Welcome to this episode of The Business Bites Podcast. I am your host Rachel Brenke. I am a lawyer, business consultant, mom and dog lover. Today, I want to talk to you guys a little about branding but not in the way that you think. We’re going to talk about this with some legal flare. You’re going to be able to find all the show notes at rachelbrenke.com/epi48. I wanted to walk you guys through the specifics that you need to be mindful of when you go to get intellectual property created, for example, your logo or your website design. I’ve talked a little bit about this already in a previous episode. It’s going to be episode 45, rachelbrenke.com/epi45, of course.
When you’re hiring other people to create things for you, it’s really important that you understand how the intellectual property ownership works and the potential implications. The example that I’m going to use here is going to be getting a logo because every single one of you out there have a logo for your business and I would assume that the majority of you had not created it on your own. Taking another assumption a step further, the majority of small business entrepreneurs don’t necessarily even have someone on staff to create the logo for them so it ends up becoming an independent contractor that you are hiring. It’s a one-off person that’s coming in to design and create this logo for you.
The problem with this is is that often times logo designers also don’t understand the intellectual property implications. Here’s a good little plug for me to say you guys can send them to this episode, number 48, you can send them this episode so they can understand to protect their business and understand exactly what is going on with the logos that they’re creating. These logo designers by default when they’re creating a logo in a one-off project for somebody are going to be independent contractors. This is a status here based in the United States of America that is people that are working whether it’s a single person who’s a sole proprietor or they’re an entity. But they are creating these logos in a one-off, might be a continued basis, but they’re not employees of your business. They’re not going to be under the full control of your business. This is important to understand the task which is why I also recommend you guys go over to episode 45.
They need to have an understanding and you do as well that when a logo is created, logo designer creates the logo for you, that by default, with their status as independent contractor, the logo that they’re creating is the intellectual property, ownership of the logo designer absent any contract that has transferred it over or any W-2 type employee relationship. You the person the logo was created for has nothing more than a mere license of use. The unfortunate thing is unless you guys have some language in there that either transfer the intellectual property ownership from the logo designer to you or some language that demonstrates this license where the ownership remains with the logo designer and the license has been given to you for use, if it doesn’t have irrevocability language, at any time that logo designer can seize your use of the logo. This is also the same if you have assistance creating blog posts content, a web designer who has custom coded the website for you. All of these intellectual property ownership by default remains with the independent contractor.
This is why it’s really important for you guys to understand that the transfer of ownership or a proper license from the logo or website or second shooter, whatever type of independent contractor that’s creating intellectual property, that there is at least either a copyright … I’m sorry. Well, it is copyright but it is going to be more of a broader intellectual property rights transferred to you, the person that it was created for, or an irrevocable license of use with the ownership remaining with the logo designer.
The thing about this that you guys have to consider, if none of this is into play, this logo designer could stop you from using this logo at any time, any time at all. They can require you to remove it off of all your products or services, your website, your social media at any time, any time at all. It doesn’t matter necessarily that you paid for it. It doesn’t necessarily matter that you sought them out to create this for you. What matters is who retains intellectual property ownership. Like we’ve established here, you either need to have the transfer by document, which you guys can find this stuff at rachelbrenke.com, or it needs to be an irrevocable license from logo designer to you.
Obviously, first step, we want to make sure that they don’t stop you from use of this logo in the future. One of the top questions I often get here from logo designers is, well, if I transferred the intellectual property ownership over to the client, how am I going to use this in my portfolio? I can’t do that anymore. This is where you guys can do the intellectual property transfer from logo designer to client. Then the client can license back to the portfolio designer, I’m sorry, to the logo designer use of the logo in their portfolio. Super simple, easy. It’s not that crazy and scary sounding. It really is simple. Just keep that in mind that once the intellectual property rights are transferred from one person to another, all rights belong with that individual and they retain control over the usage of that logo so you would need to give a license to the logo designer in order for use in their portfolio.
Now, another reason why this is really important is let’s say your business grows and you decide you want to trademark your logo or someone starts using the logo, someone not being you or the logo designer, but someone just starts using this logo for their own business. If you, the business owner, do not have any intellectual property right ownership in that logo, you have no recourse against people that are using the logo. It would be in the hands of a logo designer and then they decide not to enforce it. What does that say for your business?
Another step is if you, the client that the logo was created for, if you don’t have the intellectual property rights in the logo, you cannot go and trademark it later on because it is not your intellectual property to trademark. It all sits with the person who owns the intellectual property.
Now, that’s a lot of information I just threw at you guys so let’s recap on this real quick so we are really clear. By default, anyone that creates a logo, an image, a guest blog post, a ghostwriting content, photographs for you, anyone that creates intellectual property for you that is an independent contractor by default owns all the intellectual property rights in that property. What you guys need to protect yourself is either to have, one, the copyright transfer, or intellectual property right transfer, well, that’s going to include copyright or, two, an irrevocable license of use by you. I don’t recommend the license because a license doesn’t give you enough to be able to take the steps to trademark. You then also don’t have the rights to be able to pursue any infringers. All of that is dependent upon the person who owns the rights.
My end recommendation is that you take the steps as the business owner to receive all intellectual property rights of all independent contractors created intellectual property so that you own it and then you can license back to them so they can use it in their portfolios for marketing and other uses as you guys negotiate and see fit.
The thing about this is it’s very scary to think that at any time you’re not able to defend the rights of your brand. You’re not able to stop from someone seizing your use of the log or image. Let’s take for example the second shooter who’s an independent contractor. You technically should not be selling their images without any transfer right. You should not be selling those image to the client and you could end up getting really caught up in some legal implications.
I share this with all of you guys to say that finding someone to create a logo for you is not as simply as putting up a Facebook post, picking their aesthetic and paying the money. You guys need to have the negotiations ahead of time to determine whether or not you’re going to have the intellectual property ownership.
Now, if you’re a logo designer or a web designer or a branding specialist, whoever it is that is the independent contractor creating this, you need to also have an internal review of whether you’re willing to transfer the intellectual property ownership. If you are, how much are you going to charge for that transfer and understand that your rights have been given up if the transfer does occur. These are negotiations that need to be done prior to any commencement of any type of work together.
My rule of thumb is whether you hire an independent contractor or an employee to always have documents upfront that outlines this. Standard for all of my people, I have them sign a name contract, other documents like a nondisclosure confidentiality style stuff, non-solicitation so they can’t solicit my clients, but most importantly, an intellectual property acknowledgement so at the very beginning of the relationship, we are all very clear that everything that that outside person creates for me is not owned by them. That I have the ownership so that I can defend the rights if someone infringes it, so that I can use it free and clear, so that I can register it for trademark later on down the line.
Bottom line here, make sure you guys get very clear. Have this discussion up front. I understand it may be a really tricky thing, especially if you’re confronted with independent contractors who doesn’t really understand the law of what we’re talking about. Please feel free to send them this episode. I definitely want you guys to have this in hand so that you can refer to it. You can have some explanations so you guys can have a really good relationship together because it’s very tricky to try to change a branding or undo everything once an issue has already occurred because you never have an issue until you have an issue.
You guys can find the links to everything that I’ve talked about, the different documents here at rachelbrenke.com/epi48. Have a good one.
Rachel Brenke is a lawyer, author and business consultant. She is currently helping professionals all over the world initiate, strategize and implement strategic business and marketing plans through various mediums of consulting resources and legal direction.
Hi, I’m Rachel Brenke
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