Advice Centre

Contracting with your design partner – who owns what?

Excitement and anticipation are overflowing as your design partner is about to breathe life into your latest creative idea. This will be the work that will launch you (and your design or ad agency) into the spotlight. But don't let your enthusiasm overshadow one more mundane, but important consideration – who will own the finished product?

Both you and your design partner or ad agency can find yourselves tangled in a complicated web of copyright issues if the contract between you does not spell out clearly how you intend to deal with the ownership of intellectual property rights.

Is advertising material prepared by your design partner, owned by you or by them? You should settle this issue by specific agreement at the start of the project. Not surprisingly, it is much more interesting to talk about the shape and form of the work so discussions often do not focus on who will own the end product. Or you make the assumption that if you pay for it, you own it. But that's not always the case.

 
Copyright Contortions

If the design or ad agency contract does not refer to ownership, then the Copyright Act 1994 will determine who owns copyright in the advertising material produced. This may well lead to some unexpected and unsatisfactory results. The problem is that advertising material includes text, drawings, photos, scripts, film footage, and more. The Copyright Act sets out different rules for copyright ownership depending on what material has been produced, where it will be used and what arrangements have been made for payment.

The general rule is the author of the work is the owner of the copyright in that work. An exception to this is works created during employment belong to the employer. Normally, any copyright material produced by your agency's creative team would belong to the agency. But, this rule does not apply where you "commission and pay or agree to pay for" specific works. The specified works are photographs, computer programs, paintings, drawings, diagrams, maps, charts, plans, engravings, models, sculptures, films and sound recordings. Subject to any agreement to the contrary, whoever commissions one of these works will be the owner of the copyright.

It is also relevant to note that this commissioning rule does not apply when the client who commissioned the work, wants to enforce copyright in many overseas countries. In Australia and England for example, the design or ad agency is considered the author of the work even if you have commissioned the work and own the copyright in New Zealand.

 
Niggling Exceptions

Further complicating matters, there are limits on the sort of work to which the commissioning section applies. Not all works are included. Notably absent from this list are literary works (which include advertising copy) and dramatic works (which includes scripts for television commercials). The implication of this limit is that while you may have commissioned the copy and script, the agency is the legal owner of the copyright in this material unless otherwise stated in the design contract.

For instance, if a design company prepares a brochure or print ad for you which comprises text and either (or both) photographs and drawings, and there is no contract, copyright in the text (a literary work) belongs to the agency. But copyright in the photographs or drawings belong to you as the client (assuming they were created by the agency and not licensed from some other source). For a television commercial, the film script or the storyboard is a dramatic work, therefore the copyright remains with the design agency. However, to the extent the storyboard is a series of drawings, the copyright belongs to you as the client.

If the commercial is filmed, then, because films and sound recordings are works specified in the commissioning section, copyright in the film and its soundtrack (if created by the agency) is yours.. But copyright in the film script remains with the ad agency.

Obviously, having copyright in different parts of advertising material owned by different parties will lead to difficulties when the agency or the client wants to use or sell them at some later date.

 
Talk it over

When entering an agreement to create design and advertising material or any other work in which copyright is likely to exist, taking the time to talk through ownership issues with your design partner or ad agency will save time and trouble later. Entering a written contract which sets out who owns what is just as important as the creative decisions you will make along the way. Without clear and consistent ownership, you cannot assert your intellectual property rights in your goods or services and leverage the commercial benefits from your investment in good design.

Acknowledgements:

This article is kindly supplied by Russell Law, Senior Associate, A J Park Wellington russell.law@ajpark.com
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