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

Introduction

When it comes to web design, protecting intellectual property (IP) and understanding background asset carveouts in a Master Services Agreement (MSA) are critical for both agencies and clients. If you’re unclear on these concepts, you might run into trouble after a project is completed. What happens to the creative work produced? Who retains the rights? This is why having these terms clearly outlined is essential. By the end of this guide, you will have a solid grasp of IP assignment and learn how to safeguard your background assets, ensuring a smooth collaboration with your clients. If you find it overwhelming, don’t worry! We’re here to help.

What Is IP Assignment?

IP assignment refers to the transfer of ownership rights of intellectual property from one party to another. In the context of web design, clients often expect to own the work produced once they've paid for it, which seems fair but can be a bit more complex. For web designers, clarity on this point is crucial. You want to ensure that your rights and the rights of your clients are both protected. Without a clear IP assignment clause in your MSA, misunderstandings can lead to disputes that might affect your business relationships.

What Are Background Assets?

Background assets are the tools, techniques, and resources that a web design agency employs in the course of creating projects. These could include proprietary software, design frameworks, codes, or anything else created before the project began. The carveout for background assets is designed to guard these proprietary elements, ensuring that the designer retains ownership over their unique methodologies and innovations. This way, even after the client pays for their project, the agency can continue to use its background assets for future work.

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 rights protects both sides. The client knows they own the end product they paid for, while the agency retains control over the tools and techniques that give them their competitive edge.

Example Scenario

Imagine you run a web design agency and develop a proprietary design framework that makes your workflow faster and more efficient. You use this framework while creating a website for a client. Thanks to your well-drafted contract, you retain ownership of that framework while the client gets full rights to the website itself. This means you can use your framework in future projects, thus setting you up for continued success.

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FAQs

What is the difference between work product and background assets?

Work product refers to the final deliverables created specifically for a client, while background assets are the proprietary tools and techniques the agency retains ownership of, used to create that work.

Does the client receive a license to use background assets?

Yes, the client is granted a non-exclusive limited right to use background assets, but does not own them.

Are source files included in the deliverables?

This depends on the contract terms. Typically, source files would be considered part of the work product if explicitly stated.

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

Always document the use of third-party or open-source components in the SOW and ensure compliance with their licenses. This protects both the client and the agency.

How should we document the split between work product and background assets in the SOW?

The SOW should clearly define what constitutes work product and what constitutes background assets to avoid any confusion or disputes later.

Final Thoughts

Taking the time to add these clauses to your Master Services Agreement can save you from a host of potential problems down the line. Ensure both you and your client have a clear understanding of rights and ownership. If you have questions or need assistance, don’t hesitate to reach out and get the legal support you deserve.