Monday, February 7, 2011

Selling A Website - Watch Out For Copyright Problems

By Richard Chapo

You've built a website and turned it into a successful business. Now you want to sell it. Before you start coming up with a price, it is vital that you think through the process and make sure you have your ducks in order well before a buyer comes along.

Selling a business is always much more of a task than the party selling imagines. There are a host of issues that have to be addressed, issues that can be tough to get through. Although an internet site has no physical presence unless you want to count the servers, there are a host of issues that arise when trying to sell it as well. Let's look at an example to see how copyright can be an issue.

You have a site selling blood pressure monitors to consumers. Heart disease is the number one killer in the United States, so it is a ripe market. The site does really well and one of the big health industry sites notices as much. Discussions on a sale begin and you are suddenly looking at making a serious amount of money. A final price is agreed upon and then due diligence is undertaken by the buyer. Suddenly, you are in trouble.

The initial question the buyer will have is do you own the copyright to the site design. Well, do you? If you designed the site yourself, then you do. Most people don't do this. Instead, they hire a designer to do the work. Since the designer is usually an independent contractor, he or she will actually own the copyright to the design under established law.

The only way you could have circumvented this was to have them sign a copyright transfer contract or include appropriate language in the initial design agreement to this effect. If you didn't, you are going to need to approach them and hope they will assign it without too much financial pain on your part.

There are other problems that can arise with copyright for sites that are sufficient to sink any site sale. For instance, what if you had them sign a contract, but can't find it? What if they gave you a license to use the design, but it can't be transferred? What if part of the design was used from another site they already had rights to? The questions can be endless and the buyer is going to want an answer to all of them.

The time to deal with copyright problems is not during the due diligence process. The time to deal with them is well before you think of selling. In fact, every site should go through a website audit once a year to make sure issues related to copyright, trademark, regulatory compliance and the like are all being taken care of and are up to date.

Richard A. Chapo provides website audit services and provides legal services to clients in California at

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