Client Site will operate in a live environment.
Section 3.3.1 specifies a 24/7 readiness (24 hours per day, 7 days per week), with a capacity of 10 megabits per second.
INTERNET SERVER SPECIFICATIONS
HARDWARE & CONNECTIVITY
Web Designer will implement the following connectivity
solution for the Client site:
Silicon Graphics "Indy" server with:
* R4400 Processor
* 256 MB RAM
* 1 GB HD
* IRIX Operating System
Connectivity:
* Shared T-3 line
* Fully redundant connection with multiple "backbone" providers
Security:
* IRIX Firewall
* Monitoring with test programs to ensure firewall is intact
Description:
The server is maintained in a fire-protected unit with indefinite power backup. The Client server is maintained and monitored at all times through automatic notification systems in case of network outages, power outages and other potential interruptions.
Firewalls ensure that outside parties are unable to enter or "hack" into the site's server to manipulate information and/or server performance.
The above server solution represents a premium, high quality connection to the Internet to ensure efficient delivery of information through existing communications infrastructure.
Web Designer cannot be responsible for outages beyond its control such as maintenance and power outages by Backbone providers and other interruptions which are caused by third parties and Acts of God.
§ xx:26 -- --Software Deliverables and Web Designer SoftwareAs the definition of the Web Designer will operate the Client Site and the Internet Server at its facilities twenty-four hours per day, seven days per week on a T-1 line capable of at least 10 megabits per second capacity. Web Designer will also provide reliable and sufficient Internet connectivity in a manner adequate to process all inquiries to the Client Site at peak usage, excepting times of maintenance with outside Internet connectivity providers.
As the definition of the term suggests, software deliverables include all deliverables to the client containing software components. This may include portions of client content and possible third-party software used under license to the web designer and capable of sublicense to the client.
The web designer software is that software either developed or owned by the web designer and used in the site. Remember that the web designer software remains the property of the web designer per the section on intellectual property rights first expressed in the Letter of Intent and then reiterated at section 4.1 of the Web Page Design and Services Agreement.Software Deliverables. The term "Software Deliverables" shall mean all deliverables containing software components, including but not limited to object code (with comparable source code), JAVA and HTML, various scripts, and video and audio elements. Web Designer shall not provide source code for any third-party software.
The use of the web designer software is licensed to client by web designer for the term of the agreement.Web Designer Software. The term "Web Designer Software" shall mean all software owned or licensed by Web Designer at the time this Agreement is executed or hereinafter acquired, and which is employed by Web Designer in connection with the Client Site, including but not limited to HTML coding, PERL, CGI scripts, Java or JavaScript applets, search engines, personalized page generators, and user tracking and hit counting software authored by Web Designer or used under license by Web Designer.
If the client decides to change Internet server providers or web designers, the client may require a license to use the web designer software for a period of time in order to assure continuity during the period of site redesign. The web designer should be willing to grant a license.Web Designer Software License. Web Designer grants to Client a non-exclusive, royalty free license (or, in the case of third-party software, sublicense where allowable) throughout the universe for Client or its Internet Server agent, to use the Web Designer Software in conjunction with the operation, maintenance, and updating of the Client Site, during the Term of this Agreement.
§ xx:27 --ServicesLicense in Event of Termination. In the event of termination of this Agreement with Client requiring the continued use of Web Designer Software, the parties shall enter into good faith negotiations for a License to use Web Designer Software for a period not to exceed one year from the date of termination.
The initial paragraph of section 3 contains three important concepts--competency, open standard technologies, and exclusivity.
§ xx:28 -- --Review PeriodsServices. Throughout the Term (as defined below), Web Designer shall perform and provide the Services outlined in this Article 3, and in Exhibit "A" "Client Site Contents," which is incorporated herein by this reference as if fully set forth hereat, and as subsequently agreed to in writing by the parties. All Services shall be performed using sound, professional practices and in a competent and professional manner by knowledgeable, trained and qualified personnel, and all software used in the Client Site shall be based upon open standard technologies. Web Designer shall be the exclusive provider of Services covering Client activities to Client.
Upon the delivery of the Software Deliverables, both the Client and Web Designer have fifteen day review periods in which to test the Software Deliverables, find errors and non-conformities, and make corrections. The process repeats until the client expresses satisfaction with the site. Note that the termination provisions in the agreement provide for termination if any one deliverable is rejected more than three times!
