traverselegal - June 22, 2012 - Internet Law
There are a number of things that you need to think about if you are purchasing a website. What if there are prior trademark or copyright infringement claims against the person who you’re buying the website from? You need to make sure that any prior causes of actions, threats or claims are disclosed prior to executing a website purchase agreement. If you are a purchaser, you need to understand whether or not there might be trademark issues or copyright issues related to the website itself.
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You’ve got a great website that you want to sell, or you want to buy a preexisting website that has already got page ranking and generating a lot of traffic. How do you go about purchasing or selling a website? A standard website purchase agreement is going to contain any number of items. One of the very first things that an Internet law attorney, such as myself, will tell you is you need to understand if you’re the purchaser, what are you buying? Are you buying the back end code for the website, the HTML, the server script, the design? Are you obtaining any trademark rights as a result of the purchase? As part of your standard website purchase agreement, are you going to be purchasing the domain name and the trademark that goes along for that website?
There’s a number of things that you’re going to want to be aware of if you are the seller of the website. Are you going to provide a standard warranty about such things as claims, copyrights, trademarks, content, these types of things. If you’re selling the website as is, then you need to make sure that you say that. A standard business purchase agreement will incorporate some of the standard language that you need about form selection clauses, choice of law, what remedies might be available if there’s a problem with the website or the transfer down the line. There is no question that a website purchase agreement gone wrong can cause you an awful lot of problems. You don’t want to be either the buyer or the seller in a website agreement that does not contain all the necessary elements that are required.
Now, one thing that you need to understand when you purchase the website is what was the prior business’ business model. Did that business model generate any risk of, for instance, copyright infringement, trademark infringement, or cyber squatting? If it did, then you’re buying a high-risk website, and you need to account for that in the agreement. You need to know what is not only included in the purchase agreement for the website but also what is excluded, what are excluded assets. You need to set a closing date. You need to identify the purchase price and payment terms. Is there going to be an escrow? You need to deal with any liabilities that might come as a result of the transaction. You need to identify what kinds of representations and warranties are going to go along with the website agreement by the seller. Is there an out on the agreement after some sort of due diligence period?
What about the transaction itself? Is it something that you want to keep confidential? Or do you mind if someone issues a press release after buying or selling the website indicating what has occurred? Keep in mind, a lot of folks who sell websites for a living, they like to publicize their sales. Is there going to be any sort of restrictive covenants as part of the transaction? If you’re buying an established business and part of that includes a website, typically, you would have some sort of non-compete agreement or confidentiality agreement or trade secret agreement to go along with that. You need to make sure that you cover all these bases.
A standard website purchase agreement is going to be the base by which an Internet law attorney is going to look at your issue. Then, a good Internet law attorney is going to do the research about what your expectations are, what the other party’s expectations are, and it’s going to customize that website purchase agreement to actually fit your transaction. There are a thousand different flavors of website purchase agreements out there. All of them should be customized to your specific situation and risk tolerance, and if you get through the process, you end up with the website and you don’t have any problems and it’s all covered by contract, you’re going to be a happy camper.
My name is Internet Law Attorney, Enrico Schaefer, and we’ll see you next time.
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