Company: UK company designing and creating bespoke business focused websites
Terms & Conditions, Use of Contractors, Copyright Infringement
This UK-based company designs and creates websites for those businesses based in the UK and overseas. The client was referred by another professional firm which did not have experience with intellectual property rights and in particular with copyright infringement. The client received advice and a strategy that enabled it to mitigate against allegations of copyright infringement, and to improve its own business processes and systems that resulted in reduced risks and costs to its business.
The (Pain Point)
The client creates and designs digital solutions to deliver engaging and compelling promotion of its clients’ businesses to their respective target audiences. It uses a mix of in-house and consultant/freelance designers to develop the look and feel of client solutions.
The Challenge Faced
The client’s own terms and conditions did not include appropriate intellectual property and properly worded indemnity clauses. Employment contracts and company policies did not address intellectual property and the use of licensed versus unlicensed source material. Freelance consultants were either engaged using contracts that did not address intellectual property, warranties and indemnities, and suitable insurance, or in some cases there was no contract at all.
The client faced potential litigation, damaging publicity, loss of clients, potentially high costs in terms of defending its various positions along with potential compensation and damages, loss of future business, and wasted time and costs related to assessing previous and current projects.
I have worked with many businesses in connection with IP and those related issues faced by organisations based in the UK and overseas. In particular I have helped companies with copyright infringement matters throughout most of the world’s territories due to extensive experience and knowledge in this field.
The client needed to swiftly determine the extent of its own risk and to resolve the potential disputes arising in connection with a number of its clients. It also needed to reassess its own internal processes in terms of in-house design and procurement of external freelance contractors. Additionally a review of all contracts used in the business was deemed necessary to mitigate against similar future scenarios.
The client needed to understand its position quickly and therefore the company’s owner contacted its financial advisor for help. The advisor was aware of my experience and knowledge in this area and recommended my services.
It was important to listen to and understand the client’s concerns and preferred outcome(s) taking account of its relationships with those affected clients, its own reputation in the market-place, and to determine the deadlines of the current claims. It was essential to undertake a timely review of the copyright claims along with the client’s own terms and conditions as used with each affected client. An agreed plan of action was initiated to reassure those affected clients and to deal with the various allegations in parallel with an assessment of those who were involved in the relevant projects in order to identify any external consultants involved.
It was important to provide clear and concise advice to the client along with regular updates and progress. This was especially important on account there was a need to manage the affected clients and to receive all relevant material and information from them in connection with the copyright infringement allegations, and to do so having regard to the timescales involved.
The client was reassured that a number of the copyright infringement allegations failed to address key elements required in asserting copyright ownership. This enabled the client to wholly dispose of those claims without any further cost or fear of court action, and moreover provided great comfort to the affected clients. For a number of claims whilst the ownership was reasonably established the damages claims were disproportionately high. Negotiation of those claims resulted in vastly reduced compensation without the need to settle the matter at court.
The only instances of infringement had been undertaken by a single freelance designer who was based overseas. The cost saving achieved by the client in using the freelancer’s services was insufficient when taking account of the compensation negotiated. Nonetheless it was considered that the costs of recovery from the overseas freelancer and the prospects of securing compensation was too remote.
In any event, the client had been able to dispose of a number of the copyright claims in the first instance and greatly reduced the compensation claimed in the remaining cases. The client avoided the need to go to court, and not only avoided claims from its affected clients but maintained those relationships. It undertook a wholescale review of its processes and documentation, resulting in new bespoke terms and conditions that were more appropriate for its services, enhanced employment contracts and company policies, and its own company freelance template agreement to be used with external designers. It also revisited its own business insurance.
- maintained its client relationships;
- avoided adverse publicity;
- avoided the payment of unsubstantiated allegations;
- reduced its potential liability with those higher risk claims;
- avoided litigation with its affected clients;
- avoided high expenditure and distraction to its business due to litigation;
- greatly mitigated its position in the event of similar future claims.
- Use an experienced and qualified lawyer to prepare and negotiate your company contracts, and to review those terms and conditions of others
- Do not engage contractors without a suitable agreement in place;
- Consider risks to your business and not only appreciate what could go wrong, but how to avoid or mitigate against possible situations
- Use of unambiguous language, clear definitions, and certainty of aligned expectations within your contracts
- Suitable and comprehensive business contracts will enable you to quickly and effectively manage potential disputes with less distraction to your business and reduces future costs and risk