Most SMEs outsource the design and development of their website to another company. According to experts from the UK200Group, however, there are significant dangers when commissioning website development to a third party firm.

Two words: intellectual property

The UK200Group is a membership association of independent quality-assured accountancy and law firms who act as key business advisers to around 150,000 SMEs.

Experts in the association have seen how intellectual property issues can help or hinder even the smallest of businesses.

An issue that has landed businesses in hot water in the past is ownership of copyright of their own website.

If ownership rights are not dealt with prior to the signing of a commissioning contract, the completed product – whether that be a website or piece of software – will belong to the creator of the work, rather than the business which paid for it.

“While the digital economy has had a democratising effect in many ways, and has broken down barriers to entry, SMEs and owner-managed businesses must be careful that they are taking proper precautions before commissioning websites or software,” says Philip Partington, senior solicitor at intellectual property experts and UK200Group member Virtuoso Legal.

“It goes without saying that smaller businesses rarely have the resources to go over contracts with a fine tooth-comb, so they are more commonly caught out by intellectual property pitfalls than traditional corporates.”

The ideal time to discuss copyright ownership rights in the process of hiring a web or software developer is before any contracts have been agreed.

By negotiating this when the developer is looking to win the commission rather than when they have already built up IP value that is legally theirs, you ensure that the outcome is better and there are no hidden costs at the end.

“My advice to small firms is that correct – or incorrect – use of IP protection can make or break a firm. By properly protecting a website, piece of software or any other piece of intellectual property, you can create valuable assets.

However, failing to take the necessary precautions can leave you vulnerable to competitors and the creators of commissioned work.”