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

Introduction

When it comes to working in the vibrant world of motion graphics, having clear guidelines on intellectual property (IP) ownership is paramount. IP rights are often a tangled web, especially in the creative industries, where the lines between collaboration and ownership can blur. Background asset carveouts are essential in this regard, protecting the tools, techniques, and resources that a motion graphics studio may utilize. Without defined terms regarding IP assignment and carving out your background assets, you may find yourself facing challenges or disputes long after the project is completed. Let's ensure you are on solid ground. Ready to dive in?

What Is IP Assignment?

Intellectual property assignment refers to the transfer of ownership rights in a creative work. After you, as a client, pay for the services provided, you naturally expect to own the final product. On the flip side, as a creative, you want to retain clarity on what you are handing over. Setting these parameters is crucial in avoiding misunderstandings. Miscommunication around ownership can lead to disputes that may take time and resources to resolve, which is the last thing any creative professional wants.

What Are Background Assets?

Background assets are the foundational materials, tools, methods, and intellectual resources used to create the end product. These can include proprietary software, design frameworks, or unique methodologies that your studio has developed over time. Carving out these assets in your agreement means you can protect your studio's innovations while providing services to clients. It allows you to use your creative process and proprietary tools, ensuring that your business remains efficient and competitive while still meeting your clients' needs.

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 balance of IP assignment and background asset carveouts protects both sides effectively. While clients gain the ownership of the work they have commissioned, creatives retain control over their proprietary tools and methodologies, ensuring they can continue to innovate and offer unique services without having to worry about losing their competitive edge.

Example Scenario

Imagine a motion graphics studio that has developed a sophisticated animation software that significantly speeds up the animation process. They land a big project with a client who expects ownership of all materials once paid. By including a carveout clause in their agreement, the studio can assign ownership of the finished animations to the client while retaining the rights to their proprietary animation software. This means the studio can continue to refine and utilize that software for future projects while still fulfilling their obligations to their 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, while background assets are the proprietary tools and methods used to produce that work.

Do clients have a license to use background assets? Clients typically receive a non-exclusive right to use background assets, but they do not own them. Full ownership remains with the consultant.

Are source files included in the work product? Source files are generally considered part of the work product if it is explicitly stated in the agreement. Always clarify this in your SOW.

How are third-party or open-source components handled? Any third-party or open-source components need to be disclosed and typically cannot be claimed as proprietary without proper licensing.

How can I document the split between work product and background assets in the SOW? Clearly outline the definitions of both terms in the SOW, specifying what constitutes work product and what items are reserved as background assets to minimize any confusion.

Final Thoughts

It's vital to add IP assignment and background asset carveout clauses to your Master Services Agreements now. By being proactive in defining these terms, you protect your creative work and ensure clear expectations with clients. Don't wait for a dispute to arise. Make sure your agreements have these critical protections today.