Crowd control

Crowd control

The internet provides innovative ways of accessing talent that are attractively flexible and cost effective, but it is easy to get burned.

QUESTION: Since the GFC we have had a serious emphasis placed on getting the maximum out of a minimum number of people. As the head of IT, I have to ensure levels of service remain the same with a smaller workforce. I am looking at crowd sourcing, which looks like a cost- and time-effective way to manage my budget while hopefully maintaining standards of service delivery. Are there legal issues? ANSWER: Crowd sourcing is gaining momentum in a globalising economy. It is the act of outsourcing tasks traditionally performed by an employee or a contractor. But the difference is the contracting party is found on the internet through web platforms and emails. As the name suggests it is sourcing skills, abilities and tasks to be completed by "a crowd".

Crowd sourcing has been particularly useful in the gathering of information or research. By seeking to recruit the assistance of highly skilled people who have time to do work at more modest rates, significant business results can be achieved at lower cost. The key factors are sourcing the right people, managing the quality of the work they do and accountability. The primary benefit is that the legal obligations that you have as employer do not prevail in a crowd-sourced relationship. The person doing the work is not an employee. It is a business-friendly environment.

But crowd sourcing does give rise to a number of significant legal issues. The first is the terms of your engagement with the contractor. Customarily crowd sourcing has been undertaken by principals accessing databases or directories where a contractor will post details as to their expertise, skill set and willingness to do certain types of work. Contact is ordinarily made by email. The terms of the task are set out. The crowd-sourced contractor then decides whether they are willing to participate in the task. If that is the case, an hourly rate is struck and an estimate of the time taken to complete the job. Finally, specific instructions will be given.

This is often the extent of the contractual relationship. It may simply comprise a couple of loosely-worded emails. There is an uneasy interface between the world of law and e-commerce at times. In a fast-moving, highly dexterous online environment, this is a thoroughly modern arrangement. Minimal fuss, zero personal communication and quick, effective and prompt results. But from a legal perspective it raises a number of issues.

I have never seen a crowd sourcer enter into a formal agreement with a contractor. Imposing the super structure of a rigid and more formulated contractual relationship has been at odds with the loose, flexible and free-wheeling nature of crowd sourcing.

Many questions arise. Do you need to pay if the quality of the work done does not meet your expectations? It depends on the terms of the deal. How clearly and unambiguously did you set out what you wanted done, how you wanted it done and to what standard you required it? If you were less particular in setting out these issues, you may have to pay even if you are unhappy.

Risk management is also important. You need to consider any liability you have for republishing, or otherwise using, the work of the crowd-sourced contractor. It may be dangerous simply to repeat what they have prepared for you. You may breach intellectual property rights held by others.

There is also no guarantee that they have not simply poached work breaching copyright. You may also have a legal liability to the party whose copyright is breached. It is a combination of significant business disruption and potential exposure to damages.

Under Australian law copyright resides with the author of an artistic work. That means the person who produces it owns the copyright. Unless there is a licence conferred or a transfer of the underlying ownership right there is a practical problem. While it is reasonably likely there would be an implied licence to use the material created by the crowd-sourced contractor under a crowd-sourced arrangement, it is not clear there would be any assignment of the underlying copyright interest. That means you would have a limited right to use the material you assume you've purchased freely and without restrictions unless you deal with this upfront and comply with all legal requirements. It may come as an unpleasant shock if the crowd-sourced author of the material seeks to try to limit your ability to use it regularly in the future.

The crowd-sourcing world is one of legal uncertainty. While it is a great way to quickly, efficiently and effectively have tasks completed, it only works well if everyone behaves properly and meets expectations. If there are problems that arise it will be necessary for your position to be assessed and, in practical terms, you may not have many options by way of legal recourse.

Try to enter into better contracts with crowd-sourced service providers, but given the nature of the arrangement this may be easier said than done.

Damian Ward is a partner with Mills Oakley, specialising in technology law and intellectual property. Email:

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