IP Assignment and Background Asset Carveouts in a Master Services Agreement: A Guide for an UX/UI Design Agency

Introduction

For a UX/UI design agency, understanding intellectual property (IP) ownership and the importance of background asset carveouts in a Master Services Agreement (MSA) is crucial. These elements play a vital role in clarifying what belongs to whom. When an agency creates innovative designs, clients expect to own the end product once they pay for the service. But what if the designer is also relying on proprietary tools and methods? Without explicit agreements, misunderstandings can arise, potentially leading to disputes. Therefore, it’s essential to ensure that your MSA clearly defines IP rights and background assets. This guide will walk you through these concepts and help you secure your agency's innovative aspects while keeping clients satisfied.

What Is IP Assignment?

IP assignment refers to the transfer of ownership rights from one party to another. In the context of your agency, when a client pays for design work, they typically expect to gain ownership of the deliverables. This expectation stems from the principle that if someone pays for a service, they should own the results. However, for designers, clarity on what exactly is being assigned is essential. Misunderstandings can lead to disputes about rights and ownership if the terms are not articulated correctly in the agreement.

What Are Background Assets?

Background assets are the proprietary tools, methods, frameworks, and data models that a designer uses to create the work. These elements are critical to a designer’s operations and may represent years of development and investment. A background asset carveout in your agreement protects these proprietary resources, allowing you to retain ownership while granting your clients the right to use the final deliverables. This way, you maintain control over your essential tools without hindering your client’s usage of the designs.

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 ensures that both parties are protected. Clients gain ownership of the work products they paid for, while designers retain rights to their proprietary tools. This arrangement fosters a collaborative environment without jeopardizing creative possessiveness.

Example Scenario

Think about a typical project for a UX/UI design agency. It involves the use of various proprietary design tools and frameworks that the agency has developed over time. If the MSA lacks clear delineation of work products and background assets, a client may mistakenly assume they own all the tools used to create their project. This could lead to conflicts over the designer's use of their proprietary tools in future projects. This is where a well-structured carveout proves its worth; it keeps the agency's assets secure while allowing the client to use the finished designs without any confusion.

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FAQs

What is the difference between work product and background assets?

Work product refers to the final deliverables that a client pays for, whereas background assets are the proprietary tools and methods a designer uses to create those deliverables. The distinction ensures that both the finished product and the underlying resources remain secure and properly attributed.

Will clients receive a license to use background assets?

Yes, clients typically receive a non-exclusive limited right to use the background assets necessary for their project. This allows them to utilize the final designs without owning the tools used to create them.

Are source files included in the work product?

Source files are usually considered part of the work product, but this should be explicitly stated in the agreement. Always clarify with your client whether these files are included, as it can prevent misunderstandings later on.

How do we handle third-party or open-source components?

Third-party or open-source components should be documented clearly in the agreement. It's important to state how these components will be used in the work and assign the appropriate rights to avoid any legal complications.

How can we document the split in the SOW?

Clearly outline the distinctions of work products and background assets in the Statement of Work (SOW). By explicitly detailing what is included in the project scope and what assets are reserved, you can create a comprehensive understanding and avoid future disputes.

Final Thoughts

Securing your IP and ensuring clarity on background asset carveouts in your MSAs is crucial for any UX/UI design agency. By integrating these elements into your agreements, you can protect your proprietary resources while nurturing strong client relationships. Don't wait; consider adding these clauses to your agreements now to safeguard your innovative contributions.