E18: Can I Use That? Guidelines for Using Third Party Materials in Your Business

And so this is kind of a, master kind of overview. We're gonna talk about each of these elements, and basically we'll be talking about whether or not your use is unrestricted, or if it is restricted. Now, exactly how your rights may be restricted would be dependent upon the documentation and would be dependent upon the circumstances and therefore, giving you an opinion about whether or not a particular use is restricted, would of course be legal advice.

I don't give legal advice over LinkedIn live, I, will be able to give you some guidelines about your circumstances for you to think about whether or not you have restricted or unrestricted use with respect to any piece of intellectual property. So let's first talk about your sources of intellectual property. So where does the intellectual property that is in your business, flowing through your business, where does it come from? So the sources you, of course.

It could be your employees if you have employees. I'm talking about your W2 employees, employees, that you are paying employment taxes. Then you have your contractors. those are people on your team that are not your employees that you have engaged to create deliverables. And then you get the IP from other third parties as well. Your client can, of course, be a source of intellectual property. Oftentimes our clients will give us materials that we are to use to provide services.

We can get intellectual property from a licenseor via a license agreement, and then we can get them from other sources as well, which we will talk about. So how do we use intellectual property? And I like to put 'em in these five buckets. Um, of course they can all be broken down further, but the main buckets would be tools, marketing, client deliverables, products, and exit. And so, and of course I'm talking about the perspective of the service based business.

And when we have a service based business, we are primarily talking about copyrights. Yes, there's going to be some trade secrets. Yes, there's going to be some trademarks, but for the purpose of this conversation, we're talking about, copyrights. So those things that are in writing, or created creatively, put in tangible form, photos, graphics, software, books, trainings, things like that. So those are the things that we're talking about during this conversation.

So your tools will be the things that you use internally. These are the things that you use in order to provide services to your clients. So those might be your standards and procedures. You may have a database, you may have a resource library, frameworks, you probably have some sort of productivity tools or things like that. For marketing, those are things that are public facing that are not for sale.

So your website copy, your lead magnet, your newsletter, your social media posts, and you know, your speeches or your slide shows for, for presentations. You have your client deliverables, so you'll notice that client work is both a source of IP and clients can also be a use of intellectual property. So when we have our deliverables in the service based business, we are delivering intellectual property to our clients as well.

And then products would be those things that we create for sale, like books, like trainings, like licensing program. And then an exit would be in the event that you sell your business, can the intellectual property go with it? so those are the buckets of uses for our intellectual property. So, top level answer regarding the unrestricted use of IP. Do you own it? Do you own it exclusively? And if you do, then you have unrestricted use. It's really that simple.

If you do not own it exclusively, then you have restrictions on how you can use it. So how do you get exclusive ownership of intellectual property? Default under copyright laws is if the human who created the intellectual property, who created the copyrighted work, owns it. So if you created it and it's original to you, you own a hundred percent of it. If your W2 employees created it, then as the employer, you own it, a hundred percent as the owner.

And then the third is if it's there's something in writing, signed in writing, that changes that dynamic so that the creator is not also the owner. So if you engage a contractor and you have a written services agreement with that contractor that assigns the rights in that copyrighted work to you, then you are the owner. And so in those circumstances, you own it, you have unrestricted use of it for all those five buckets of uses.

Unless you created those materials as part of a service for a client, so that's gonna be addressed in the restricted use. So, but anything that is created outside of a client engagement, you own it in these circumstances and you have unrestricted use of that IP. And then I'm gonna go dig a little bit deeper regarding the contractor, because that is by agreement. So you need to have the right words in your agreement to make sure that you own the rights.

So the important magic words here, when you have a contract, when you have a services agreement, you are the client in this instance. Your contractor is creating something for you and you wanna own a hundred percent of it. You wanna make sure you have the magic words work for hire.

And so that those are copyright terms so that it is as if you created it yourself very much like W2 employee, when they create something for you, a contractor who does something for you as work for hire, you're also the owner. But because there's some specific language regarding work for hire, you also have just this assignment of all rights, just in case it doesn't fall into the, the scope of work for hire, then you also get an assignment of all rights as well.

So that is to make sure that you own everything from a contractor. Now if you have a contractor who has some preexisting material, so let's say for instance, you, you are a coach and you hire someone to create your website who has like a template for coach's websites because it's magic, and so they take their template and they layer on your branding, your copy, so you own that, but you don't own that template.

And so your vendor, your contractor, will carve out the preexisting materials so you won't own those. So those are things that you won't own and that are subject to a license. So that is the bridge between so you have some that is unrestricted and some that is restricted if there's any preexisting materials that's covered by your signed contract. So if you don't own it, everything else, there are restrictions attached to the use.

And so the specifics of those restrictions will depend on how you receive them. You know, whether you receive them via an agreement that has terms in it, whether you receive them without an agreement that has implied terms, and what those terms are exactly. so anything that you don't own, there's going to be restrictions. So, if you've engaged a contractor and there's no signed agreement who owns that material, the contractor.

Because the default is that the human who created it owns it, unless there's something signed and in writing, and, of course, any carve outs. You know, even if you pay for it, you tell 'em exactly what to do, if there's not a signed agreement, then the contractor owns it, and what you have is you have a non-exclusive license to use those deliverables for the purpose that, they're engaged for. But they own the copyright. So your use is restricted to what you hired them to deliver to you.

