Design Management Resources: Business Article - Free Advice from Design Experts

About the author:

Jean Perwin has been practicing in the area of Intellectual Property Law, Entertainment and General Corporate Law since 1987. Ms. Perwin represents graphic design firms, web site designers, and advertising agencies, as well as many types of artists, entertainers and other clients for whom she handles copyright and trademark registration and licensing, infringement litigation, entertainment and general business contracts, partnerships, and corporate matters. Ms. Perwin is co-author of The Artist's Friendly Legal Guide, author of Electronic Copyright, a columnist for How Magazine and the Artist's Magazine and author of numerous articles on copyright and trademark law.

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Know Your Rights: Intellectual Property Basics

By Jean S. Perwin

One of a design firm's most valuable assets is the creative work it produces. Yet, protecting and exploiting that work often takes a back seat to its creation. What constitutes "intellectual property" and how do you protect it?

At its most basic, intellectual property is property created by the mind. Unlike "real" property, it depends for its existence on ideas and the expression of those ideas. In a design firm, intellectual property can consist of artwork, both drawn or computer generated, videos, brochures, packaging, computer programs, comps presentations, mock-ups, prototypes, CDs--almost anything created by the firm for its clients or for its own marketing or promotion. Protection for that property should be built in to the way the firm does business.

The law gives us a few tools to use to protect intellectual property. They can include patents, copyright, trademark, trade secrets and contracts. These tools can be very effective in some ways and ineffective in others. American law doesn't have a lot of tools, for example, to protect ideas when they are just ideas and haven't been reduced to a tangible form. But once they are in a form that the law will recognize, those tools can be extremely effective. The most important of these tools for design firms is copyright.

Copyright Defined

A copyright is literally the right to control the copying of a copyrightable work. The legal definition of a copyrightable work is original creative work fixed in a tangible medium. As soon as that work is created, the author owns a copyright in it. Registration is not required to own a copyright.

A copyright consists of a bundle of five separate rights, each of which has separate compensable value. Copyright rights include the right to reproduce the work, the right to make derivative works from it, the right to display the work, the right to distribute the work and, in the case of the performing arts, the right to perform it. Only the copyright owner (and anyone else authorized) has these rights, and they can often be quite valuable.

A copyright lasts for the life of the author plus 70 years. Transfers of exclusive copyright rights must be in writing. In the case of a corporation as the owner, the term of copyright is 75 years. Transfers for non-exclusive rights can be made orally.

When a design firm creates work for a client, it owns the work it creates unless and until it transfers those rights to the client. It may transfer some copyright rights to a client or it might transfer all of its rights to the client. Between the client and the design firm, the question of ownership of materials, and increasingly digital files, is often a contentious one.

Protect Your Copyright Rights

The best way to protect copyright rights is in the firm's proposal/invoice terms and conditions. Every firm should have a template agreement that contains terms and conditions that change very little with each client. While every proposal and every job is different and the agreement will always reflect that, intellectual property protection of the firm's work will almost always be the same. Once those provisions have been drafted, they will always be a part of the contract and the protection they afford the firm will always be there.

As a general rule, a design firm should only give to a client those copyright rights that the client needs to use the work and for which the client is willing to pay. All the rest should be reserved to the firm. Usage rights should be spelled out carefully so that the client knows exactly what it may use the work for and what uses it needs to get further permission in order to use. No rights should ever transfer until all payments have been made. And the issue of control of digital files should be determined before anything is turned over to a client.

A further way to protect work is through copyright registration. Although not required for ownership, it does confer legal advantages to the copyright holder and is often an inexpensive insurance policy. Design work is registered on a VA form for a $30 filing fee downloadable from the copyright office website with instructions. Although it is not necessary or practical to register everything a firm creates, registration should be considered for work that is widely distributed, work that is in the hands of a client who hasn't paid, or in any situation where there is a potential problem. Having a registration will sometimes make it easier to get the problems resolved.

Design Copyright Issues

Two copyright issues that come up frequently in the design business are work for hire and fair use. Although both can be complex legal issues, it is useful to understand the basic concepts.

