IP Assignment and Background Asset Carveouts in a Master Services Agreement: A Guide for a Digital Marketing Agency

Introduction

When it comes to working in the dynamic world of digital marketing, having a clear understanding of IP ownership and background asset carveouts in Master Services Agreements is essential. These elements help ensure that both the agency and the client have their interests protected. Missing these can lead to confusion, disputes, and even legal challenges down the line. If you’re a digital marketing agency looking to safeguard your proprietary tools while meeting client expectations, this guide will provide valuable insights. Don’t wait until it’s too late—ensure your contracts reflect your needs and protect your assets.

What Is IP Assignment?

IP assignment refers to the process of transferring ownership rights of intellectual property from one party to another. In the context of a digital marketing agency, this usually means that once you complete a project and receive payment, the client expects to own all the work produced. This expectation is quite common, as clients want to leverage the assets created for their marketing strategies. However, for creative professionals, it’s crucial to maintain clarity on what exactly is included in this ownership, so there are no misunderstandings or assumptions.

What Are Background Assets?

Background assets are the proprietary tools, platforms, frameworks, and methods that a consultant or agency has developed prior to working with a particular client. These assets are vital as they can include unique methodologies or processes that differentiate your agency in the competitive market. By implementing a carveout in your agreement, you can ensure that while your clients gain rights to the final deliverables, your agency retains ownership of the underlying tools and methods that helped create those deliverables. This balance allows both parties to benefit without compromising the agency’s intellectual property.

Suggested Clause Language

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 clear demarcation is beneficial for both parties. It assures the client of ownership over the work product while also protecting the agency's valuable background assets that it relies on to deliver exceptional service.

Example Scenario

Imagine a digital marketing agency that uses a proprietary analytics tool developed over several years to enhance its campaigns. When working with a new client, the agency creates a comprehensive marketing strategy and delivers pixel-perfect designs tailored to the client’s brand. Through the IP assignment clause, the agency transfers ownership of the final designs and marketing strategies to the client upon payment. However, the analytics tool remains the agency's background asset. By protecting this tool through a carveout, the agency can continue to use and refine it, providing the same high-level service to future clients without infringing on the rights of the initial client.

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 refers to the final deliverables created for the client after payment, while background assets include the proprietary tools and frameworks that the agency retains for its own use.

What rights do clients have to background assets?

Clients receive a non-exclusive, limited right to use background assets as part of their project, but the agency retains ownership and title to those assets.

Are source files included in the work product?

Source files are typically considered part of the work product, but it’s essential to specify this in the contract to prevent any ambiguity.

How should third-party or open-source components be handled?

Any third-party or open-source components used should be clearly documented in the agreement, ensuring the client understands their license obligations and any limitations.

How can I document the split in the SOW?

Ensure that the SOW clearly delineates what constitutes work product and what is included as background assets, specifying rights and usage for each to maintain clarity.

Final Thoughts

Adding the right IP assignment and background asset carveouts in your agreements can save you significant trouble in the future. By addressing these points now, you can foster clearer communication and stronger relationships with your clients. Don’t leave your important assets unprotected—review your contracts today to ensure they reflect your needs.