Online Retailing Q&A – Ownership Of Websites And Other Issues

April 23, 2013

This article was originally written for and featured in Fresh Business Thinking.

Question:
I run a boutique fashion company, designing and selling womenswear. We currently operate three high street stores and have recently decided to sell online as well. We have arranged for a website developer to design and create the website. Who will own the website and would we be able to use content and images found on the internet? Also, are there any legal differences to selling products online of which we should be aware?
Ms W W Webb

Answer:
Dear Ms Webb
You have raised some key issues, which we will address in turn.

1. Who will own the website?
A website is usually made up of software, content and images. You will “own” the website if you own the intellectual property in the software, content and images that comprise the website.

You state that you have commissioned an independent contractor to develop the website. As you are likely to be paying for the development, it is reasonable to think that you should own all the components of the work done. However, the fact that you have commissioned and paid for the work does not inevitably mean that the intellectual property in it will legally belong to you. It will only do so if the intellectual property has been transferred to you by written assignment signed by the developer. This could be included in the website development agreement.

Whilst ownership may be desirable, it is not essential. In order to publish the website, you must either own the intellectual property or have a licence to use it. There are no formal requirements for a licence, but it is in both sides’ interest to have clear terms set out in writing. You need to make sure that any licence would allow you to use the website as you intend. For example, you should make sure that your licence is on a world-wide basis if you are intending to sell your products internationally.

Generally, a website developer will not wish to give away software coding which it may wish to re-use in other website developments; it would regard this as its stock in trade. On the other hand, it may be happy to transfer ownership in components which have been specifically designed for you.

2. Using images and content found on the internet
Usually, a website will comprise intellectual property that you own, for example, intellectual property in content that you upload to the website about your products and the company and intellectual property such as software which is owned by a third party such as the website developer. You may also want to use images and content that you have sourced from the internet and elsewhere. Quite simply, if you do not have permission to use these images and content, you should not be displaying them on your website.

This is important where you are displaying third party brands and logos. You need to make sure that you have permission to use and display the logo and brand from the brand owner. The same rules apply where you are displaying an image or a photo of a model or celebrity, perhaps because they are wearing your label or clothes. Even though an image or photo is freely available on the web, this does not necessarily give you the right to use it for your own purposes. If you are using materials, photos or images without permission, then the owner may be entitled to claim damages from you.

3. Online sales
Customers buying online have greater protection then those who buy goods on the high street. One of the key differences is the “cancellation right” This provides customers who purchase products from your website with a right to cancel an order and return the goods without having to provide any reason for doing so. To do this, the customer must inform you within seven working days after the day following delivery of the products. This cancellation period may be longer if you have not provided the information which website operators are required to provide pursuant to the Distance Selling Regulations.

The rationale behind the cancellation right is to allow customers the opportunity to try the products as one would be able to in a shop. However, this right is potentially open to abuse by customers and you may be concerned about re-selling products which have previously been worn.

There are some exceptions to the right to cancel which may assist you. Also, an appropriate returns policy and terms of business could deal with the issues raised by the cancellation right.

4. Terms of business
The importance of terms of business cannot be emphasised enough. These form the basis of the contract between you and the consumer for the sale of your products and the use of the website. Terms of business not only act to protect you, but are also necessary to ensure that you comply with various online and consumer protection laws.


Related pages:

Intellectual property more

Intellectual property for Technology more

Technology and Online more

Technology and online for fashion more

Technology, Media & Digital more

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