Erin Austin: Hello, everyone. Welcome to this month's LinkedIn live. I do these every last Wednesday of the month, whether there are four Wednesdays or five Wednesdays like this month, I was shocked by how much time I had to prepare for today's LinkedIn live. And we talk about different topics of interest to experts in the areas of. Contracts and intellectual property and copyrights in particular. And so I do these are recorded and you can find them on my profile.
at Aaron Austin and also on my website thing beyond. I. P. do sometimes release these as podcast episodes. My podcast is hourly to exit. and it depends on how clean this recording is. We'll see if this 1 gets on, or if I rerecord it afterwards. So, please do check out those resources as well. If you are listening to this and audio only there are, PowerPoint presentation that has slides. I will be talking you through it, but you're interested, then go find the video.
So you can also see the resources for those of you who are here live. I'm happy to take your questions. I'll talk for a bit and then open the floor to your questions and you can post them in the comments at any time, as well. And so let's get to today's topic, which is spotting the hidden license and our client agreements. So what we're going to talk about is particularly how we protect or fail to protect our intellectual property with our clients. And in particular, with our client agreements.
So we protect our intellectual property in 2 ways. There is the intellectual property law, which is the default in the U. S. and which applies when you don't have any contracts at all. And so I actually don't have a slide about what happens when you don't have contracts at all. So, if you have questions about that, then ask me about that when we get to the Q and a, and then the other way is with our contracts. So we can change the default through the use of contracts.
You know that I like to talk about copyrights in particular because we are experts with corporate clients, the copyrighted works, the things like our trainings, our workshops, our PowerPoint presentations, our courses and books, those are all copyrighted works. The things that are the expression of our expertise. Those are things we protect with copyright. It's different than trademarks. I don't talk about trademarks because, that's not what provides value to our clients.
stylized I. P logo on the corner there. I think it's kind of cute, but you get absolutely no value from that. You get the value from the stuff that I. Talk to you about and so we will focus on protecting our copyrighted works when we enter client agreements. And so intellectual property law, just briefly, under copyrights, the human, it always has to start with a human, the human being who creates something original and puts it in a tangible form.
They write it down, they record it, photograph it. At the moment of creation, copyright protection attaches, and it is the human who creates it, who is also the owner, and so that is the default, but we can change that through contracts. And so we'll talk about that. in our client agreements there, we're going to talk about the provision specifically, In your client agreements that addresses the contractual provisions that change the default.
And so some of the paragraph headings, you will find it under intellectual property is probably the number 1, probably 75 percent of the paragraph headings will be intellectual property. but other ones might be deliverables or work product or just ownership. I went through, a couple dozen examples of client agreements that I've worked on just to see what they generally say.
And so these are where you will look for the language regarding intellectual property rights in connection with the work that you do for your clients. before we get into a real example that we will. want to just talk about the concepts that we will find in a client agreement in that intellectual property provision. And so these are, the types of ownership. Or permissions that we have in copyrights under intellectual property law.
So the highest level, and I'm going to use that term highest level and you'll see why in a minute. well, actually, the highest level isn't even on this slide because when we just do work for ourselves. So I sit down and I write. A post as Aaron Austin, and I am the human being who created it. So I am both the author and I'm also the owner. So I'm the creator and the owner. There's, just 1 human or entity involved in the creation of that copyrighted work.
But when we are doing work with 3rd parties, when we're doing client work, there's obviously. 2 parties involved, there's, you and I as consultants and then there is our client. And so the top level of ownership is the work for hire. the, work for hire means there is. The human being who created it, but there's somebody else who is the owner. There's a 2nd entity who's the owner.
So the, classic example is the employee employer relationship, you whether or not there's an agreement in place if I create something as an employee, and I create it in the course of my scope of duties. So I am. the head of H. R. and I write the employment guide, the employee, handbook I created that in the course of my employment. I am the human being who created it, but the author for copyright purposes is my employer and also.
The owner, so if we were to look that up at the copyright office, there's only 1 entity listed their employer. I don't appear anywhere on there. I don't even exist for the purposes of the creation of that asset when it's not an employee and it's contractual relationship like. What we have with our clients, then the work for hire concept also exist. You do have to have the magic words work for hire. We'll look at that in a second.
, and then when we have that it's in writing and it's signed and it's work for hire. The human being, the consultant is creating it, but the, client is the owner. And again, there's only, they immediately own it as if they created themselves. There's no separation there versus assignment. When there is an assignment, I have the creator. And that is the human, of course, and then I have the person who's going to own it.
So, if we were to look at that in the copyright office, there would be the, author, the human, and then the owner would be the separate entity, the client. So, there is actually a transfer of rights from the creator to the owner, and that's the assignment. And then license is the last level where The creator and the owner is the same, but they're giving permission to the 3rd party to use, some or all of my rights that I have in that work. these are the 3 kind of concepts that we will find in.
A client agreement, so let's look at a sample this is going to be a very typical provision. it will have this 1st section. not going to read the whole thing to you, but I'm going to point out, the key provisions that we are looking for. So, in this 1st paragraph, it is talking about the rights that contract or use the term contractor instead of consultant here is.
Providing to the client, so this refers to the deliverables that the contractor is agreeing that all the deliverables are owned by the client and that the contractor has no rights in it and that it is a work for hire for the client. So that is that 1st level, as soon as it's created by the contractor, It is as if the client created it and they immediately own it and immediately have all the rights under copyright law in that work.
