by Jonathan T. Howe, Esq. | January 01, 2011

This age of constant technological advancement adds some twists to the standard vendor contract. Online registration, virtual events and the like all carry with them possible cyberspace issues.

Spell Out the Deal The first order of business is to determine what exactly you are contracting for. Are you just renting hardware? Does the hardware come with software? Are the services of a technician involved? Each of these adds a layer of concern.

Perhaps the most sensitive part of the package surrounds intellectual property. For example, does the supplier have the right to license you to use software that might contain proprietary processes? The application might be subject to someone else's process patent or copyrighted materials.

While the Supreme Court has raised serious issues about process patents, the ongoing concern about software remains sensitive. When obtaining software licenses, which are designed specifically or are modified for your use, part of any agreement with the provider should be a declaration of ownership or authority to use the software processes and intellectual property contained within the product or service. Failure to have that could subject the user, you, to liability for patent or copyright infringement. In addition, the hardware also may be subject to various patents.

Stake Your Claim If your tech suppliers tweak some software or a process for you, who owns that customization? The question of ownership should be squarely addressed in writing.

If you are paying for the work, I assume you would like to own it. If that transfer of ownership is not spelled out in the initial agreement, you might be out of luck.

When ownership is not possible, you're only purchasing the right to use the materials; what happens if the vendor goes bankrupt or out of business? Your contract should establish your rights to the underlying intellectual property that is needed to make your system work, such as the coding.

Cover Your Links While the infringement of intellectual property is one of the primary risks in dealing with third parties in cyberspace, areas of liability also arise through the use of hyperlinks. For example, by hyperlinking to someone else's site, are you now vicariously liable for abetting the infringement of someone else's copyright?

Hyperlink agreements can do much to address liability concerns. You should have an indemnification provision so that liability can be shifted to the appropriate party in the event you are sued or a claim is made over a link to material over which you have no control. Strong privacy and disclaimer requirements also can help mitigate liability.

Sell Smart Another set of rules comes into play if you will be selling anything on the Internet. For example, be prepared to collect sales tax or use taxes that might be owed. Explore how other organizations handle it. Looking before you leap into this side of the web is key.