Intellectual property, Copyright and all that legal stuff… What does it mean to you as a graphic designer? What should you know?…
As designers, we love to create. In fact, we get so engrossed with creating, we sometimes forget the importance of establishing who owns the work we create. So, who does own the work? And why should you care? GSM Re-Edit delved into the legal world of Intellectual Property…
Intellectual Property
Let’s start with a brief overview of Intellectual Property (IP) Law as it applies in New Zealand. IP Law is covered by the Copyright Act (1994). At it’s core, IP Law is designed to protect the Rights of the ‘creator’ of an original work. The principle of this is pretty easy to understand when you create work for yourself – it’s your idea, your work, you hold the Rights.
However, it quickly becomes more complicated when you create something for someone else. In particular, due to section 21(3) of the Copyright Act, otherwise called the ‘Commissioning Rule’.
The Commissioning Rule
The Commissioning Rule basically says;
“Where an original work is created on a client’s instructions for a fee (or other reward), then the client (not the creator) owns the copyright in the work”.
This means that, under the ‘Commissioning Rule’, if you agree to create something in exchange for payment (i.e., working for hire)—you have automatically renounced the Rights to what you have created. This rule applies to a broad range of works including graphic design, photographs, software, drawings, sculptures, films and sound recordings. Interestingly, it does not apply to literary works such as books.
This also means that a freelance designer, or a design business, producing work in exchange for payment by a client has, by default, no Rights to the work they produce. The client holds the Rights.
And, there is also an additional kicker to the ‘Commissioning Rule’…
The client who is paying for the work owns the Rights to the work, whether payment has been made or not. Simply by agreeing to do the work on the basis of being paid you have renounced all Rights to the work.
However, you can opt-out of The Commissioning Rule by licensing the work to the client. This means the Rights to the IP stays with you as the creator. Which brings us to the importance of Service Agreements.
Service Agreements
A Service Agreement is a form of contract outlining the terms of the relationship and/or engagement between you (as the supplier) and your client.
This type of Agreement should cover a number of topics, including trading terms and Intellectual Property. Both parties must sign the agreement.
As you are the creator/supplier, you should be the party who takes the initiative to bring a Service Agreement to the table. This should happen at the start of the relationship, before you undertake any work.
Any Service Agreement should include a specific ‘contract-out’ statement in relation to the Commissioning Rule. Without this you are back to; the client owns all the Rights.
Service Contracts, however, can be costly to generate via your lawyer. To help in this area, the Designers Institute of New Zealand (DINZ), have collaborated with Clendons Law Firm to provide a range of resources. This includes information on The Copyright Act & the Commissioning Rule, plus Design Service Agreements. These are available to DINZ members for download for their use from the DINZ website.
For designers who are starting out on their own, it’s important to realise that a Service Agreement between two parties in business is normal. Most supplier/client relationships will be based on an agreement of this nature. So with this in mind, there is no reason why a client would refuse to sign such an agreement. Although it would be reasonable for a client to ask for an explanation of the wording, or to ask for amendments to the wording.
So how does this work, or not work, in practice?…
Here’s a common scenario that we’re sure many graphic designers can probably relate to;
Client requests for ‘artwork files’.
Here’s how the story goes…
- Designer receives an email from their client requesting the ‘open artwork files’ for a project they have previously produced.
- The designer asks the client why they have requested this material? After all, the designer has delivered the work, and the client has used it within the agreed original scope of the project.
- The client responds by saying, they have decided to increase their marketing activity and want to use the artwork for ‘some other things’.
- Except someone else, other than the designer, will be producing the work moving forward…
In the clients mind, this is a simple case of we need the artwork (which we paid for). The problem is, it’s not what they are actually asking for. They are asking (in fact, presuming they already own) the Rights to the work. It’s not about artwork, it’s about Intellectual Property.
In this scenario, the designer needs to have a signed Service Agreement with the client in place. It would state that:
- they opt out of The Commissioning Rule,
- the works are Licensed to the client under the agreed scope of work,
- the Rights to the work would remain with the designer.
In this case the client would have paid for the use of the work within the agreed scope. The designer could therefore refuse the clients request. Being pragmatic, however, the designer may instead negotiate with the client to reach an agreement. Such as a release fee, Rights buy-out or similar. Without a Service Agreement opting out of The Commissioning Rule, the client’s request is likely to be within their Rights.
So, is this really a big deal? Well it could be…
There was a recent, well-documented case in New Zealand involving a product designer who designed a bottle and licensed this for use to a client. Cutting a long story short, the client attempted to sue the designer over the Rights to the design. In the resulting legal case, the Court ruled in favour of the designer. This was based on an agreement made 15 years prior, that the designer had never relinquished ownership of the Rights to Client. Without a prior agreement in place, the ruling may well have gone the other way.
And finally, the story of American graphic designer Carolyn Davidson. As a student Davidson penned a simple ‘swooshing tick’ for a fellow named, Phil Knight. He paid Carolyn $35 for her drawing. Phil went on to build a global empire that would eventually become Nike. Someone has probably written a whole book on this particular scenario, but the simple truth is that the idea of IP was likely never discussed, let alone agreed on, at the time the drawing was produced. This could have created a potential legal quagmire (in a country where people love to sue each other). Good news was, Nike recognised Carolyn’s contribution to the company. They gifted her a diamond and gold ring (featuring her Swoosh design), along with an amount of stock in the company with an estimated worth of $1m USD.
Again, however, this simply illustrates the importance of understanding some basics around IP. It is important to have the right conversations at the beginning, with everything agreed in writing.
Please note that this article is intended to provide a general discussion on the topic of Intellectual Property in New Zealand. It is not to be used or construed as legal advise. For more information on the Copyright Act & the Commissioning Rule, and Design Service Agreements click here.
This article was originally published in GSM Re-Edit. To read this and other great articles purchase this issue here.
