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Property Rights in Web Sites:

Check out Conwell v. Gray Loon Outdoor Marketing Group, Inc., decided May 19 by the Indiana Supreme Court. Is a custom-designed and designer-hosted Web site a good or a service? Who owns the site? Can the deletion of the site by the host (for nonpayment of the bills) constitute tortious conversion of the supposed owner's property? Not the sexy sort of cyberlaw, just the practically important sort.

martinned (mail) (www):
There's one for the Language Log: Why, when and how did we go from web site to website? (footnote 4 on page 5 of the ruling)
5.28.2009 12:33pm
A Law Clerk:
What ever happened to conversion requiring the property have a tangible form. I know there is a NY case that allowed conversion for electronic records, but for the most part I don't think you can convert the intangible.

In this case the website is just a message being broadcast by the host. The host should have no obligation to store that message in some permanent form. It would be like if I went to a radio station and asked them to broadcast a message for me. I spoke into their mic, they temporarily recorded it on a tape, and then played it over the air. If I wanted a copy my message, then I should have made one myself; I have no right to theirs. If they then reuse that tape to record something else, then I am SOL.

Plus, who doesn't make a backup?
5.28.2009 12:37pm
PeteP (mail):
My thoughts as a web designer / programmer -

It depends on the contract terms. hopefully , 'ownership of source code' was specified at the origination of the contract. I've had cases where 'the client owns the source code', complete with detailed NDA's, etc, and some where I sold the client the source code to work they had previously commissioned from me 'not including source code'.

As to the web hosting - that is totally different. That is an ongoing service, where the supplier has ongoing monthly expenses for an ongoing monthly service provided. barring contract terms of 'due notice before termination', etc, that is of course subject to cancellation at the end of the current contract term ( to be assumed as 'the current month', unless specified otherwise ).

Ownership of the domain name is subject to the usuals of trademark, 'who paid for the registration', contract terms if any, etc. Barring the above, it belongs to whoever registered the site and is paying the bill to a web provider.
5.28.2009 12:38pm
martinned (mail) (www):
@A Law Clerk: I don't know the answer to that one either, but the concurrence cites a number of Indiana cases that point in that direction, including one where a cable television signal was "converted".

Generally, I'd say that I would find it more natural to describe this situation as work for hire, which would cause the copyright to end up with the customer. However, that approach seems to be foreclosed by the SCOTUS case law cited.
5.28.2009 1:03pm
Bruce:
Nice seal on the first page of the opinion. That's the first time I've seen a court use some sort of graphic as a file stamp like that.

It's also not every day you get a state supreme court copyright decision.
5.28.2009 1:30pm
Monty:
Part of the problem is that most modern websites are crafted to interact with a specific hosting setup. It would be easy if I paid you to as a graphic designer to make my existing site, hosted by a third party, aesthetically pleasing. I pay you for the design work, and you wouldn't really retain any control over the product.

The problem is when the design work your paying for includes backend server interactions, and the designer integrated those interactions with its servers. You can't just take the design and move without having the technical expertise to rebuild the backend functions at your new host.

To make an analogy, it would be like highering the owner of a commercial space to remodel the space you are moving in to. You pay for the remodelling, and then take on lease payments. Is it conversion when you stop paying the lease and the leasor retakes possession?

As opposed to highering an interior designer to remodel your house, you pay the designer, and when you pay the work is yours outright.
5.28.2009 1:34pm
Vader:
I'm not sure I'm seeing the hard issue here.

If I fail to pay the rent on my shop, and get kicked out, does it matter that all my business cards give the shop's address? That the layout of my shop was tailored to the floor plan of the rental space? That I no longer have access to my clientele?
5.28.2009 1:39pm
David M. Nieporent (www):
If I fail to pay the rent on my shop, and get kicked out, does it matter that all my business cards give the shop's address? That the layout of my shop was tailored to the floor plan of the rental space? That I no longer have access to my clientele?
None of those were, in fact, the issue in this case.
5.28.2009 1:51pm
Gabriel McCall (mail):
Some parts of the dispute are entirely uninteresting: whether a verbal contract is valid without an agreed price (do the appellants think they can walk out of a bar without paying if there's no posted price list?), etc.

The really interesting point is what the legal status of the original website is, as addressed in Justice Boehm's concurrence. He suggests that the appellants would have been entitled to delivery of the original website files if they had raised the issue of non-exclusive licensing. I disagree.

Imagine this sequence of events:

CUSTOMER: Please paint my car red.
SHOP: Done. That'll be $500.
CUSTOMER: Here you go.

C: Now paint my car black.
S: Done. That'll be $500.
C: I changed my mind, just give me back the car.
S: Um, no. Pay me.
C: You owe me the red car I paid for last time.
S: No.
C: How about a picture of my red car?
S: You should have taken one if you wanted it.


A service provider is under no obligation to preserve "before" images of a product one has hired them to modify. It's the customer's responsibility to preserve those images if he wants them.
5.28.2009 2:00pm
martinned (mail) (www):

Some parts of the dispute are entirely uninteresting: whether a verbal contract is valid without an agreed price (do the appellants think they can walk out of a bar without paying if there's no posted price list?), etc.

In many legal systems, including my own, the price is considered an "essential" part of the contract, unless the contrary is clearly established. In absence of agreement on price, there is no contract, only negotiation. To the extent that work has already been performed, the counterparty would have a claim in unjust enrichment. Under normal common law, the solution would be a claim in quantum meriut. (I'm no expert on US contract law, so I won't presume to understand why that approach wasn't followed here.)

Apart from quantum meruit, the court could have also plausibly found that the pricing scheme from the original design was incorporated into the second contract, on the grounds that the customer assumed it was, and was entitled to do so. That is a matter of fact that I can't judge from over here, and in any event I'm not sure if that wouldn't have lead to pretty much the same price.
5.28.2009 2:06pm
visiting texas lawyer (mail):

Generally, I'd say that I would find it more natural to describe this situation as work for hire, which would cause the copyright to end up with the customer. However, that approach seems to be foreclosed by the SCOTUS case law cited.


That is what I was thinking as I got to the Page 7 U.C.C. discussions.

By the time I got to page 10, I was wondering if they were going to discuss the fact that the hosting fees were not being paid (and the terms of the hosting contract?!).

By page 13 the Court is coming around to analysis that explains why it was cited above, without much comment.

The case comes full circle eventually, well worth the read.
5.28.2009 2:12pm

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