Repeat client is suddenly demanding intellectual property rights!

Question

A fairly sizable client whom I've done a few jobs for over the past several years has recently contacted me for a new job. We have never had a contract for any of the work I've done for them (I'm a freelance designer). In his most recent email, he said:

"By the way, I am requiring that all files in their native form belong to [my company] and are to be delivered to me upon completion of the project. The files must not be password protected and are to be in their 'collected-for-output' form before payment will be made. I consider what we pay for to be the intellectual property of [my company]."

Aside from the fact that this is a little insulting (considering I've held nothing hostage, have been perfectly civil, and complied with every request I've ever received from any client I've had, including providing original working files), I understand that this is not standard practice... Most designers, it seems, do not hand over copyrights or intellectual rights to a design. But I don't feel that it's worth losing a fairly good client over something that may make him feel I'm somehow taking advantage of him. (The designs I do for them are mostly advertisements, flyers, small brochures, etc.)

What would you do? What do you recommend?

Answer 1

I wouldn't necessarily be insulted. Your client is simply coming to the table with some terms. You can accept them, deny them, or counter.

I'd recommend countering with a formal contract. Typically designers do not deliver the work files for a number of reasons (the least of which is that the client usually has no use for them). But it's not unusual either. Sometimes designers will charge more for that. Sometimes not. It's up to you.

But I'd suggest you make your contract very clear and consider some thoughts:

• you will deliver your working files as-is meaning in the file formats and conditions you typically use. If the client needs the files in certain formats, or in certain cleaned-up conditions, then charges will be incurred to accommodate.

• only working files themselves will be transferred. Ancillary licensed content (typefaces, stock photography, etc) due to licensing can not be transferred. If the client would like you to manage the purchasing and transferring of additional licenses, you will need to charge as needed to accommodate.

And the one thing I'd probably not balk on is WHEN you'll hand them over:

• all work files will be handed over when project is paid in full. Not before.

In the end, it's your call. You need to weigh the long term relationship against how strict you want to be with your contract.

Answer 2

It's not insulting at all. Those are standard terms for this type of work, as your work would be useless to them otherwise.

It may not seem as serious with a brochure or one-time ad, but imagine if you retained the copyrights and trademark rights to the client's company logo. Then every time they used the logo, they'd need to get your prior permission or risk violating your trademark. Every time they transferred the digital artwork, they'd be risking copyright infringement. That's hardly a viable business arrangement.

The fact that this doesn't seem to be common sense (professional ethics really) to all designers is precisely the reason the client has to spell this out. I've personally encountered quite a few clients who've been burned in this way. They spend thousands of dollars on branding design, and all they get are flat PNGs, or worse—JPEGs. Some printers who offer design services also use this as a method of vendor lock-in.

There really is no good reason for a designer to not agree to not operate under these terms whether the client explicitly requests it or not. After all:

• You're already getting paid for the services rendered. What reasons do you have to retain the copyrights?
• The digital artwork (collected for output) is in this case the very deliverable that they're paying for. A flattened image, a password-protected file, or a partial design will either cause potential problems down the road or simply be useless to the client.
• Handing over the masters, or at least a copy of them, concludes the business transaction and relieves you of the responsibility of holding on to them for safekeeping in case alterations/corrections need to be made.
  • One of the worse scenarios I've dealt with was a designer who sent only a flattened image (saved in PSD form for no apparent reason) and then promptly lost or deleted the master files. Well, the flattened design, in addition to being less than ideal for printing, turned out to have an error in the copy. This resulted in a costly process where the designer basically had to re-create the design from scratch, delaying the project.
• Portfolio rights (essentially a special reproduction license given to the designer) are separate from copyright. It is customary for the designer to retain portfolio rights after handing over copyrights to the client.

There are however some secondary artifacts that are negotiable. For instance, in web development a distinction is made between the design and content on the site, which are clearly copyrighted by the client, and the code the site runs on, which the client is usually only licensed to use. It may be a conglomerate of open source projects (WordPress, jQuery, Compass, etc.), or it may be proprietary code that the developer is giving the client a singular license to use on that particular site. Done correctly, this lowers the cost for individual clients and additionally saves the developer time while delivering a superior product to all clients.

Likewise, many designers choose to retain the copyrights to unused designs from a project or brushes, photos, and other reusable stock resources that are used in the final product. But if you want to both charge for work and still retain ownership, you should spell that out explicitly in the contract to avoid any misunderstanding that could result in unpleasant surprises for the client.

Answer 3

A few things you'll want to watch out for in your contract (you should always have one):

1. Retain specific rights to reproduce the art for portfolio purposes.
2. Font software and licenses will be purchased by them, or you can purchase on their behalf for an additional charge.
3. Image and illustration rights will be handled similar to the fonts issue (you aren't a media management agency).
4. You will not provide any original files until payment is received in full or according to an agreed upon payment schedule.
5. Never give up rights to your sketches and other process materials.