The great debate – who owns the IP of the creative work a client commissions?

Some of the most sticky conversations I have had to have with my clients have revolved around the great debate of who owns the Intellectual Property to the design work we have created – design agency or client? In the 20 years Fresco has been in operation there have been numerous occasions where we have run into difficult conversations involving copyright issues, so I thought in the interest of saving myself the trouble of re explaining I would write an article to explain how I have resolved this.

Under Australian Law the IP and native or source files (i.e. the program that the file was originally built in, and is editable) of all design work belongs to the designer or creative agency that created that work. That’s right, they own all the rights to those files by law. If a client wishes to own the native files because they know they want to modify these files in the future this point needs to be discussed and negotiated at the time of signing the quote. What an agency decides to charge for releasing these files is to their discretion but a general rule of thumb is that a 100% additional charge applies based on the original fee. The common exception to this rule is for matters of brand identity, such as logo design (which the company will trademark as their own) or websites, which by nature must be updated frequently. The only other exception to this rule is if you are a freelancer or volunteer, other than that Copyright protection lasts throughout the life of the author or creator, plus an extra 70 years from the author or creator’s death!

I’ve had clients who were hell bent on getting the native files for design work our studio has created. After explaining to them how copyright works, and that although we don’t automatically give the native files away, I’d be happy to do so for an additional fee. These clients were outraged and often I hear the same claims that “all their other design agencies didn’t have a problem” with giving up their native files. Hmmm, well, maybe they should have had a problem with it!

According ADGA (Australian Graphic Design Association),
“The biggest component of a graphic designer’s job is to create intellectual property. It would be a waste for them not to find out how to protect it.”
So by giving away native files you are automatically giving away your Intellectual Property.

In a nutshell The IP issue revolves around the skill the creative agency and the designers have developed in ‘programming’ or developing source code in an Indesign, Photoshop or Illustrator file. The way that the designer sets up a file makes it more efficient to use and that is the IP. Handing over the source file gives another designer that IP. The comparison is that Microsoft would not give away their source code. The client has every right to copy the design into any program they choose. That is what they are sold as part of the design fee.

There was a great tongue and cheek article written by a US Agency called Apex Creative that perfectly summed up why giving away native files or the source files to clients is an “extra” not an “inclusion”. I’ve included these ideas below for the next time anyone of my clients argues their point on why they have the right to receive the IP of a design project they feel they have already paid for. Happy reading!

“Giving Away Your IP – What’s the big deal? The main reason why professional designers don’t give away their source files is because the client is paying for the final work, not the tools to make it. A lot of clients may think that access to native files should be included, and don’t see it as an extra thing.

The client is paying for the final work, not the tools to make it

The best analogy I can think of is going out to dinner. Me and the hubby love the Cheesecake Factory. But when we pay $20 for our medium-rare Kobe burger with Cheddar, all we get is that one meal for that one visit. Can you believe it?

The price doesn’t include the chef coming out, giving us his recipe, utensils, and ingredients to take home, as well as a tutorial.

What a rip off.

Yet millions of people, everyday, happily go to restaurants and other service industries, where they get “ripped off,” yet expect something different when it comes to designers, even though it’s the exact same thing.
You, as the client, are paying for the delivery of the final design product. Nothing more, nothing less.

Another client I have completely understood this concept. I designed a handbook for them, and they inquired about getting the InDesign (source) files.
I explained how this would be an additional fee, and while they were understandably disappointed, they respected my position and didn’t argue the point further. A few months down the road, they were ready to purchase the native files and rights from me.

One last thing to consider, and I’ll quote from because this was so spot on :

An Independent Contractor is commissioned because the work requires significant artistic skill.
The Designer supplies her/his own tools, performs the work at her/his own office, works for a relatively short time on a project-to-project basis, and controls when, how or how long he/she works.

Typically, in this arrangement, the client has no part in the Designer’s business practices, does not provide the Designer with employee benefits or contribute to his/her unemployment or worker’s compensation, and most importantly to Uncle Sam, the client does not treat the Designer as an employee for tax purposes.

Independent Contractors pay self employment taxes and foot the bill for health insurance, technical maintenance, tools required for the trade, and provide a valuable service to their clients.

Take a look again at all a freelancer does. I’m not trying to throw a pity party, the above is just factual, and should be compensated.

Because let’s face it; asking for source files is extra, not normal. So let’s stop normalizing it”.