Fradulently obtaining a website?

When someone is hired to create a website for a business, does so, turns it over to the business but isn’t paid for their work, who owns the site . . . the website creator or the business that contracted for it?

That’s the issue the New Mexico Supreme Court addressed in State v. Kirby, 141 N.M. 838, 161 P.3d 883 (2007). You can find the opinion on the New Mexico Supreme Court’s website, if you’re interested.

The facts in the case are pretty simple. Here is how the court explained what happened:

[Richard] Kirby owned a small business, Global Exchange Holding, LLC. . . . Kirby hired Loren Collett, a sole proprietor operating under the name Starvation Graphics Company, to design and develop a website. The two entered into a website design contract. As part of the contract, Kirby agreed to pay Collett $1,890.00, plus tax, for his services.

Collett . . . designed the web pages and incorporated them into the website, but he was never paid. When Kirby changed the password and locked Collett out from the website, Kirby was charged with one count of fraud over $250 but less than $2,500, a fourth degree felony. New Mexico Statutes Annotated § 30-16-6. The criminal complaint alleged that Kirby took `a Website Design belonging to Loren Collett, by means of fraudulent conduct, practices, or representations.’

State v. Kirby, supra. After a jury convicted him of the charge, Kirby appealed to the Court of Appeals, which upheld his conviction. He then appealed to the Supreme Court. State v. Kirby, supra.

Kirby claimed he couldn’t be convicted of defrauding Collett out of the website because the website belonged to him, Kirby. Kirby argued, in effect, that he could not defraud himself. The New Mexico Supreme Court therefore had to decide who owned the site.

The Court of Appeals found that “because a `website includes the web pages,’ and Kirby never paid Collett for the web pages as contractually agreed, ownership remained with someone other than Kirby”, i.e., remained with Collett. The Supreme Court agreed with “that reasoning as far as it goes,” but decided “further analysis may assist the bar and the public in understanding this . . . novel area of the law.” State v. Kirby, supra.

We first turn our attention to the legal document governing the agreement between Collett and Kirby the `Website Design Contract.’ Collett was engaged `for the specific project of developing . . . a World Wide Website to be installed on the client's web space on a web hosting service's computer.’ Thus, the end product of Collett's work was the website, and the client, Kirby, owned the web space. Kirby was to `select a web hosting service’ which would allow Collett access to the website. Collett was to develop the website from content supplied by Kirby.

While the contract did not state who owned the website, it did specify ownership of the copyright to the web pages. `Copyright to the finished assembled work of web pages’ was owned by Collett, and upon final payment Kirby would be `assigned rights to use as a website the design, graphics, and text contained in the finished assembled website.’ Collett reserved the right to remove web pages from the Internet until final payment was made. Thus, the contract makes clear that Collett was, and would remain, the owner of the copyright to the web pages making up the website. Upon payment, Kirby would receive a kind of license to use the website.

State v. Kirby, supra.

Kirby conceded the site “`contained copyright material that belonged to Loren Collett’” but claimed Collett's ownership of the copyright was “separate from ownership of the website. Thus, because the contract only specified ownership of the copyright interest in the web pages and not ownership of the website,” Kirby argued that “from the very beginning he and not Collett owned the website.” State v. Kirby, supra.

Kirby argues that because he owned certain elements that are part of a website and help make it functional, he was the website owner regardless of who owned the copyright to the web pages. Kirby purchased a `domain name’ for the website and had contracted with an internet hosting service for `storage’ of that website. This same hosting service was the platform from which the website was to be displayed on the internet. Kirby, as the owner of the domain name and storage service, also owned the password that enabled him to `admit or exclude’ other people from the website. Kirby argues that his control of the password, ownership of the domain name, and contract with an internet hosting service provider gave him ownership of the web site.

State v. Kirby, supra.

The New Mexico Supreme Court disagreed:

While a domain name, service provider, and password are all necessary components of a website, none of them rises to the importance of the web pages that provide content to the website. A domain name is also referred to as a domain address. A domain address is similar to a street address, `in that it is through this domain address that Internet users find one another.’ . . . But it is nothing more than an address. If a company owned a domain name . . . but had no web pages to display, then upon the address being typed into a computer, only a blank page would appear. A blank web page is of little use to any business enterprise. It is the information to be displayed on that web page that creates substance and value. Similarly, the service provider only stores that information on the web pages and relays that communication to others. Having a service provider meant little to Kirby if the web pages were blank. Thus, the predominant part of a website is clearly the web page that gives it life.

State v. Kirby, supra.

The Supreme Court held that Collett owned the website: “the contract between Kirby and Collett clearly recognized Collett's legal ownership of the copyright to the web pages. Payment was to be the pivotal point in their legal relationship, and even then Kirby was only to receive a license to use those pages. The contract never transferred any interest in the web page design or ownership of the website to Kirby. As the owner of the copyright, Collett was the owner of the website, and any change was conditioned upon payment.” The court therefore upheld Kirby’s conviction.