From copyright and confidentiality agreements to work space leases, business owners who enter into contracts with outside vendors should carefully consider what goes into these legal agreements to protect their business.
Jones Walker attorneys Parker Kilgore, Raedtha “Rae” Vasquez and Michael Leachman provided tips on what to look for in contract agreements today during their panel discussion— “How to not get screwed in or out of contracts”—as part of Baton Rouge Entrepreneurship Week.
“You need to be careful when presented with contacts from outside businesses,” Leachman said. “With any startup involving apps and websites, you’re dealing with software developers. You need a contract from them.”
For an example, the attorneys created a hypothetical business called Pet Tinder, a digital platform that matches people with pets. Like most businesses today, Pet Tinder would require a website or app, designed by a software developer. One issue often overlooked in contracts with software developers deals with copyright.
“Keep in mind that a website is protected by copyright law, and by default, whoever creates the website owns it,” Leachman said. “Without a contract saying differently, the website belongs to the developer.”
The same goes for a company logo. If a graphic designer created it, the design is technically theirs—unless this is addressed in the contract beforehand. The contract should include an Intellectual Property Assignment clause to give the company ownership.
Another issue deals with confidentiality agreements, Kilgore said. If you give confidential information to a designer or website developer, that person does not owe you confidentiality, unless it’s in the contract.
“When you send information to a web designer, there are confidentiality agreements or nondisclosure agreements you can send for them to sign,” Kilgore said. “You have to have an agreement in place that protects and preserves secrecy of information.”
Restrictive covenant provisions can also protect companies that enter into a contract with a vendor from then having that vendor go out and create similar products for a competing business, the attorneys said.
“If we’re building Pet Tinder, you can’t go and build Pet Finder—or something that looks just like it,” Kilgore said.
After a business is established, the next step is to find a place to work. For those who don’t want to buy and lease, there are two more cost-efficient options: shared spaces or business incubators, Vasquez said. But if you’re looking for your own space, lease agreements are also important contracts that companies should carefully review. In the case of Pet Tinder, say you have 10 dogs that need matches and need a space suitable for housing pets.
“Make sure everything you need is clearly defined in the lease,” she says.
Landlords usually provide contracts with standard terms, but don’t believe these terms are not negotiable—everything is negotiable, Vasquez said. Leachman added you should always consider who wrote the contract. Standard contract terms tend to favor the vendor.
“Most outside vendor contracts are not written by attorneys, but consequences will fall on you not the vendor,” Kilgore says. “These issues need to be addressed on front end because it’s hard to solve these on back end.”
BREW, a three-day event ending Thursday, kicked off this morning with a session on women in business. Today’s sessions wrap up with a opening night celebration at 4:30 p.m. at the Shaw Center. BREW resumes on Wednesday with a full day of panels and keynote speeches by cyber security expert Jeff Moulton and marketing guru Ryan Holiday.
Check back with Daily Report AM for more BREW coverage. See the full schedule of BREW events.
—Annie Ourso Landry