§ xx:29 -- --Usage ReportsClient shall review each Software Deliverable upon receipt. Client shall have sole discretion to accept or reject any Software Deliverable and shall consider the presence or absence of any Errors or non-conformities and other criteria that Client selects in its sole discretion. Client shall accept or reject each Software Deliverable in writing, including a description of any non-conformities or other reasons for rejection, within fifteen (15) days following delivery of such Software Deliverable. Web Designer shall use best efforts to immediately correct any non-conformities specified by Client, but in no event more than fifteen (15) days following receipt by Web Designer of the rejection. Subject to Client's other rights provided in this Agreement, the acceptance procedures pursuant to this section 3.2.1 shall be repeated until the Software Deliverables are accepted by Client.
If the web designer is to supply the client with Internet server services, detailed usage reports should be provided to the client. The report contents should indicate all sorts of statistics such as number of hits per page and time of usage. The following clause could be expanded to include a detailed list of statistics desired by the client.
§ xx:30 -- --Technical SupportWeb Designer will furnish periodic usage reports regarding the Client Site to Client in a format reasonably acceptable to Client. In addition, upon Client's reasonable request, Web Designer will provide to Client such information as Client may request regarding traffic and access to portions of the Client Site.
This section holds the feet of web designer to the fire! The terms require one hour response by the web designer with correction of the error within twenty-four hours. The section concludes with the acknowledgment of possible mitigating circumstances analogous to a force majeure clause.
§ xx:31 -- --Backup ArchivesTechnical Support. At reasonable times, and as reasonably requested by Client, Web Designer shall render the following technical support by telephone and e-mail, at no extra charge to Client. If Client notifies Web Designer during Web Designer's normal hours, Web Designer shall respond to Client within one (1) hour of notification. Upon discovery or notice of an Error, as the case may be, Web Designer shall make reasonable efforts to supply a correction to the Error within the twenty-four (24) hour period immediately following actual notification; provided, however, that Client acknowledges and agrees that should notification of an Error be delivered to Web Designer on a weekend, holiday or after normal business hours, that any such correction shall be undertaken by Web Designer as soon as commercially practicable. Notwithstanding any provision contained in this Agreement to the contrary, Client acknowledges and agrees that if any Error should occur due to forces or circumstances outside of the reasonable control of Web Designer, Web Designer shall not be held accountable hereunder for failing to take any measure that may be otherwise required herein.
The ephemeral nature of digital data and the easy steps that one can take to protect it, demand that the web designer provide some mutually agreeable form of backup. The form should be one that both parties have access to such as Syquest, Jaz, or streaming type cartridges. The parties should also consider periodic backups at an off-site data silo facility.
§ xx:32 -- --Additional ServicesBackup Archives. Web Designer shall maintain at least two backup archives in a storage format agreed to the parties of all Client Content and Software Deliverables provided pursuant to this Agreement in a format ready for display on the Client Site, and deliver one backup archive to Client at no extra charge. Upon the termination of this Agreement and pursuant to the provisions herein for Site transfer, Web Designer shall deliver to Client a current set of backup cartridges containing Client Content.
The agreement reproduced herein contemplates that the web designer shall maintain and enhance the site during the term of the agreement. What happens after the term? After the term, it is likely that the client will take it's site to another server and perhaps another web designer. But it may also need the services of the original web designer.
§ xx:33 --Proprietary RightsAdditional Services. For a period of five (5) years after the expiration of the Term or any subsequent Term, Web Designer shall perform any enhancements or modifications requested by Client at Web Designer's prevailing rates. Client acknowledges and agrees that such services shall be preceded by a written proposal. Any such written proposal shall constitute an estimate of costs only, and actual costs shall depend in part upon the actual amount of services that Web Designer performs.
The knotty problems of work made for hire and licensing of web designer software have been covered in earlier sections of this chapter.15
§ xx:34 -- --Grant of Limited License by Client
Even though it would seem that by the parties entering into the Web Page Design and Services Agreement the web designer would have an implied license to use the client content for the purpose of designing and constructing the client site, when representing the web designer, it's best to use a belt and suspenders approach. Reaffirm that the client owns all client content ,then grant a license for use of that content by web designer.
§ xx:35 -- --Artistic and Editorial ControlGrant of Limited License by Client. Client shall own all right, title and interest in and to the Client Content. Client hereby grants to Web Designer a non-exclusive, non-transferable, limited license coterminous with this Agreement, to use the Client Content under the terms and conditions of this Agreement solely in connection with the development and operation of the Client Site.
The following paragraph neatly divides artistic and editorial control among the web designer and client. Giving the web designer primary artistic control with final approval by client usually satisfies the web designer's need for artistic recognition. "Final cut" always belongs to the client.
§ xx:36 -- --Copyright and Trademark NoticesArtistic and Editorial Control. Client shall have exclusive editorial control over the Client Site. Web Designer shall assume primary artistic control over the Client Site; provided, however, that Client shall have final artistic approval, which shall not be unreasonably withheld.
