Intellectual Property: What does "Work for Hire" mean for designers?

Frank Martinez is special counsel on copyright and fair-use issues for AIGA. Frank has considerable experience in copyright, trademark and patent law; he was responsible for typeface design issues at the U.S. Patent Office; has worked with design firms and typeface designers; and teaches in the graduate program at the School of Visual Arts in New York.

Question:
Under U.S. copyright law, the designer is the owner of all files and artwork created for the client, and the client is the owner of the end product (i.e. a printed business cards). Release of electronic files to the client is at the discretion of the designer and is determined by the type of project. Copyright ownership may be transferred to the client for a fee that is based on the uses for which rights are being transferred. This is specified in a proposed agreement for the design of an identity system.

The client returns the proposed agreement with the copyright section crossed out by the client and with this added: "The work to be performed shall be considered to be "Work for Hire" and all Copyright Ownership related to this work shall completely reside with the Corporation. All electronic files developed during the process of the work are the property of the Corporation. The designer can display this work for portfolio or self-pormotional purposes only with the express written approval of the Corporation.

What should I do?

Answer:
In a perfect world, a designer should be in control of how he sells his services. As a practical matter, however, very few businesses will grant a third party the right to control its identity and it is used.

There are a number of conflicting issues in this case, starting with two polarized legal realilties. First, the identity a designer creates becomes a trademark of the company. It is a fundamental principle of trademark law that all trademark rights arise through use in commerce. Thus, all trademark/commercial rights will belong to the company, not the designer.

Second, under copyright law, an independant contractor (freelancer) is able to control how he transfers ownership, if at all, of his work. This right includes the right to license the work for specific uses. So, even if a designer were to retain ownership of the logo, he will have no right to use the logo or sell it to another party since the designer does not have rights to sell or license a trademark. The designer?s rights are limited to the mere appearance of the design. In addition, it is highly likely that a court will find an implied license, from the designer to the client, to use the work in any commercially reasonable manner.

Choose your battles wisely realizing that generally transferring all rights should incur a higher fee.

Ask yourself this question: What is the type of work and do I really believe there is a value to me in keeping the rights over an extended period of time? If the work is in the nature of a separate animation element, a dingbat or other easily separable work, it may be re-usable. Many websites or complex printed matter (templates) will contain elements that can be reused in other ways. An identity, on the other hand, does not lend itself to repurposing.

"Choose your battles wisely realizing that generally transferring all rights should incur a higher fee."

Some clients will try to limit the designer's rights because of concern that competitors will seek to use the same look. As a designer with professional ethics, be mindful that whatever the terms of your agreement, you have an obligation not to undermine your client, i.e., you can't sell the same or similar work to another client and in some cases it might not even be wise to work for a direct competitor of a client unless the scope and/or look of the work is quite different.

In connection with this, be wary of contract terms which absolutely limit your ability to provide services for a client's competitors. Limitations on your ability to obtain work should require compensation.

I would not realisticaly expect to be able to own or control the use of an identity or any work related to it since you really cannot use it afterwards. As a commercial matter, no corporate counsel would allow such an agreement. You might try to get a right of first refusal as regards creating versions or updates to the work, but anything more is probably not feasible.

Regardless of the extent to which you want to retain the rights of your logo design, I would always urge a designer to retain an absolute right to show work in his portfolio or in advertisements for his services. If a client wants to remain anonymous, let him pay for that privilege. Your portfolio is the only proof of your ability.

In all circumstances I would retain a digital copy of the work simply as a wise business practice. You should archive a copy and if the client or the printer loses theirs and they insist on full ownership, charge them a service fee to replace it (a fee that should be stated in your agreement).


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First published in Gain 2.0: AIGA Journal of Design for the Network Economy.