IP Assignment and Background Asset Carveouts in a Master Services Agreement: A Guide for an Animation Studio

Introduction

As an animation studio, understanding the intricacies of IP ownership and the nuances of background asset carveouts in your Master Services Agreement is essential. You want to ensure that both your creative works and proprietary tools are protected. Missing these critical elements can lead to confusion and disputes down the line. Imagine completing an incredible project, only to have a client assert ownership over your unique tools and techniques. That’s the kind of trouble we’re here to help you avoid. So, let’s explore how these concepts work and how to address them in your agreements.

What Is IP Assignment?

Intellectual Property (IP) assignment is the process of transferring ownership rights from one party to another. In the context of animation studios, when your client pays for your services, they typically expect to own the final output—the animation itself. This expectation can create tension if there is no clear agreement in place. For creatives, having clarity on what parts of the work they retain ownership of, and what is assigned is crucial. It helps artists like you protect your rights while meeting client expectations.

What Are Background Assets?

Background assets refer to the proprietary tools, frameworks, and methods that you, as an animation studio, use to create your work. These might include specialized software, animation techniques, or databases that you've developed over time. A background asset carveout ensures that these elements are protected. When this carveout is explicitly stated in your agreement, you are allowed to use your creative tools without fear that the client will claim them as their own.

Work Product. Upon full payment of the Fees provided in the SOW, Consultant agrees that the deliverables, work product, content and other materials created, developed or conceived by Consultant for Client for purposes of this Agreement as provided in the SOW (the “Work Product”) shall be the sole and exclusive property of the Client. Consultant hereby irrevocably assigns to Client all right, title and interest worldwide in and to the Work Product, including all copyrights, patents, trademarks, trade secrets, and other intellectual property rights therein. Consultant acknowledges that to the extent permitted by law, all of the Work Product consisting of copyrightable subject matter is “work made for hire” as defined in 17 U.S.C. § 101 or any similar or analogous law or statute of any other jurisdiction and such copyrights are therefore owned by Client. To the extent that the Work Product and/or the results and proceeds of the Services may ever be determined under the laws of any country not to be a “work made for hire,” Consultant hereby confirms that effective on the date of creation of the Work Product, it assigns (or has assigned) to Client all right, title and interest thereto (including all copyright and associated rights, extensions and renewals, and all causes of action appurtenant thereto) throughout the world. If Consultant has any rights in any jurisdiction, including without limitation “artist’s rights” or “moral rights,” in the Work Product that cannot be assigned, Consultant hereby unconditionally and irrevocably waives the enforcement of such rights, and all claims and causes of action of any kind against Client or Client’s customers.

Background Assets. “Background Assets” are the materials, tools, utilities, techniques, technical frameworks, data models, object models, methodologies, know-how and information (both in object code and source code) made available to Client by Consultant under this Agreement that are proprietary to Consultant. This Agreement grants Client a non-exclusive limited right to use the Background Assets and does not constitute a sale or convey title or ownership of the Background Assets or any intellectual property rights therein to Client. Consultant is and shall remain the sole and exclusive owner of all right, title and interest in and to the Background Assets, including all improvements or modifications made thereto, and all intellectual property rights embodied in or related to the Background Assets.

This balance of IP assignment and background asset carveouts protects both sides. Clients get the finished product they paid for, while creatives maintain ownership of their proprietary tools, ensuring future projects can utilize the same resources without issue.

Example Scenario

Consider an animation studio that has developed a unique software tool to streamline their workflow. This tool, a background asset, allows them to produce high-quality animations more efficiently than competitors. If a client commissions a project and there is no background asset carveout, they may assume ownership of everything created, including the tool. This could hinder the studio's ability to use their proprietary tool in future projects. However, with a well-defined carveout in place, the studio can confidently use their innovative tool across different projects while delivering the final animations to clients as agreed.

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FAQs

What is the difference between work product and background assets? The work product refers to the finished deliverables created for the client, while background assets are the proprietary tools and methods used to create that work.

Can the client use background assets? Yes, clients can use background assets under a non-exclusive license, but they do not own them.

Are source files included in the work product? Typically, source files may be included in the definition of work product, but it is essential to clarify this in the agreement.

How do I handle third-party or open-source components? It is crucial to document any third-party or open-source components in the SOW to avoid confusion over ownership and license obligations.

How do I document the split in the SOW? Clearly define what constitutes work product and background assets in the SOW, ensuring both parties agree on ownership and usage rights.

Final Thoughts

In summary, adding clear clauses regarding IP assignment and background asset carveouts in your Master Services Agreement is paramount to protect your creative work and tools. By ensuring these elements are addressed, you can foster a collaborative relationship with your clients, knowing that both your creations and proprietary methods are safe. Don’t leave it to chance—get these clauses added now.