And for the purpose that, that they were delivered. So for third party materials, let's say it's client work. And this is both incoming, the client has materials that they've presented to you to work with, so that's incoming, as well as outgoing. So you've now created something for the client and you've delivered it to the client.

Let's go back to this lovely language where in this case you are the contractor and your client is the one who is getting all of those rights in what you created as a work made for hire. And to the extent it's not a work made for hire, you are assigning to your client all rights in that deliverable. So here, you're on the other side of that language, and so your client owns 100% of those deliverables. And I think, you know that anyway, but that is the language that solidifies that.

And if for whatever reasons you're doing work with your clients without an agreement, then you do own that material. Of course I don't recommend that for, for either parties comfort, but that is the default. And then for licensed materials so let's say you went through a certification program and as part of that certification program, you have a license to use the materials.

Maybe there's a framework that they let you use, maybe there are training materials that they let you use, maybe there's a valuation tool or an assessment tool that they let you use, that's part of the license. And every license is going to have terms in it. It will say like for how long you can use it. And with whom you can use it, is it for internal purposes only? Or can you sub license it? Can you allow third parties to also access those same tools and materials?

Or are there restrictions around, maybe even the type of person that you can work with. And so you will want to know you understand what's in your license, and you're going to wanna make sure that the license covers the use that you need it for. Sometimes the license will be too narrow for your use. I have a client who actually, they are licensing information from a database and the default license limits their ability to use that database.

Like you can't take the information from their database and combine it with your own information. Like that's the default license, but my client actually needs to be able to combine it with their information, cuz it's more powerful. They can then, you know, perform whatever processing with it in order to create better insights.

And so they needed to go back and negotiate a broader license to not only have access to the data in the database, but be able to be able to integrate that data with the data in their own databases to get the full value from it. Now, does that transfer ownership of that data from the licenseor to my client, who's a licensee? No, it does not.

So the license still governs what they can do with the data, even permits them to combine it, but at the end of that term, when they're no longer paying for it, they have to remove it from their database and return it all to the licenser. So you do wanna make sure that don't assume that your license covers all the uses that you need. So where does other come from? Probably be one of the major ones that's people don't really think about is from our old employers.

Um, we leave employment and we take some stuff with us, right. that we use that we think aren't proprietary. Um, but by the end of the day, whether or not it's. A secret is not determinative of whether or not somebody owns it. Cuz most materials that are covered by copyright or not secret, right, cuz they have to be registered. Let's say they have an employee manual. So we take that with us and maybe we use that and that's not ours, that is theirs. It's not yours to use.

Um, maybe there's some templates, like, you know, like services are great months people might take. And, those are your former employers property. And so when we don't have a license, we are in danger of infringing, a third party's copyright. So That brings us to our fair use. The only time fair use comes up is when lawyers are involved. So fair use is not something you want to rely upon.

Basically it means you have used someone else's intellectual property without their permission, and they've come to you and said, you're infringing my copyright. And if you feel like, no, I think I have the right to use this without your permission, because it's fair use. That means you're claiming that you're not infringing their copyright because of fair use. So that is not an affirmative right. That you can receive upfront. That's not a safe Harbor. It's something you have to assert.

If somebody accuses you of infringing their copyright. So that is, uh, our overview, a high level overview of how you can use the intellectual property that flows through your business. We talked about the ways that it comes in. Unless you own it a hundred percent, there're going to be some restrictions. So you're going to wanna understand the terms of any agreements written or implied, you know, cause you can have implied licenses as well.

Maybe if you got something from the internet, we've talked about creative commons, maybe it's creative commons, maybe you have a handshake deal and you have, uh, non exclusive license. Um, but you need to understand the limits of your uses, um, so that you are not in danger of infringing the owner's copyright. So can the services agreement with a contractor be by email? So the answer to that. It can be by email.

However, in order for you to own the exclusive rights in the deliverables it has to be signed. So the transfer of intellectual property rights is one of those areas of law that you have to have something signed. And so the transfer of real property is another one of those areas. So if you do it digitally, by email, you know, it's enforceable. So you can make them deliver the deliverables to you. And if they breach the agreement, you can Sue them, but you will not get your exclusive copyright.

by email, you cannot get that by. Is it fair use if I give credit to the original material? no, it is not. So the copyright owner has the exclusive rights to make copies, to distribute it, to perform it, to display it, whatever the nature of the material is. That is their exclusive right, and giving credit to them does not give them that exclusive ride that takes away the exclusive, right?

So if you've used the material without permission, regardless of credit, then you are in breach of their copyrights, their exclusive rights to what happens with that material, unless you can successfully assert fair use. So, If it is fair use, I assume you would have given credit, but that is not determinative. I am actually writing a newsletter today as it'll be on my website, a blog post about fair use and, uh, what the circumstances would be to assert and hopefully win, a fair use, defense.

Well, thank you all so much for joining me today. If you have any questions, you can always reach me through LinkedIn. And, you can of course, access the free resources on my, podcast website, hourly to exit.com or through my regular website, think beyond ip.com. and I look forward to, talking to you again soon. Thanks.