In its simplest form, work for hire means that an employer owns the copyright of the work created by its employees. A free lancer who is not "employed" by a company owns the work he or she creates unless the work is transferred in writing to the hiring company. If you work with free lancers on a project by project basis and you do not have a work for hire agreement neither the firm nor the firm's clients will own the rights to the work created by the free lancer. While free lancers are presumed to own what they create because they are not traditional employees, under certain circumstances they can be considered employees for work-for-hire purposes. Never work with free lancers without a contract.

I am often asked, "How many pixels can I copy before I have infringed someone's copyright?" I wish it were so simple. The copyright law says that not all copying is copyright infringement. Sometimes, copying is "fair use" of another's work. How do you know what is fair use and what is copyright infringement? The answer is--it depends. The simplest way to define what is fair use of another's copyright is that it generally consists of non-commercial or educational (i.e. non-profit or personal) use, in legal terms deminimus use--using a small amount of someone's work or use in news reporting. If you download an image you find on the Internet because you like it and want a copy of it on your bulletin board, that use is likely to constitute fair use. But, if you download and image and manipulate it for a client, it's copyright infringement.

The legal standard for what constitutes copyright infringement is substantial similarity. If the image you create is substantially similar to someone else's work you have seen or used, you have infringed his or her copyright. The only real guideline that helps in this area is based on a very old and golden one. Don't do to someone else's work what you wouldn't want done to your own.

Trademark vs. Copyright

What's the difference between a copyright and a trademark? A copyright protects the author of creative work. A trademark identifies goods and services. Trademark issues have become increasingly problematic in the age of the Internet. The "branding" bandwagon has made awareness of trademark law much more important for design and marketing firms than it ever was in the past. In 1990, 100,000 federal trademark applications were filed in the U. S. In 2000, 300,000 applications were filed. Trying to find product names that are available and registrable has become much more difficult if only because of the numbers. Here are some trademark basics to avoid common mistakes:

Basics You Should Know

In the U.S., trademark rights accrue from use. The first person to actually use a trademark in commerce has the most rights in that mark, not necessarily the person who is first person to register. The first user may not have the only rights in it, but that person will have a strong claim to that mark. So the sooner you begin using a trademark, the better.
If you are involved in the naming of products or services, it is critical to run a trademark search on selected names BEFORE any money is spent on design or marketing. If a website is involved, determining whether a domain name is available for the identical word of the trademark is also very important. Domain names that match their trademark owner's mark identically gain the most protection from trademark registration. An "internet" search is not a trademark search. A search of the Patent and Trademark Office database is not a good enough search. Thompson and Thompson is a large well-known trademark search firm. Most trademark lawyers can also conduct an in depth trademark search. If the name you have selected is not available to be registered as a trademark or the domain name is not available, you want to know that before you spend any money on it.
Registration of a corporate name is NOT the same as registering a trademark. Just because you have incorporated in your state does not mean your name is protected as a trademark.
Federal registration of a trademark is a serious investment of time and money. Registration can cost around $2,000.00 and take up to one year to go through the process. However, you are protected from when you file. Every mark or potential mark does not have to be registered. But, increasingly, it's the safest course. There are two ways to register a trademark. One way is based on the actual use of that mark where proof of actual use is required. The second way is through an intent to use registration. If you are planning to use a mark in the near future and want to make sure it's protected, an intent to use application will allow you to "hold" the mark until you start using it. But you must begin using it before the final registration will issue.
A trademark can consist of many things: a word, a logo, a color, a scent, a sound. As long as it can identify a product or a service it can be trademark.
The best way to create strong trademark rights is to use the trademark in the same way all the time. The font, the colors, the design should never vary. The more consistent the use, the stronger the identification of the trademark with the goods or services.
You may not use the ® symbol unless your trademark is actually registered. That symbol identifies registered marks. If you use it without registering, it will prevent you from being able to register it later. However, you may use the symbol ^TM to indicate that you are using a mark as a trademark.

While having a basic understanding of copyright and trademark can point you in the right direction, getting good legal advice on intellectual property protection and contracts can help avoid some of the problems involved in doing creative work for others.

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