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

Introduction

Intellectual property ownership can make or break a creative studio’s success. In the hustle of bringing ideas to life, having clear terms in a Master Services Agreement (MSA) about who owns what can save both worry and heartache down the line. Imagine completing a stunning project only to be told you have no rights to it because you missed out on a few crucial details about IP ownership. Understanding IP assignment and background asset carveouts not only protects your work but also supports a smooth relationship with your clients. If you want to make sure you are set up for success, keep reading.

What Is IP Assignment?

IP assignment refers to the transfer of ownership of intellectual property rights from one party to another. In practical terms, when your clients pay for your services, they often expect to own the results of that work. This means that if you don’t specify things clearly upfront, you could find yourself in a confusing situation later on, unsure of what your rights are over work you’ve created. That clarity is essential not just for your clients but for you as well. Having written terms in place ensures you both understand who owns what. It protects your ideas while also giving your clients the assurance they need.

What Are Background Assets?

Background assets are the tools, techniques, and frameworks that you bring with you to a project, which you have developed prior to working with a client. These can include proprietary software, design templates, or even unique methodologies that have taken you considerable time and effort to create. The carveouts in an MSA protect these valuable assets by clarifying that while your client might own the final deliverables, you retain ownership of your background assets. This protection is crucial as it ensures that you can continue to apply your signature methods in future projects without worrying about losing them.

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.

Finding this balance in your agreement is crucial for protecting both parties involved. Clients want ownership of the final result for their investment, while you need to safeguard your unique tools and methods to maintain your competitive advantage in the industry.

Example Scenario

Let’s consider a creative studio hired by a tech company to develop a new online platform. The studio uses its proprietary software tool to streamline its design process, which has been honed over several years. Thanks to an effectively drafted Master Services Agreement that includes clear background asset carveouts, the studio is able to deliver an amazing product while retaining rights to the tool that made it possible. They can leverage this tool for future projects, thus keeping their creative edge intact while the tech company can feel secure in knowing they own the new platform that was created for them.

How Counsel Club Helps

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FAQs

1. What is the difference between work product and background assets? Work product refers to the final deliverables created for a client, while background assets are the proprietary tools and methods a creative brings to the project.

2. Am I granted a license to use the background assets? Typically, clients are given a non-exclusive limited right to use the background assets, but ownership remains with the consultant.

3. Are source files included in the deliverables? This depends on the agreement's terms. Clarifying in the contract whether source files are part of the work product is crucial.

4. How do I handle third-party or open-source components in my work? If third-party or open-source components are used, clear documentation and permissions should be included in the agreement to avoid future complications.

5. How should I document the split in the statement of work (SOW)? Clearly outline in the SOW what constitutes work product and what are background assets to avoid misunderstandings down the line.

Final Thoughts

In the vibrant world of creative work, every project is an opportunity to create something unique. By including clear clauses on IP assignment and background assets in your Master Services Agreement, you're not just protecting your work; you're setting the stage for successful collaborations. If you haven’t added these clauses yet, it’s time to do so and safeguard your creative future.