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

Introduction

When it comes to turning creative ideas into stunning video productions, understanding IP ownership and background asset carveouts is essential. Whether you're a video production studio or a creative professional, properly addressing these elements in your Master Services Agreement (MSA) can save you from headaches later. Failing to clarify ownership can lead to disputes over who really owns the finished product, leaving both parties with unresolved questions. That's why taking the time to get this right is crucial for your business. By the end of this guide, you’ll have a clearer understanding of how to protect your work and feel confident adding these clauses to your agreements.

What Is IP Assignment?

IP assignment refers to the transfer of ownership rights of intellectual property from one party to another. In the world of video production, it’s common for clients to expect that once they pay for a project, they own the final product. That is perfectly reasonable. On the flip side, it is essential for creatives to have clarity on what they retain ownership of. By explicitly defining IP assignment in your MSA, you can ensure both you and your clients understand what is being assigned and what rights are retained. Failure to clarify this can result in clients believing they own all aspects of the content created, which can lead to conflicts and misunderstandings down the road.

What Are Background Assets?

Background assets consist of the proprietary tools, frameworks, and methods that a creative professional uses to produce their work. Imagine a video production studio that has developed a unique editing technique or software that speeds up project completion. When you carve out these background assets in your agreement, you protect those proprietary components and maintain ownership over them. This not only safeguards your intellectual property but also enhances your ability to use those tools for future projects. A well-rounded MSA takes into account both the creative outputs, or work product, and the foundational resources that support the creative process.

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.

Balancing the clauses for work product and background assets protects both the client's interests in owning the final produced content, as well as the creator's rights to their proprietary methods and tools. By outlining the rights clearly, both parties can focus on collaboration rather than confusion, ensuring a smoother creative process.

Example Scenario

Imagine a video production studio that specializes in creating promotional videos using a proprietary editing software they've developed over the years. They secure a contract with a client to create a series of promotional videos. Thanks to the background asset carveout in their MSA, they can deliver the final videos—giving the client ownership of that work product—while retaining ownership of the editing software they created. This allows the studio to continue using their editing software in future projects, enhancing their efficiency without the risk of losing their valuable tools.

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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, methods, or frameworks used to create that work. Each has different ownership rights, so it’s important to delineate them in your agreements.

Do I have a license to use background assets?

Typically, yes. The agreement usually grants the client a limited, non-exclusive right to use the background assets, but it does not transfer ownership of those assets to the client.

Are source files included in the work product?

Source files can be included in the definition of work product but should be specified in the agreement. Be sure to clarify ownership and access rights in your MSA.

How do I handle third-party or open-source components in my projects?

It’s crucial to have clear guidelines in your Master Services Agreement about how third-party or open-source components are managed, including who owns what and how those elements integrate into your work product.

How can I document the split between work product and background assets in the SOW?

You should include specific language in your Scope of Work (SOW) that clearly defines which elements are considered work product and which are background assets to maintain clarity and avoid future disputes.

Final Thoughts

As you set out to create compelling video content, don't overlook the importance of adding the right clauses about IP assignment and background assets in your agreements. These protective measures not only clarify ownership but also ensure that your creative practice continues to thrive. Be proactive and ensure that your contracts reflect these essential elements right from the start. If you feel uncertain, don't hesitate to reach out for assistance. Take the next step in protecting your creative work today.