Section Seven - Intellectual Property Rights

Intellectual property rights are fundamental in any service-based agreement, especially when creating unique works such as logos, photographs, or software. This section clarifies the ownership and transfer of rights between the service provider and the client, ensuring that all parties understand and agree on how intellectual property will be handled.

Question: Is the Vendor creating something tangible for the client, or do you want the option for the Vendor or the Client to choose to retain the copyrights rights?

Is anything "tangible" being created under this Agreement? For example, designs, photographs, specifications, recipes, etc? 


Unless you know specifically that you do not want to retain the rights to the work you are creating,  we strongly recommend that you select "yes" to this provision, and adjust later if need be.


You own the copyrights to the work that you create. It's a matter of what you decide to do with them. So if you want to just ignore this whole section, you can choose “Don’t Include IP”. 


I wouldn’t recommend that, but for example, if you’re a makeup artist you can’t own the copyright to someone’s face after putting makeup on them. That might be one of the only examples where you don’t need to include an intellectual property provision.

DETERMINING OWNERSHIP OF INTELLECTUAL PROPERTY

If you select “Yes” above, you will now see the following question:

Question: Does the Client or Vendor retain copyright ownership of the Vendor's work?

If anything created under the Agreement, ownership must be specified.


The "author" of a copyrightable work must transfer the ownership to an "owner". The "owner" is the only party who can enforce against infringement in the future. If the Vendor wants to be able to pursue infringement claims in the future, they need to select this provision.


This is one of the most heavily-negotiated  provisions in any creative contract. Because the law imputes the ability for the copyright holder to stop copycats, there is a monetary value attached to who can protect the work (or the brand). This provision must be selected carefully.


If you select “Vendor” above, you will now see the following question:

Question: Does the Vendor want to assign an exclusive or nonexclusive license in the work product?

The Vendor automatically holds copyright rights by creating the work.


This option is appropriate when the Vendor wants to retain ownership, but allow the Client to use the work under a license. For example, if you are a photographer providing stock photography for a stock photography company, you may want to negotiate an exclusive license, which would allow that company to be the only company who can sell the photos. When a party is granted an exclusive license, they usually pay a bit more to do so. 


If you select “Yes” above, you will now see the following 2 questions:

Question: Exclusive or Nonexclusive rights?

Exclusive vs. Nonexclusive License


Exclusive License: If the Client chooses an exclusive license, this means that the Client is the only one who can use the Work Product. The Contractor can't give or sell the same Work Product to anyone else. It's like having an exclusive right to use a particular piece of art or a unique tool. Companies often choose this if the work is very specific to their business and they don't want competitors to have access to the same material.


Nonexclusive License: A nonexclusive license means that while the Client can use the Work Product, the Contractor is also free to provide the same or similar Work Product to other clients. This is common when the work is more generic and not tailored to one specific client. It's like buying a software program that anyone else can also buy and use.


Why Choose One Over the Other?


Choose Exclusive if: The Work Product is unique and tailored specifically for the Client’s business. The Client wants to ensure that no competitors can access the same work. The Work Product gives a competitive edge or contains sensitive information.

Choose Nonexclusive if: The Work Product is generic and can be useful for multiple clients. The Client is okay with others having access to the same work. The Client is looking for a more cost-effective solution (since nonexclusive licenses can sometimes be cheaper)

Question: Exclusive or Nonexclusive rights?

For example, is the Vendor providing the Client with a license for a set term, such as "one year"?


If you select “Client” above, you will now see the following 2 questions:

Question: Does the Vendor agree to waive all moral rights and authorship?

"Moral rights" are a set of rights that creators (like artists, writers, etc.) have in relation to their work. These rights typically include:


The right to be credited as the author of the work.

The right to object to any change or use of the work that could harm the creator's reputation.


This provision is saying that the Vendor (the creator of the work in your agreement) agrees to give up these moral rights. Select this provision only if the Vendor is relinquishing all rights to the work.

The Role of AI in Intellectual Property

Question: Have the Parties agreed to the use of AI?

When in doubt, select "yes"; this provision is a line that states that if AI is used, that use will not misappropriate any legalities.


You are representing to the client that the work that they are going to be able to register is created by a human and therefore is able to be registered. If you have completely used AI to create the work and you're giving the client the copyright rights to the work, I don't want to say that they are worthless, but the client won't be able to register that work and so they are significantly, significantly devalued. 


So if you have used AI to create the deliverables, what the actual final product that is delivered to the client, not necessarily behind the scenes, go ahead and select yes to this.

Handling Client Use and Testimonials

Question: Do you want to include "Client Use of Photos"/"Testimonials"/Both

Client Use of Photos of Work: Photographs Sharing Rights: Both the Vendor and the Client can showcase photos of the work on their websites and social media. This is common in situations where the visual representation of the work can benefit both parties' portfolios or marketing.


Credit Requirement: Every time these photographs are used, the Vendor must be credited. This helps maintain the Vendor’s connection to and recognition for their work.


Testimonials: Use in Marketing: The Client allows the Vendor to use their testimonials in the Vendor's marketing materials. This could be on websites, social media, printed materials, etc. The Client will be identified only by their first name and location, or an alias if they prefer. This maintains a level of privacy for the Client while still allowing the Vendor to showcase genuine client feedback.


This would allow both parties to be able to showcase this work on an online portfolio. You have to be able to show if you use somebody's name, image, or likeness in a testimonial, that you have their permission to do so.

Question: Before moving on to the next Section, would you like to add any of the following?

Model Release

Permission to Use Images: The Client agrees to let the Vendor use any images that include the Client or events (referred to as "the Event") from the work (referred to as "the Work") for the Vendor’s own promotional purposes.


No Additional Compensation: The Client won’t receive any extra payment when these images are used by the Vendor.


Types of Usage: These images can be used by the Vendor for various promotional activities. This could include displaying them on their website, in their portfolio, in advertisements, or in publications like magazines or books.

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