When a business has an employee or consultant create its business website, it is likely assumed that the business owns the copyright in the resulting site. But is that the really the case?

Copyright in a website is usually multi-layered. A website is typically a compilation of artistic works (graphic designs), literary works (text) and photographs. It is important that the business own or have a licence to the copyright in each of these components to avoid having copyright infringement claims made against it and to permit reproduction of those elements without concern. Despite what you as a business entity may think, you may not have those rights!

Your position will be most favourable if an employee created your business website. In that case, by operation of law, your business will be the first owner of the copyright in the elements of the site the employee created. In contrast, if you hired an independent consultant to create your website, the consultant will be the first owner of copyright, and you will need to obtain an assignment of the copyright in any elements he or she created.

Once you have acquired the copyright in the elements created by the web designer (employee or consultant), either by operation of law or by assignment, the next task is to determine whether there are elements on the website which are owned by third parties. There is a real risk that the consultant or employee who designed your website may have incorporated copyrighted images, text or photographs and may not have obtained permission or paid the applicable licence fees to use such work. In particular, it is not uncommon for website designers to source images for their clients’ websites from stock image companies without seeking permission or paying the applicable royalty fees.

Unlicensed use of any work in which copyright subsists is actionable, but the risk of detection is particularly great if the copyright is owned or licensed by a stock image company. These companies use sophisticated software to scan the Internet for the images they control. If they find their images on your website, you may receive a letter requesting payment of licence fees for the period during which the image was displayed on your website. These fees can be significant, especially if multiple images were used over a long period of time. If you fail to pay, you could face a copyright infringement law suit.

Plaintiffs in copyright infringement suits can seek the damages they actually suffered, plus the profits made by the infringement. Alternatively, they can claim a fixed amount per infringement, ranging from a minimum of $500 to a maximum of $20,000. The minimum amount can be reduced to $200 per infringement if the defendant can satisfy the court that s/he was not aware and had no reasonable grounds to believe that s/he was infringing copyright. The minimum amount can be further reduced to an amount the court considers just if the infringement involves more than one work in a single medium and awarding the minimum amounts would result in an award grossly disproportionate to the infringement.

To minimize your exposure to these types of copyright infringement claims, it is advisable to take the following steps:

  • Ask your web designer, whether an employee or a consultant, where the images on your website came from.
  • If the images are not photographs or graphic designs taken or created by the web designer, ask him or her whether permission and/or payment of a licence fee is required to use the images. If this can’t be confirmed, don’t use the image.
  • Document your conversations with your web designer about the source of the images.
  • Even if you are satisfied that you will be lawfully using images on your website, as an extra precaution, it is advisable to have a liability and indemnification clause in the agreement governing an independent web designer’s services. This type of clause can limit your legal and financial liability in the event that you or your business are sued for copyright infringement as a result of content placed on your business website by the independent web designer.

It is only prudent to be diligent when developing your business website. As you strive to create an attractive and functional website, you want to avoid creating one that leaves you open to copyright infringement claims.