WEB DESIGN AND HOSTING COMBINATIONS: Cautionary Tales

IVAN HOFFMAN, B.A., J.D.


        Combining designing and developing with hosting or the re-selling of hosting services is a very bad idea for both the site owner or the designer/developer.  The article that follows presents some, but certainly not all, of the potential problems that can arise for both such parties.

        Of course every relationship between a site owner and a web designer/developer, with or without hosting services, absolutely, without any question, should be in the form of a thorough, written and signed agreement.  Read “The Fundamental Principle Under the United States Copyright Law” and “The Need for a Written Web Design Agreement.”   Proceeding without such agreement is likely to produce conflict, dispute, litigation and ultimately the destruction of the relationship, not to mention the problems below.   In my over 3 decades of experience practicing law, I have found that it is not contracts that break up relationships but the “I thought you said…” stuff that comes from no contracts or poorly drafted contracts.

Problems for the Site Owner

        The appeal for the site owner of combining design and development with hosting or having the designer/developer provide hosting through a re-selling arrangement is the apparent convenience of having only 1 party “handle everything.”  “Everything” includes having the said designer/developer do the registration of the domain and provide hosting services either directly or via a master host arrangement between the designer/developer and the master host, as well as doing the design and development.

        I realize that what I am about to say may come as a shock to many reading this article but I need to say it anyway: Often relationships (business as well as personal) break down and fall apart!

        If you have now recovered from that shock, the consequences of such a break up (I will limit this article to business relationships) to the site owner can be one or more of the following, as but a few examples.  Keep in mind that these possibilities are not merely the imagined disasters of an attorney (although the best attorneys are those who can imagine the most potential disasters that can befall a client and then seek to help prevent such disasters from occurring or preventing adverse consequences to the client should they occur).  These are real world scenarios that occur on a regular and frequent basis.

1. If the designer/developer has registered the domain for the web site owner, it is likely that the contact information, especially the Administrative Contact, has been listed in the designer/developer’s name.   In the worst case scenario, the actual Registrant may also be listed as the designer/developer.  Often, as part of the “convenience” factor, an unknowing site owner may not even check the WHOIS data base to find this out…until the aforesaid break up occurs.  Too late, it turns out.  Remember: it never matters until it matters and then… it matters!

2. If the designer/developer has placed himself or herself as the Administrative Contact, then generally only the said Administrative Contact has the ability to modify the account including but certainly not limited to controlling the DNS information as to where the site is located.  In actual practice, the registrar of the domain may have varying rules depending on whether the account is an individual account, a business account or other form of account.  What remains the same is that the site owner may have lost the ability to modify the account including losing the ability to change the said contact and DNS information.

3. And if 1 and 2 are what has occurred, then the site owner may find himself, herself or itself locked out of the site.  By locked out, I mean being without having the legal power to modify the ownership and contact and DNS information.

        For related problems in this regard, read “Using Domains As Leverage To Collect A Debt.”
4. Moreover, as a host including as a re-seller, it is the designer/developer that has access to and ability to change the passwords for uploading and otherwise changing the site.  So even if the owner has been given the password, such password is infinitely changeable by the host/designer/developer and again, the site owner may be unable to access the site and make changes.  Locked out again.

5. In the instance where the designer/developer is a re-seller of hosting services, often the site owner is subject to provisions of the master hosting agreement even though the site owner is not a party to that agreement.  Often as well the site owner does not know to request to examine that master hosting agreement to find out what the designer/developer has gotten both the designer/developer and the site owner into.

6. In the same re-selling situation, the site owner pays the designer/developer who then hopefully pays the master host.  But in the instance where the master host is not paid even though the site owner has made payment to the designer/developer, the master host may have the right to remove the site from the Internet, among other penalties.  All that is left to the site owner is a probably useless or legally weak remedy of a lawsuit against the designer/developer who may have no assets (which may be the reason the payments were not made to the master host in the first instance), is in another state or even another country or other such situations that make legal access to that designer/developer empty.

7. If there is a dispute over anything, sometimes the site owner can perhaps engage the services of another designer and leave the resolution of that dispute to its own time frame.  (I would point out however that without proper provisions in a thorough, written web design agreement, the site owner may not even be able to do this.)  However, if the original designer/developer also controls the hosting, either directly or via a re-selling arrangement, and access as indicated above, the site owner’s remedies of bringing in another designer are pretty much useless since the original designer/developer controls access to the site as indicated above.

        The foregoing are just a few real world examples of what problems can arise for the site owner in such a combination relationship.

        Read “Leverage in Contract And Other Negotiations.”  The site owner who opts to allow the designer/developer to also provide hosting or re-selling of hosting is likely to have lost all leverage.

Problems for the Designer/Developer/Host

        As indicated, it is not merely that this relationship presents issues for the site owner.  Hosting in general presents a wide variety of legal issues for the host or the re-seller of hosting services and thus it is not clear the reason any web designer/developer would ever want to expose himself, herself or itself to liability for the same.

        Under the Digital Millennium Copyright Act (“DMCA”), a host has many obligations in order to seek to avoid liability for copyright infringement including but not limited to the requirement of properly posting and filing an Interim Designation.  Read “The Notice and Take Down Provisions of the DMCA” and “Are You A Service Provider?”

        Moreover, under the Communications Decency Act (“CDA”), there are additional requirements, both in the act and as interpreted, as to whether or not a host or reseller can avail himself, herself or itself of the protection of the CDA.  Read “Are You The Provider of an Interactive Computer Service?”

        The key is that under both the DMCA and CDA, the general nature of legal protection is for hosting parties that lack the ability to control the content on the site (or the content of posts for other type protected parties).  However, in the instances where the designer/developer is also the host, the ability of the designer/developer to take advantage of the “I didn’t know what was on the site” argument is considerably weakened.  It is in fact the designer/developer that is actually doing the creation of the content either alone or in combination with materials provided by the site owner.

        Thus, it seems a very good argument can be made that any designer/developer that is also a host or a re-seller of hosting services should not be protected by either the DMCA or the CDA.

        As above, there can be many other issues presented to the web designer/developer as a result of this combination relationship.  Additionally, the written agreement with the client is considerably more complex.

Conclusion

        I practice preventative law, which means that by seeing a problem before hand and seeking to remedy the same though good lawyering and proper structuring of deals and agreements, hopefully resort to remedial law (litigation) may not be necessary.   As I have said many times, help me is almost always cheaper than fix me.

        Any site owner that enters into even a simple design/development arrangement with a web designer/developer without having a thorough, written and signed agreement is likely to find himself, herself or itself in a business and legal nightmare.

        Any site owner that allows a web designer/developer to also host the site or to provide re-selling of hosting service, with or without such agreement is likely to have that nightmare compounded many times over.

        Any designer/developer that hosts or re-sells hosting services faces their own set of legal issues.
 

Copyright © 2005 Ivan Hoffman.  All Rights Reserved.

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This article is not legal advice and is not intended as legal advice.  This article is intended to provide only general, non-specific legal information.  This article is not intended to cover all the issues related to the topic discussed.  The specific facts that apply to your matter may make the outcome different than would be anticipated by you.  This article is based on United States law.  You should consult with an attorney familiar with the issues and the laws of your country.  This article does not create any attorney client relationship and is not a solicitation.

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No portion of this article may be copied, retransmitted, reposted, duplicated or otherwise used without the express written approval of the author.


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