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

Introduction

In the fast-paced world of content creation, understanding the intricacies of intellectual property (IP) ownership and background asset carveouts in a Master Services Agreement is essential. For content studios, missing these details can lead to misunderstandings and disputes that may harm creative relationships and projects. Clear provisions ensure that both clients and creatives get what they need, while also protecting vital business interests. If you are working on a project that involves significant creativity, now is the time to ensure you have a solid grasp of these concepts to safeguard your work and avoid potential pitfalls.

What Is IP Assignment?

IP assignment might sound complex, but at its core, it's about the transfer of intellectual property rights from one party to another. In most creative projects, clients expect to own the finished work once they pay for it. This makes complete sense from their perspective. After all, they are investing in a product that represents their brand or business. On the other hand, creatives often need clarification about what they can continue to use from the projects they create. This is where clear agreements come in handy. By defining IP assignment in a Master Services Agreement, both parties can rest easy knowing their rights and responsibilities are understood.

What Are Background Assets?

Background assets refer to the various proprietary tools, frameworks, and methods that a creative professional might use to produce work for a client. Think of them as the building blocks that make the final product possible. These can include everything from software applications and design frameworks to data models and methodologies. By including carveouts in the agreement for these background assets, the creative can protect their unique tools and approaches, ensuring that they can use these vital resources in future projects without losing ownership. This balance allows creatives to keep their competitive edge while still fulfilling their commitments to clients.

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.

Establishing these clauses creates a balanced approach, ensuring that the client's right to own the final output is clear, while also protecting the creative's ability to continue using their proprietary tools and insights. By having a precise delineation between what constitutes work product and background assets, both parties can operate with transparency and confidence.

Example Scenario

Imagine a content studio that specializes in creating animated videos. They often use proprietary animation software and unique design techniques that give their work a distinctive flair. When they sign a Master Services Agreement with a client, it includes clear sections on IP assignment and background asset carveouts. At the completion of a project, the client receives the final video and holds exclusive rights to that specific piece of content. However, the studio retains ownership of the software and techniques used, meaning they are free to use those tools on future projects without restriction. This mutual understanding fosters a positive relationship that encourages creativity and collaboration.

How Counsel Club Helps

Counsel Club re-imagines legal for startups, freelancers, and creative entrepreneurs. Our platform allows you to search for lawyer-drafted forms for startups, freelancers, content creators, and other creative entrepreneurs. Our platform guides you through modifications, both to the contract and the scope of work. Counsel Club has the most sophisticated drafting tool on the market, and it was designed and developed by lawyers. If you want more help, reach out to a Counsel Club lawyer through our Concierge program. Our legal agent, Amicus, was trained on proprietary legal data to be your best legal assistant. Finally, legal for today, that is fast, protective, and cost-effective.

FAQs

What is the difference between work product and background assets? Work product is the final deliverable created for a client, while background assets are the proprietary tools and methods used to create that work. Clients own the work product; creatives retain rights to background assets.

Do clients receive a license to use background assets? Yes, clients are typically granted a limited, non-exclusive right to use background assets as part of the agreement.

Are source files included in the deliverables? Source files can be part of the deliverables, but this should be clearly defined in your agreement. Clients usually only receive the final output unless specified otherwise.

How do I handle third-party or open-source components? It's important to clarify in the agreement how these components are used. Ensure that the contract covers liability and rights regarding third-party assets, as they can complicate ownership.

How can I document the split between work product and background assets in the SOW? The SOW should describe each deliverable and specify any tools, frameworks, or methods that are considered background assets, clearly indicating what remains proprietary to the creator.

Final Thoughts

Taking the time to add these clauses now can save you from potential disputes in the future. Understanding the balance of IP assignment and background asset carveouts is crucial for your projects. If you are embarking on a new venture or renegotiating a contract, consider reaching out for help. Counsel Club is here to help guide you through the legal landscape with clarity and confidence.