Intellectual property is a creative agency’s main stock in trade. As such, the parts of the contract dealing with intellectual property are very important. In this chapter, we’ll discuss issues relating to:
With this section handy, you’ll be able to navigate the intellectual property provisions of most Client Service Agreements.
When an Agency creates work for a Client, who owns it?
The default rule is that in the absence of a written agreement saying otherwise, the work an Agency creates is owned by the Agency and Client only has limited, nontransferable permission (a license) to use that work. In most instances, the Client wants to own the work its Agency creates and the Service Agreement they send you will contain clauses to accomplish this.
First, we’ll introduce the typical ownership transfer provisions you’ll face. After that, we’ll give some negotiating tips for both types of clauses.
This method of transferring ownership from Agency to Client actually has a fairly limited application. Under the federal Copyright Act, if work constitutes WFH and there is a written contract specifying it as such, then the copyrights in work created by an Agency is deemed to belong to the Client.
I say that WFH has a limited application because the categories of work that fit the statutory definition are actually quite specific. As applied to Agencies, the most typical works that fit the statutory definition include (i) a part of a motion picture or other audiovisual work, (ii) compilations (a collection of other work, like a website) and (iii) instructional text (how-to guides, infographics). There are a number of other types of work included in the WFH statutory definition, but they are pretty rare in modern creative services work (e.g., an atlas, a test or answers, a translation, and supplemental works).
You’ve no doubt seen a work made for hire clause (WFH). It usually reads something like this:
<aside> 📑 All copyrightable aspects of the work produced by Agency for Client are hereby considered “works made for hire” within the meaning of the Copyright Act, and Client will be deemed to be the “author” of all such works.
Note what this clause is doing. It purports to convert all types of work (even things not in the WFH statutory definition) into WFH. Is that effective? I have no idea. From my research, the question (whether work that doesn’t fit the statutory definition of WFH can be designated as such by contract) hasn’t been decided. But the issues for an Agency are the same. We’ll discuss those below after the provision about Assignment.
The second way Clients obtain rights in an Agency’s work is by assignment (a fancy word for transfer). You’ll sometimes see an assignment clause appended to the end of a WFH clause that reads something like this:
<aside> 📑 To the extent the Materials produced by Agency do not constitute works made for hire under the Copyright Act, Agency hereby irrevocably assigns all rights in its work to Client.
This says that regardless of whether the Agency’s work qualifies as work made for hire, the Agency is transferring all rights in that work to Client.
Likely, you’ll face a Service Agreement that has both of these clauses. Fortunately, your key negotiating issues are the same: