Creative agencies, client agreements and intellectual property
It is essential for creative agencies to have clear and authoritative provisions about ownership of intellectual property in their client agreements. Having clear terms in client agreements reduces the potential for disagreement down the track or for the client or agency to be put in a harmful position. Unmet expectations, unclear responsibilities, a loss of time and money, and resulting potential lawsuits are not worth the risk!
This content is for members only.
But wait, I’m a member! Please login to access your member-only content.
| Password | |
It is essential for creative agencies to have clear and authoritative provisions about ownership of intellectual property in their client agreements. Having clear terms in client agreements reduces the potential for disagreement down the track or for the client or agency to be put in a harmful position. Unmet expectations, unclear responsibilities, a loss of time and money, and resulting potential lawsuits are not worth the risk!
When preparing (or considering) a client agreement it is important to also clearly define the scope of work and to ensure that the terms regarding intellectual property are clear, appropriate and fair in the context of the scope of work and the contract price, at the commencement of the relationship.
Protecting the client’s intellectual property
Generally speaking, the underlying rights to any intellectual property provided by the client to the creative agency should be retained by the client. The agency will usually be granted a licence to use the client’s intellectual property in order to undertake the services they have agreed to provide whilst the agreement in in force.
The client agreement should include a clause that states that nothing in the arrangement between the creative agency and the client will constitute a transfer or assignment of the intellectual property rights of the client’s including its intellectual property in any material the client provides.
Protecting the intellectual property created by the creative agency for the client
Clients will generally want ownership of any intellectual property created by the agency for them. Usually an agreement will assign all right, title and interest in the created intellectual property material in any campaign or project for the client, sometimes with a limited licence back to the creative agency to use the created intellectual property for marketing or promotional purposes.
Sometimes creative agencies want to retain ownership of the intellectual property in the work they create for the client and licence it to the client. If you are entering into a licensing arrangement with a client, consider the following:
Where and how can that creative work be used, and for what length of time?
Is it an exclusive license to the client, or can that work be licensed to other clients? Do you want to continue to have the right to the creative work yourself (usually yes!)
May the client modify that creative work or create new works based on that work?
Does the client have to credit the creative agency for the work when using it?
Will royalties for use or sale of the creative work apply? Who will receive them?
Does the creative agency want to retain the right to use the work as part of a portfolio or exhibition, or on social media for promotion purposes?
Protecting the client when the creative agency uses intellectual property belonging to a third party
If the creative agency uses third party intellectual property in their provision of services to a client, there should be a clause warranting that the creative agency has the right to use that third party intellectual property, together with an indemnity in favour of the client, protecting the client in the event of any third-party claims. A similar undertaking should be in favour of the creative agency where it is the client providing third party intellectual property for the purposes of the agreement or project.
What will happen to the work done by the agency if the client engages another agency for the same work?
If you are a creative agency, you will want to make sure that any intellectual property rights that are to be granted to the client once you have delivered your work are reflected in the price you charge, and ideally, that you receive payment before the final delivery of the work. So; at the pitch-stages of marketing and pre-contract negotiations, ensure you as the creative agency retain the IP (and if necessary, require that any pre-contract negotiations are protected by confidentiality obligations), so that the client cannot run off to another agency with your ideas —without infringing your IP rights anyway!
Ensure that your agreement with the client states that the IP in the creative work will not pass to the client until payment has been made for the work. That way, even if the client engages another agency for the same work following completion of your work, they should still be legally required to pay you the full fee. There is also no risk that the client can obtain rights in the IP if they cancel the agreement before the work is complete or full contract price paid.
Who will own the work provided to the client if a refund of the deposit is requested?
If the client requests a refund of the deposit it insinuates that either the client is not happy with the work done by the creative agency to date, or that they have found another agency to do the work. Your terms should state under what circumstances the client is entitled to a refund and how the IP is to be treated in such circumstances (again we would suggest that the IP does not transfer or vest in the client unless and until the full contract price is paid).
Jessica Kerr is the director of Sinclair + May. Jessica set up Sinclair + May with a view to do law differently and make legal services accessible for small businesses. Sinclair + May operate on a fixed fee basis and offer retainer services for their clients. Sinclair + May is a female-led, boutique commercial law firm and work extensively with the creative industry. You can follow Jessica on instagram @thelawyerslunchbox for useful legal tips and see more about Sinclair + May at www.sinclairmay.com.au.
Debt recovery options for small businesses
As a small business, it’s essential that you receive payment or money owed to you within a certain time-frame. If you have been unsuccessful in recovering a debt after sending your own friendly reminders, attempting informal negotiations, and sending a letter of demand, you might consider taking some more formal steps towards recovering moneys owed.
As a small business, it’s essential that you receive payment or money owed to you within a certain time-frame. If you have been unsuccessful in recovering a debt after sending your own friendly reminders, attempting informal negotiations, and sending a letter of demand, you might consider taking some more formal steps towards recovering moneys owed. Debt collection services or legal action are the next steps – and although such measures may result in a tense business relationship with the debtor, it could be that being paid is more important. Taking formal action will show your business will not tolerate non-payment, which can be advantageous in future disputes over debts owed.
Debt recovery by traditional debt collection services
Debt collection agencies usually work on a commission percentage of the debt; rates vary between 5% and 30% of the debt value – so it pays to shop around for a low rate. A letter of demand will be sent by the agency stating that the debt must be paid by a certain date or legal action may be taken, and sometimes a further and final letter of demand will be sent stating the same. If the debt is still unrecovered, the debt collection service can then be engaged by you to take legal action on your behalf.
Debt purchasing
Sometimes you may sell your debt to a debt collection service for a very small percentage of the amount owing to you. As this means of debt recovery will only yield a small proportion of the amount you are owed, it should only be considered when you have completely written off the debt, and all other avenues are exhausted or impractical.
Online legal debt recovery
These services generate and send a letter of demand for you using information supplied about the debt and debtor, and charge you a fee for the letter. While this can seem like a quick and cost-efficient process it’s important to be aware that you lose control over what is written, and legal advice is generally not provided.
Engage your lawyer
Consulting your lawyer may be the best way to go. A lawyer can draft a specific letter of demand to the debtor that is sensitive your business relationship with that person or business in an effort to minimise collateral damage, while still asserting your right to payment. A follow up letter can be sent as well as phone reminders, and if necessary a payment plan can be worked out that allows your debtor to pay you the full amount owed without further (costly) legal action being required. A letter sent by your lawyer will hold a certain amount of weight and hopefully trigger some sort of positive action from your debtor. If there is a reason the debtor is withholding payment, your lawyer can provide advice on your legal position, rights and likely outcome of pursuing legal action to try to recover the debt, (and whether it is worth it weighing up the legal costs). Your lawyer can help to ascertain whether the debtor has enough money and/or assets to cover the debt, before taking any legal action.
If the debt is for less than $100,000 you may recover your debt through the Magistrates Court of Victoria. (The County and Supreme Courts deal with debts for over $100,000.) Your lawyer will issue a Complaint, serve it on the Defendant (the debtor), and if there is no defence filed, file an Application for Order in Default of Defence form. If there is a defence filed by the Defendant, the matter will be set down for mention and may be referred to a conciliation conference and/or arbitration prior to a hearing date being set. The aim here is for you and the debtor to discuss and hopefully resolve the issue, and avoid a hearing.
Once you have either received an Order in Default of Defence, or been to the hearing and obtained judgment, you may need to enforce judgment if the Defendant doesn’t pay within a reasonable time. Your lawyer will apply to the court for the Defendant to attend an oral examination of their earnings and assets, and then may pursue payment through an instalment order, an earnings order (that will take payment from the debtors’ wages), or a warrant to seize property. You may wish to bankrupt the judgment debtor if they are a person and the debt is over $5000, or ‘wind-up’ the debtor if they are a company to place them in liquidation – and receive the money owed to you as a creditor. These legal pathways are not without complication or cost, and you and your lawyer will decide together whether it will be a worthwhile effort considering the time and money involved, and likely chance of success. If you are winding up a company, your lawyer will check that your debt will not be superseded by debts owing to other creditors.
Mediation
If you find out that there is a business dispute over the owed money, you can utilise a free or low-cost mediation service, such as the small business commissioner, to try and resolve the situation. It might be that the debtor is withholding payment for a valid reason, and you may both need to compromise to come to a satisfactory outcome (and avoid an expensive and stressful legal dispute.)
Banned practices for debt collection
There is a list of banned debt collection practices. In summary, the use of threatening behaviour against the debtor, their family, or on their property in any way, is illegal. If the debtor advises you in writing that they wish for no further communication to be made about the debt, then the only avenues available to you are a) contacting the debtor through an action issued by a court or VCAT; b) threatening to take the debtor to court or VCAT action; or c) applying for the debtor to comply with a requirement under the National Credit Code (this Code will only apply if you have entered a credit contract or consumer lease with the debtor.)
Jessica Kerr is the director of Sinclair + May. Jessica set up Sinclair + May with a view to do law differently and make legal services accessible for small businesses. Sinclair + May operate on a fixed fee basis and offer retainer services for their clients. Sinclair + May is a female-led, boutique commercial law firm and work extensively with the creative industry. You can follow Jessica on instagram @thelawyerslunchbox for more useful legal tips and see more about Sinclair + May at www.sinclairmay.com.au.
How to stay "Instasafe" as a creative
I love Instagram. It lets me communicate to the world what I'm about (nourishing food, natural light and comfortable shoes wherever possible, and preventative health in life, law and business!), and has allowed me to connect with so many like-minded clients...
Photo via Pexels
I love Instagram. It lets me communicate to the world what I'm about (nourishing food, natural light and comfortable shoes wherever possible, and preventative health in life, law and business!), and has allowed me to connect with so many like-minded clients through my page @thelawyerslunchbox.
And I know many of my clients loving using it for their own businesses.
But we all need to make sure we stay legally safe on Instagram. This means not falling foul of Insta's terms and conditions, using the right images and not saying or doing anything illegal.
Here are some tips...
Types of images
Instagram has the right to remove, edit, block, and monitor accounts containing content that Instagram determines violates their terms of use.
To avoid problems, you must not post violent, nude, discriminatory, unlawful, infringing, hateful, pornographic or sexually suggestive photos. This term is interpreted sensibly, for example if your business is in fashion, intimate apparel, swimwear, music, celebrity, modelling etc, photos may be quite sexual without causing any trouble. But nudity, or pornographic inference (even if digitally-created), will not be okay. Use common sense when thinking about what Instagram and its diverse audience may find offensive. Nudity in photos of drawings, paintings and sculptures will be acceptable, as will photos of mastectomy scarring and breastfeeding women.
If your business is related to children or you like to share photos of your own family, be mindful of the broad audience that they may be open to. Photos of nude or partially nude children may be removed, even if they seem innocent and are being shared with the best intention. Instagram’s aim here is to ensure that they don’t fall into the wrong hands.
Copyright
You can only use images that do not infringe others’ intellectual property rights. If you are posting authentic images created by you or your business (such as your own photos, photoshoots, illustrations, videos, or graphics) then this is not an issue. But if you want to post an image found online, then you must be vigilant. There are millions of high-quality graphics and photos online available for free commercial use. Many websites curate images in the public domain, and you are free to use them in any way. In most cases, you do not have to provide attribution. But check the terms of the site to make sure. If attribution is
required, check what format.
It is best to assume every image you find online is copyrighted – a copyright notice is not legally required as notification of copyright, so the absence of a © or watermark isn’t a sign that no copyright exists. If an image is covered by copyright, the copyright holder may agree to some uses but not others. You must check this before using the image.
If you alter a copyrighted image, it does not relieve you from potential liability. If you repeatedly infringe other people’s intellectual property rights, Instagram will disable your account.
On Instagram, you are liable for what you upload. This means you are legally responsible for copyright violations even if you hire a social media professional who chose and used the offending image. It is important to ask your social media manager where they source their images from. You should contractually ensure that if an image they use is found to violate copyright and you are required to pay, that they will indemnify you.
Music is covered in the same way as images, and you are not allowed to use music that you don’t own the rights to, for any commercial or non-personal use. This includes music in videos uploaded to your feed as well as Instagram lives and IGTV, and can extend to music playing in the background of videos.
Photo via Pexels
What you can legally say
Don't copy any other person's written work in your Instagram posts. This may infringe their copyright.
And don't post unwanted comments, likes or other forms of commercial or harassing communication (spam) to Instagram users. This includes repeatedly contacting people for commercial purposes without their consent.
Further, online cyber bullying is a crime in Australia. You must not threaten, harass, or offend someone, stalk someone, access others’ Instagram accounts without permission or defame someone on Instagram.
How to deal with trolls
A troll is a member of an online community who deliberately tries to disrupt that community by posting inflammatory content.
How should you deal with trolls commenting on your business page?
Use Instagram’s built-in reporting option. Instagram will quickly remove content that does not meet community guidelines.
Unfollow or block the person who posted the comment. And delete the trolls’ comment on your post.
Sometimes ignoring a troll is best. If they are looking for a reaction, they may lose interest when you give them nothing.
If the troll is a customer with a complaint, take notice and try to help. Humour can be used to effectively engage unhappy customers and turn them into advocates for your business. Acknowledge yet make light of the situation, and apologise for the customer’s experience.
If the troll is spreading rumours or misinformation, address the issue head-on and retaliate with the truth.
If the troll points out a mistake, look into it, make the proper corrections and admit that you were wrong.
Instagram has the right to modify or terminate your account for any reason, without notice,
and at any time. So stay the right side of their terms and the law.
Jessica Kerr is the director of Sinclair + May. Jessica set up Sinclair + May with a view to do law differently and make legal services accessible for small businesses. Sinclair + May operate on a fixed fee basis and offer retainer services for their clients. Sinclair + May is a female-led, boutique commercial law firm and work extensively with the creative industry. You can follow Jessica on instagram @thelawyerslunchbox for useful legal tips and see more about Sinclair + May at www.sinclairmay.com.au.
Should you trademark your business name?: Brand protection tips for creatives
This week we’re introducing a new regular column for 2018, focused on legal issues for creatives. To kick things off, let's take a look at trademarks.
Trademarking your business name can help ensure your customers identify your product or service as unique, and ensure your business is – and remains – distinguishable from all others.
This week we’re introducing a new regular column for 2018, focused on legal issues for creatives. To kick things off, let's take a look at trademarks.
Why trademark your business name?
Trademarking your business name can help ensure your customers identify your product or service as unique, and ensure your business is – and remains – distinguishable from all others. You can trademark your business name on a national and/or international level, after considering whether your business will operate locally, nationally or globally.
The pros
The benefits of registering your business name as a trademark include:
Protection of your name against imposters and copycats
A secure brand on social media. Facebook, Instagram, Pinterest, Twitter and other social media venues have policies in place to protect you against abuse.
Trademarks are easy to renew.
Trademarks build brand loyalty and may even evoke pride in employees.
Trademarks can safeguard against cybersquatting (domain names that are identical or similar to your trademarked name).
A business name alone does not give you exclusive trading rights or ownership over that name. A trademarked business name can be extremely useful as a marketing tool; it gives your business an identity, or brand. You will have ownership and exclusive rights to the commercial use, license or sale of your business name as a trademark. No one else in Australia will be able to commercially use your business name within the class of goods and services it is registered under. It will carry intellectual property protection and you may use the trademark symbol (a capital R enclosed in a circle) following your business name, alerting others that your business name is a registered trademark. This can help build the value of your business, and the trademark may hold value in itself. If another trader tries to pass off her own product or service using your trademark, it will be an offence under the Competition and Consumer Act 2010.
It’s possible to protect your business name as a trademark without registering it, if your business has been using it for a sufficient period of time and has built up a significant reputation. However, in the long run, protecting a trademark without the benefit of registration is likely to be much more difficult and expensive.
New businesses registering their business names will be alerted to your trademark when they use IP Australia’s TM Check to ensure they do not infringe on an existing registered trademark.
The cons
The negative aspects of registering your business name as a trademark include the hassle of dealing with government agencies, the time it takes to jump through legislative hoops and the cost—which is not large, but not insignificant either.
How to register
To register your business name as a trademark, use the Australian Government IP Australia online services. You’ll be offered different cost structures depending on whether you use the TM Headstart service or the Standard filing service; application costs range from $130 to $480 per ‘class’. The ‘class’ refers to the category of goods and services, which are divided into forty-five classes. To discern which class/es you need to register your trademark under, think about the exact nature of your business and consider the following:
Where do you derive your business income?
What is the nature of your business?
What are you known for by your customers/clients?
What products or services does your business provide?
Once your trademark application is approved, there is no further cost to register the trademark.
It takes three to four months for IP Australia to examine your trademark application and ensure that it meets legislative requirements, is under the correct class and so on. Refunds are not given for errors, so it is important to get the application perfect the first time around. You might save time, energy and money by engaging a lawyer to do the application on your behalf; if you are moving your business to a global platform, a lawyer’s advice on trademarking overseas will be indispensible.
Once your trademark application meets all requirements, it will be registered and you will be notified in writing.
Maintaining your trademark
If you do decide to trademark your business name, you must actively use it in the course of trade. If you do not use it, the trademark can be removed on the grounds of non-use. (Trademarks are not allowed to be registered to simply stop other traders from using them.)
Once registered, your trademark remains for ten years from the filing date. You can renew your trademark from twelve months before the renewal is due, or up to six months after. Current on-time online renewal fees are $400 per class, however there will be extra fees if you renew after the due date.
Weighing up the pros and cons
Overall, trademarking your business name is usually worth the time, effort and cost. It ensures the business you have built will remain solid and hold its reputation for the long term, and you won’t need to change your name or branding down the track.
Jessica Kerr is the director of Sinclair + May, a female-led, boutique commercial law firm that works extensively with the creative industry. Jessica set up Sinclair + May with a view to do law differently and make legal services accessible for small businesses. You can follow Jessica on Instagram for useful legal tips or visit Sinclair + May at sinclairmay.com.au.
Photo by pixabay.com