The web designer should have the right to display her copyright notice since the site contains certain proprietary elements. The site should also contain appropriate trademark notices. Make sure that the trademark notices distinguish between registered, unregistered and third party trademarks.
§ xx:37 -- --Rights ClearanceCopyright and Trademark Notices. Web Designer shall insert the following copyright and trademark notices (or any other notices as instructed by Client) on each page of the Client Site:
"Copyright © 1998 [or the year of creation or publication of the content] Client Name. All rights reserved. Portions Copyright © 1998 [or the year of creation or publication of the content] Web Designer. All rights reserved. [TRADEMARK] is a registered trademark of Client Name. [TRADEMARK] is a trademark of Client Name. [THIRD PARTY TRADEMARK] is a registered trademark of Third Party Corp."
The responsibility for the clearance of rights to various content is split between the client and web designer. Naturally, the client should clear all rights in client content and client materials. The web designer should clear all other rights.
§ xx:38 --Service FeesRights Clearance. Client shall assume sole responsibility at Client's sole cost and expense, for obtaining any and all rights, releases, clearances, licenses or other permissions necessary to lawfully place Client Materials on the Client Site, including Client Content. Except with respect to the Client Materials, Web Designer shall obtain transferable, perpetual, irrevocable, royalty-free rights necessary for Client to utilize the Client Site as contemplated by this Agreement at no cost to Client.
Most of these sections require no comment due to the sui generis nature of each deal.
§ xx:39 -- --Advertising Revenue
In this particular agreement, the parties agree to share advertising revenues although this does not commonly occur.
§ xx:40 --Representations, Warranties, and CovenantsAdvertising Revenue. During the Term, the parties agree that each shall be entitled to share in respective portions of advertising revenue generated from, posted on, or relating to the Client Site in accordance with the formula set forth on Exhibit "D" (attached hereto and made a part hereof), unless otherwise modified by the mutual written consent of the parties.
The representations, warranties, and covenants found in the Web Page Design and Services Agreement incorporate terms commonly found in computer software development agreements and publication agreements.
§ xx:41 -- --By Web Designer
Many of the clauses found in the web designer's representations and warranties reiterate other terms in the Web Page Design and Services Agreement: the services will be performed in a sound and competent manner; the site will operate with the hardware. Note the clauses concerning Trojan horses, worms, and viruses and that the site will not violate any federal, state, or local law or regulation.
§ xx:42 -- --By ClientBy Web Designer. Web Designer represents, warrants and covenants that, (i) Web Designer has full authority to enter into this Agreement; (ii) all of the Services, whether performed by Web Designer or any of its subcontractors, will be rendered using sound, professional practices and in a competent and professional manner by knowledgeable, trained and qualified personnel; (iii) to the best of Web Designer's knowledge, the software and other materials used by Web Designer in fulfilling its obligations under this Agreement (except the Client Materials provided by Client) do not now and will not infringe upon any copyright, patent, trade secret, contract right or other third party right; (iv) to the best of Web Designer's knowledge, neither the Site nor the use thereof shall infringe upon or violate any right of privacy of, or constitute a libel, slander or any unfair competition against or any other right of any person or entity; (v) subject to Client's obligations, all obligations owed to third parties with respect to the activities contemplated to be undertaken by Web Designer pursuant to this Agreement are or will be fully satisfied by Web Designer, so that Client will not have any obligations with respect thereto; (vi) Web Designer is the owner of or otherwise has the right to use and distribute all materials and methodologies used in connection with providing the Services hereunder; (vii) to the best of Web Designer's knowledge, the Software Deliverables provided hereunder do not now, or hereafter during the Term, infringe upon any copyright, patent, trade secret, contract right or other third party right; (viii) the Client Site will be designed and will operate in conformance with the terms and conditions of this Agreement and will operate completely with the hardware configured as set forth in Exhibit "B" hereto; (ix) the Client Site shall not contain any Trojan horses, worms or viruses; (x) to the best of Web Designer's knowledge the Client Site, as contemplated and when designed as contemplated hereunder, will not violate any federal, state, or local law or regulation; and (xi) Web Designer and its subcontractors will comply with all applicable federal, state and local laws and regulations in the performance of its obligations hereunder.
The client's representations, warranties, and covenants are somewhat simpler and less extensive. The most important concerns the fact that Client Materials will not infringe any third party intellectual property rights.
