We are a social enterprise looking to engage with a web development company to create a custom dashboard for our website users. The design of the dashboard and its functionalities will be unique and will be key for competitive differentiation. Also, the same dashboard will be replicated for similar websites that our social enterprise will launch in the near future (I have heard about problems with web designers with licenses for use of the custom web application). In this case the web applicatiion will a new variation
What type of agreement should we have to be able to acquire and protect the source code (website’s function and design)? Is an NDA adequate? Is there anything else that needs to be done?
Alasdair Taylor's Answer
An NDA will not be sufficient here. Usually, an NDA will place obligations of confidentiality upon one or both parties, but will not assign or license IPR.
IPR is really the key to this. In order to prepare a web development agreement, you need to know what are the ingredients of the website (e.g. the CMS, application development framework, code libraries, etc), who is the owner of the rights in those ingredients, and the extent to which they can be assigned or licensed to you.
In a web development agreement giving the customer maximal rights / protections, I would expect to see:
(i) an assignment of all the IPR in any new work produced by the developer in the course of performing the contract;
(ii) a licence of any “background” IPR which existed before the contract started and is used elsewhere by the developer; and
(iii) direct or indirect licences of any third party (inc open source) materials.
The level of protection you will get from a contract containing these elements will however depend upon the relative proportions of the types of IPR, and the exact terms of the licences.
These IPR-related protections may be combined with contractual restrictions and non-competition clauses, although these do need to be drafted carefully to ensure they don’t fall foul of the restraints of trade doctrine or other aspects of competition law.
For a web developent covering teh different approaches to IPR, see:
(Although NB I don’t think this includes contractual non-compete restrictions.)