Get It in Writing to Prevent IP Theft
By Nina Kaufman, Esq.If you do business on a handshake, don’t be surprised if the price is an arm and a leg.
You’re starting your new company on a shoestring budget. You need a hot logo that really speaks to your brand. One of your closest friends is a graphic designer, and she offers to create it for you. You’re ecstatic.
Six months later, your friend is preaching to you about the “sanctity” of her design. She hands you a written agreement that gives all the rights to her–which she expects you to sign. She sends you a bill for thousands of dollars. She then tells you that you can’t make any changes to the design without her permission and that you don’t own the logo. Still ecstatic?
For Evermore Pet Food, based in Brooklyn, N.Y., ecstasy quickly turned to exasperation when the company hired a graphic designer without a written contract. Evermore suffered the kind of business nightmare many entrepreneurs go through when they choose to be casual about their business arrangements.
That’s why “work for hire” agreements are vital whenever you are dealing with creative work. Without them, you could easily lose what you think is your IP. What are some of the mistakes Evermore made that you can avoid?
- Assuming that if you ask for it, it belongs to you. This is a common misconception. Copyright law is very clear that (with few exceptions) the rights in creative work belong to the person who created it. Hanna Mandelbaum, one of Evermore’s owners, originally balked when her graphic designer friend told her she had no right to modify the logo design in any way, shape or form. As a practical matter, it seemed ridiculous; but as a matter of law (and because there was no written agreement to the contrary), the designer was correct. “What escalated the situation was that this designer sent us a cease and desist letter. . . by text message,” Mandelbaum says. “There was no way we could let the company be held hostage to this logo, so we decided to scrap what had been done and create something entirely new ourselves. That way, there is absolutely no question who owns it.”
- Letting others tinker with your text. This, too, is an area where entrepreneurs can lose control of the rights to their intellectual property. Evermore had created text for a new brochure. The designer made a number of formatting (and possibly other) changes to the text. “He claimed that he owned the text because he formatted it,” Mandelbaum says. This meant the designer was making a claim that he was a “joint author” of the brochure. When you’re a small business, right and wrong don’t matter as much as “can you afford the legal fees involved in filing a lawsuit?” After this incident, Mandelbaum says, “We make sure that there is a promise in writing that any copy generated is the intellectual property of the company.” She also makes sure an attorney reviews all documents.
- Not getting clear time/cost estimates. Not only did Evermore run into problems on the issue of ownership, but it also had issues with the fees charged. That’s one of the problems of doing business on a handshake, especially with friends who are loosey-goosey with their own invoicing systems. The designer worked on Evermore’s logo and brochure over a period of six months. Evermore wasn’t invoiced until the very end, when relations had already gone sour. “We got billed for spending 15 hours to create letterhead,” Mandelbaum says. “And then, when we wanted to make sure we owned all the rights, he slapped on an extra $10,000 ‘copyright fee.’ Had we known from the outset that’s what it would cost, we would have made other arrangements and not lost six months in the process.”
Evermore learned its lessons the hard way. Mandelbaum lost time, money and a friendship in the process. But the company now has good systems in place: Evermore has clear, written terms for all business relationships (regardless of any personal relationship involved). Owners Hanna Mandelbaum and Alison Wiener have learned the basics of IP law, so they know which questions to ask. They also get estimates from vendors and ride herd on time frames. They may have lost their IP once out of ignorance, but they won’t let it happen again.
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