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

Introduction

In the world of product design, understanding IP ownership and background asset carveouts is essential. These elements play a crucial role in shaping a Master Services Agreement. If these legal aspects are overlooked, it can lead to misunderstandings, disappointments, and even financial losses. It’s vital to clarify who retains the rights to what after a project concludes. This guide aims to unravel these concepts for product design studios so you can navigate these waters with confidence. Ready to safeguard your creative assets? Let’s dive in!

What Is IP Assignment?

IP assignment refers to the transfer of rights to intellectual property. When clients pay for your creative services, they typically expect to own the resulting work. This expectation isn't merely about possession; it’s about achieving clarity and ensuring that both parties are on the same page. For a product design studio, having a clear IP assignment clause in your Master Services Agreement is crucial. It ensures that your clients know what they’re entitled to, while also protecting your creative rights.

What Are Background Assets?

Background assets are any proprietary materials that you, as a designer, have developed prior to your work with a client. These may include innovative tools, frameworks, or methodologies that enhance your design process. By carving out these assets in your agreement, you protect your unique approaches and prevent clients from claiming ownership over them. This safeguard is essential for maintaining your competitive edge while also ensuring clients understand what they are truly purchasing.

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 balanced approach protects both you and your clients. Clients receive the work product they’ve paid for, while you maintain rights to the proprietary tools that make your design process effective and unique.

Example Scenario

Imagine a product design studio that utilizes a proprietary design framework, developed over years of experience. This framework streamlines the creative process and enhances project efficiency. If this studio forgets to include a background asset carveout in their agreement, they could lose the rights to this framework after completing a project. This could lead to competitors replicating their successful approach. With clear carveouts in place, the studio can confidently provide tailored designs to their clients while safeguarding their unique methods for future projects.

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’s the difference between work product and background assets? Work product refers to the results created for the client during the project, while background assets are the proprietary tools and methods the designer brings to the table.

Do clients get a license to use background assets? Yes, clients may receive a limited license to use background assets as part of their work product, but full ownership remains with the designer.

Are source files included in the work product? Typically, clients expect access to final deliverables but may not necessarily receive source files unless specified in the agreement.

How are third-party or open-source components handled? It's essential to outline any third-party or open-source materials in the agreement, including their usage rights for both the designer and the client.

How can I document the split between work product and background assets in the SOW? Clearly define both terms and their respective rights in the SOW. Specific clauses help avoid potential disputes and misunderstandings.

Final Thoughts

Now is the perfect time to add these essential clauses to your agreements. Clear definitions of IP assignments and background asset carveouts will create a safety net for both you and your clients. If you haven’t already, consider reaching out to Counsel Club for assistance in drafting tailored agreements that meet your unique needs. Protect your creativity today!