Understanding Copyrights and How to Address Them in Your Client Contracts

Written by: Annette Stepanian
Attorney for Creatives & Entrepreneurs
www.annettestepanian.com

As a designer starting to work with clients, you probably understand the importance of having a contract in place before you take on the work. But rather than working with an attorney to draft a custom contract for you, you take matters into your own hands and pay a visit to the almighty Google.  You scour the internet for free samples or borrow examples from your Facebook group friends and once you have a good handful of examples, you get to work.  

You brew yourself some coffee, print out all your sample contracts, lay them across your desk, and commit to spending an afternoon on getting your contract done.  You’re not even halfway through the first sample contract when your head starts to hurt reading all that legal mumbo jumbo - force majeure? indemnity? copyrights? whaaaaat?

Committed to cross this task off your to-do list, you go to town just copying and pasting important sounding language into your contract - even though you’re not sure what some of this language means, why it’s important or how you’d even explain it to a client. Eh, details.

After a few more cups of coffee, you’ve got a legitimate looking document staring back at you on your computer screen. You hit save, shut down your computer, and you decide to reward yourself with a night of binge-watching Netflix. 

Although most folks take this what I affectionately call the “cut-and-paste approach to contract drafting,” it’s not an ideal scenario if you’re looking to protect your business baby.  There are a handful of reasons why this is, but among them is that you might be inadvertently giving away important rights that could protect you in the future. For designers, one of the key issues that is often misunderstood is the issue of copyrights

What rights do you have when you do design work for your clients? In this post, I’ll break down some of the essential things you need to understand about copyrights and how to address them in your contracts.

First off, what is a copyright? 

A copyright is a form of protection for published or unpublished “original works of authorship.”  Literary, musical, dramatic, pictorial, graphic and audiovisual works are just some of the categories of work that can be protected by copyright laws. 

Copyrights are made up of a bundle of transferrable rights – think of it like slices of a pie. Mmmm…pie. Back to copyrights -- think of each slice of the pie as a right, including the right:

  1. to reproduce the copyrighted work;

  2. to prepare derivative works based upon the copyrighted work;

  3. to distribute copies of the copyrighted work to the public;

  4. to perform or display the copyrighted work publicly

As an owner of a copyrighted work, you can assign these rights on an exclusive or non-exclusive basis.  Rights to a copyright can further be divided by: (1) time period, (2) geographic area, (3) category of use, (4) medium of use, or (5) language.  For example, let’s assume you’re an illustrator who developed a cast of original illustrated characters (which we’ll refer to as the “copyrighted work.”)  You can, for example, choose to grant a non-exclusive license to Company A to use your illustrations (the copyrighted work) on T-Shirts (the medium of use) to sell (the category of use) in North America (the geographic area) from May 30, 2015 to May 30, 2030 (the time period). Nifty, right?

Because a copyright owner of a work has these various rights, you can see that owning a copyright to a work can be very powerful and lucrative. 

Who owns a copyright? 

The copyright generally belongs to the author of the original work. However, that’s not always the case. 

Here are the categories of people who might own the copyright to a work: 

  • The creator of the original work

  • An employer for work prepared by an employee within the scope of employment

  • The hiring party for work made for hire arrangements where there is a written work made for hire agreement for “commissioned work”

  • A person to whom the copyright is legally transferred

For example, let’s say you’re a graphic designer employed by a design firm. In that scenario, your employer owns the copyright for work you do on projects for your employer. In contrast, if you’re a freelance graphic designer hired by a client to design an illustration for their upcoming book, as the designer you own the copyright to those designs, unless you agree to legally transfer them to your client. 

What does this mean for your design business?

As you can see, copyright ownership of a work can be very valuable.  That’s why it’s important to address who owns the copyright to your design in your contracts with your clients.  Some of the options include:

  • The designer retains the copyright to the work and licenses its use to the client under certain conditions;

  • The designer foregoes the rights to the copyrighted work, and assigns all rights to the work to the client; or 

  • If the designer is an employee or has entered into a work made for hire arrangement, then the copyright belongs to employer/ hiring party.

Take Action Now

  • If you don’t have contracts in place for your business, or you’ve been working from a contract that you “cut and paste” from free samples on the internet,   it’s time for an upgrade. You can work from solid template or hire a lawyer to draft one for you.

  • Find out if your current contracts are up to snuff by taking our one-minute quiz: https://yourlegalbff.com/quiz.

  • If you do have contracts, spend some time reading through them. Do you understand all the terms? Does the contract accurately reflect your current policies and procedures? Remember, to regularly review and update your contracts as your business grows and evolves. 

If you’re serious about your business, then make the small investment to have a solid contract in place.  Your future self will thank you. 

© 2019 Annette Stepanian

Some say fun & law can’t coexist, but that means they haven’t met Annette Stepanian, a real lawyer who makes the law practical, approachable, and dare we say it – even a little fun. Not only can she lay down the law, but Annette equips other creative professionals and small business owners with the legal and business knowledge needed to confidently start and grow their businesses.  Committed to making legal information accessible for small business owners and entrepreneurs, Annette founded Your Legal BFF, your go-to online legal bestie for easy to understand and industry specific contract templates and trainings.  To learn more, visit Annette at www.annettestepanian.com and Your Legal BFF at www.yourlegalbff.com.

Disclaimer:

This information is for educational and informational purposes only; it is not intended as and does not constitute legal advice and does not create an attorney-client relationship between you and the author.  You should not act, or refrain from acting, on the basis of information provided here without first consulting legal counsel in your jurisdiction.

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