However, the bucket of things that can fall under work for hire when it is a contractor relationship versus an employment relationship is actually defined, like, not everything we do qualifies as a work for hire when contractual relationship as opposed to an employment relationship. So there is a bucket of things that it applies to.
if it doesn't, for some reason, fall into one of those specific buckets, a work for hire eligible work product, then the assignment comes in because then the client, okay, if it doesn't qualify as a work for hire, I still want to make sure I get all the rights. So if it's not a work for hire. Contractor assigns 100 percent of the rights in that deliverable to client.
So here, again, the client ends up with all of the rights, but it is through an assignment as opposed through as if they created it themselves. But still they get all the copyrights with the client, and the contractor retains no copyright interest in that deliverable. And then the second, paragraph refers to those elements that the contractor brings to the table.
I mean, there's a reason they're coming to you instead of somebody else, because, you have a system, you have a model, or you have, , some research or data or something that you're bringing to the table, and you want to make sure that you continue to own those. Materials, so we want to make sure that we are carving out from, that work for hire and that assignment your pre existing materials. paragraph says you retain ownership in those things. But where is the license?
So, the, last part of that sentence is the license that you are granting to your client to use your, materials. Obviously, they have to have a license to use it. Let's say you do A strategic analysis, and as part of that analysis, you're using some preexisting research that you have.
You're using some models and templates that you have and you package that together for the deliverable and you present that strategic analysis to your client and so they have to have the right to use, the things that you incorporated in that deliverable. The issue is how broad is that license? This is. Very standard language that you will see from the client.
Now, first of all, this one is fairer than a lot of client agreements, because a lot of client drafted agreements won't even have this second. Paragraph in it, it will just be 100 percent of the deliverables. I own it because I'm the client, probably at least 40 percent will also have this 2nd paragraph that acknowledges that you're bringing your own materials to the table and that they simply get a license to it. But let's look at this license.
in the middle of the 2nd paragraph, it says contractor hereby grants a client a limited worldwide perpetual irrevocable royalty free, fully paid up transferable right and license to use, execute, reproduce sub license, display, perform, distribute, maintain, create derivative works and make modifications and improvements to the contractor materials. This is very. Common starter language, you know, standard language that you'll get from your client. And so what is wrong with this?
you know, we didn't start from the basics of what the bundle of copyrights that you get as a copyright owner, but I'll tell you what they are because they're all right here in this license. the exclusive rights you get as a copyright owner is that you get the exclusive right to reproduce, sub license, display, perform, distribute, create derivatives, and make improvements. Those are your exclusive rights as a copyright owner.
And so when you have a license is this broad, even though you have a retaining ownership of that work, you have granted a license to your client that is so broad that they can do anything. Everything that you can do as a copyright owner without coming back to you so they can sub license it. They can create derivatives. They can reproduce it and distribute it without paying you another dime because you have granted them that broad of a license. So, what do we want to do?
We want to make sure that we are limiting that license And so just, you know, I probably should do my, disclaimer here. Of course, this is information, legal advice. If you have specific questions about your agreements, talk to a lawyer, but, this is pretty good advice, information. so there are a couple of things that we want to do. First of all, we want to make sure that the grant of license is subject to them paying your fee. What's the difference?
So if The grant of license is not subject to paying your fee. You have granted the license so they have the right to do whatever they want to with it. you can do all the things and if they haven't paid you, well, they've breached their contract and you have a contract claim against them. So, they're supposed to pay you. 10, 000 and they don't pay it. Well, then you can sue them for the 10, 000.
If the grant of the license is subject to payment of your fee and they haven't paid it, that means they don't have a license, which means if they use that deliverable without a license, what is that? That is a copyright infringement. And so then you not only have a, contract breach, you also have all the statutory damages that you get under intellectual property law, because they have infringed your copyright if they haven't paid your compensation. So we want to always have that.
this should never be Controversial, when you're asking for this, Typically, they will not agree to it, with respect to the work for hire the assignment, you can try it, there should be no objection to it with respect to the license of your intellectual property, clarifying that it's not exclusive. Frankly, you know, if it doesn't say exclusive, it is by default non exclusive, but, let's be clear. So there's no misunderstanding. Nobody thinks they have an exclusive license.
And then we've just cleaned up to make sure that the license that you have granted them in your preexisting material is only, for their use and their use alone. They can't transfer it. They can't sub license it. They can't create derivatives and it is for their internal use.
And, you know, I'm making the assumption that the deliverables for their internal use most of the things that we do for clients is, to help them inside their businesses it's not something that they're reselling and so make that very clear in the license so that if they want to do something else with it, they want to use it with, an affiliate, or they want to somehow incorporated in something that they're going to sell.
You want to make sure that your fee is consistent with the breadth of the use that they're looking for. these are all very reasonable requests. people often ask me, I don't know if I'm allowed to ask for changes. You are allowed to ask for changes. =, they just need to be reasonable and to be very clear that you're simply trying to protect your intellectual property, but you do want to make sure that they have the rights to do what they need to do with your deliverables.
And so, with that, that's what I wanted to talk to you guys about with that. I am happy to take your questions and you can pop them in the chat. and also, you can always find me if you have any follow up questions, on LinkedIn, please feel free to connect with me there and then the recording will also be available there as well. So I'll hang around for a minute to see if you have any questions. Otherwise, I thank you for joining me. All right, guys. Well, thank you again.
And if anything comes up, you know where to find me and I look forward to next time. Don't forget, the last Wednesday of every month, at noon Eastern. And I do take requests. So if there's ever a topic that you want me to address, on a live, just shoot it over to me and I'd be happy to do that. Thanks. And then that's, where you can find me as well. I'm online. All right. Thanks guys. See you next month.