§ xx:43 --Limitation of LiabilityBy Client. Client represents, warrants and covenants that: (i) Client has full authority to enter into this Agreement; (ii) Client has or will obtain, during all times relevant hereunder, all of the necessary consents, rights, licenses, clearances, releases or other permissions to lawfully consummate the transactions and lawfully discharge, in all material respects, each and every of Client's obligations or duties set forth hereunder, whether performance is due now or hereafter during the Term; (iii) to the best of Client's knowledge none of the Client Materials will infringe now or hereafter during the Term upon any copyright, patent existing as of the date of this Agreement, trade secret, contractual or any other third-party right; (iv) neither the materials provided by Client for use in connection with the Site nor the use thereof shall infringe upon or violate any right of privacy of, or constitute a libel, slander or any unfair competition against any other right of any person or entity; and (v) any and all other obligations owed to third parties with respect to any activity contemplated to be undertaken or actually undertaken by Client pursuant to this Agreement are or will be fully satisfied by Client.
The agreement contains the standard limitation of liability for indirect, incidental, consequential, special, or exemplary damages found in other computer contracts. Note the capitalization; you can't miss it!
§ xx:44 --IndemnificationLIMITATION OF LIABILITY. THE WARRANTIES IN ARTICLE 7 ARE THE ONLY WARRANTIES MADE WITH RESPECT TO THE USE AND OPERATION OF THE SITE AND CONSTITUTE A LIMITED WARRANTY. CLIENT AND WEB DESIGNER EXPRESSLY DISCLAIM ANY AND ALL OTHER WARRANTIES, EXPRESS OR IMPLIED, INCLUDING BUT NOT LIMITED TO IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE. EXCEPT WHAT MY BE REQUIRED UNDER ARTICLE 8 HEREUNDER, NEITHER CLIENT NOR WEB DESIGNER SHALL BE LIABLE TO EACH OTHER OR TO ANY THIRD PARTY FOR ANY CONSEQUENTIAL, SPECIAL, PUNITIVE, EXEMPLARY, OR INCIDENTAL DAMAGES INCLUDING, BUT NOT LIMITED TO, LOST PROFITS OR OTHER ECONOMIC LOSS (WHETHER ARISING FROM BREACH OF CONTRACT OR TORT) EVEN IF APPRISED OF THE LIKELIHOOD OF SUCH DAMAGES OCCURRING.
Don't assume that the indemnification provisions are the same for both web designer and client. The role of each require some thought as to the extent of the indemnification.
§ xx:45 -- --By Web Designer
The bulk of the indemnification covers the Web Designer Software but not third-party software used under license by the Web Designer.
§ xx:46 -- --By ClientBy Web Designer. Web Designer will defend, indemnify and hold Client harmless from and against any and all liabilities, losses, damages, costs and expenses (including legal fees and expenses) associated with any claim or action brought against Client for actual or alleged infringement of any patent issued as of the Effective Date of this Agreement, copyright, trademark, service mark, trade secret or other property right based upon the duplication, sale, license or use of the Web Designer Software, provided by Web Designer, except for third-party software used under license by Web Designer.
The client will indemnify the web designer for any actual or alleged infringement of intellectual property rights in client supplied Client Materials.
§ xx:47 --Term and TerminationBy Client. Client will defend, indemnify and hold Web Designer harmless from and against any and all liabilities, losses, damages, costs and expenses (including legal fees and expenses) associated with any claim or action brought against Web Designer for actual or alleged infringement of any patent issued as of the Effective Date of this Agreement, copyright, trademark, service mark, trade secret or other property right based upon (i) the duplication, sale, license or use of the Client Materials as part of the Client Site or (ii) the use, operation, function or existence of the Client Site.
Two subsections require special attention outside of the usual boilerplate clauses: Termination During Performance of Services and Transfer of Client Site.
§ xx:48 -- --Termination During Performance of Services
This section gives the client the right to terminate the agreement for performance reasons including missed deadlines and rejection of designs.
§ xx:49 -- --Transfer of Client SiteTermination During Performance of Services. During the Term hereof, Client shall have the right to terminate this Agreement pursuant to the notice provisions immediately upon the occurrence of any of the following events: (i) Web Designer fails to deliver acceptable designs or updates within the time schedule agreed to by the parties; (ii) Client rejects each of Web Designer's any proposed designs for the Site three times; and (iii) Client rejects the same design three times.
At some point, the client may want to transfer the site to another server. This section requires the cooperation of web designer by the delivery of copies of all Software Deliverables and the assignment of all necessary rights under third-party agreements.
Transfer of Client Site. Upon the termination or expiration of this Agreement, Web Designer shall provide all necessary assistance to Client or its nominee to transfer the Client Site to another Internet server. Such assistance shall include, but shall not be limited to, (i) complete copies of Software Deliverables; and (ii) the assignment of all rights under third party agreements to Client or its nominee.
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