ACID’s latest article from the IP Doctor, Andrew Lee of McDaniel & Co., covers another of the subjects for which we receive frequent queries and ACID Generic Agreements are featured this month. ACID and their Accredited Law Firms worked together to produce a range of legally binding standard agreements which are simple to use and can be saved on your system as an electronic document for use on further occasions. They are extremely economical and available to all. If you are an ACID member they are discounted and you can also telephone the legal hotline for advice on which agreement you need and how to use it.
You can find the whole range of agreements by visiting www.acidtrading.eu.com or by visiting the main website at www.acid.eu.com and clicking on the ACID Trading tab at the top of the screen.
Intellectual property rights are like any other form of property. They can be dealt with in a variety of ways. They can be sold, licensed, mortgaged, for example. Quite often however, when two parties enter into an agreement in respect of intellectual property, they do so without legal advice or without documenting the agreement. That can have a number of consequences and there is a raft of intellectual property case law which has at its foundation the problem that the parties conducted their arrangement informally and did not reduce it to writing. So, clarity of ownership is key!
Below are examples of common questions asked where the use of an ACID Generic Agreement would have helped to avoid a subsequent problem.
I am a fabric designer and I have designed a new print. A manufacturer of furniture wishes to use that print and apply it to furniture for sale. I do not want to sell the print outright as I would like to have the option of using it myself in the future. How can I best protect myself?
In this situation you are looking to allow another to use your design but retain ownership and receive financial benefits from doing so. The best option therefore is to licence the use of the design to the manufacturer. The starting point should be to have a form licence agreement drawn up, the foundation of which could be the ACID royalty/licence agreement. It is important that the agreement is reduced to writing for a number of reasons:
- It provides commercial certainty to both parties as to what the agreement between them is.
- There is no ambiguity as to what the manufacturer is licensed to do, how long it is licensed to do it for, on what types of products it can use the design and whether you will be at liberty to grant licences to others.
- The terms of payment can be specifically set down such as whether you will be paid a one off licence fee or a percentage royalty per sale made by the manufacturer or a combination of both.
I am a freelance designer who is regularly commissioned by clients to produce a wide variety of products and designs. I have a problem where a client is alleging that they own the rights in the product I have created. We did not have a written agreement; the deal was concluded informally over the telephone. How can I ensure I am better prepared next time?
The issue of the ownership of commissioned works is complex and these were outlined in previous Q & A’s. It is always advisable to deal with the issue of ownership of commissioned works before any work is undertaken when preliminary negotiations are underway. In that regard the ACID Freelance Designer Agreement is extremely useful. This document will allow you to expressly provide for the issue of ownership. In addition, if you already have your own written terms of business, the content of the freelance designer agreement can be incorporated into those terms as additional clauses dealing expressly with IP ownership.
You may wish to retain legal ownership of the intellectual property in the designs you produce but grant the customer a licence to use the design. The customer would, in any event, have an implied licence to use the design for the purpose it was commissioned. Alternatively, you could be happy to agree that the customer will be the owner of all intellectual property rights once payment for the work has been received. Again, by reducing this agreement to writing, there is no ambiguity.
A manufacturer has asked to see some prototypes and samples of my work so that they can give me an idea of the costs of producing the product for me to commercially exploit. Is there anything I should be aware of and what can I do to ensure I am protected?
This is a relatively common situation and the risk is that an unscrupulous manufacturer could decide to take your product, produce it themselves and sell it as their own. Many people approach commercial situations with good intentions, however, it is wise to err on the side of caution. There is a simple way of maximising your protection in this situation with the use of the Acid Intellectual Property Agreement. This is a short agreement that you would give to the manufacturer and ask them to sign before sending them any prototype, or sample of your designs.
The agreement outlines that you are the owner of the samples and any intellectual property rights. The manufacturer by signing the agreement would acknowledge that and also agree not to do anything with the samples without your written consent. Of course, even if they sign the agreement this does not mean they will not do anything wrong. There is no guarantee. However, if they have signed the agreement then you have in writing their confirmation that you own the designs and that they will not misuse them. Without such an agreement they could complicate matters by alleging you gave them permission.
I am starting a new business, is there anything I should have in place for trading with customers?
Acid offer the Standard Terms and Conditions template generic agreement. The template is a basic set of trading terms and conditions with additional clauses that can be added or taken out depending on the circumstances, but with emphasis on ensuring any intellectual property issues are covered. This will allow you to clearly set out to customers the terms upon which you do business. For example, how long will a customer have to pay for the goods or services? What happens if they do not pay? What is the procedure for returns? Are you to retain ownership and title until payment is made?
Without a set of written terms and conditions it can be difficult to know on what terms you are conducting business, which makes any disputes costly and time consuming to resolve. This way, by having a set of Terms and conditions, the terms are clearly set out. The generic agreement can also be amended to be tailored specifically towards your business needs.
I am worried that by asking the company I am dealing with to sign agreements that they will refuse to deal with me or assume I think they are not trustworthy. Should I still insist they sign the documents?
Yes! The first sign of concern in such a relationship should be when the other party is not keen to have formal agreements in place. This should raise your suspicions immediately. After all, if they are a bona fide company who do not intend to rip you off, then there should be no problem with formalising the agreement. Remember that the agreements are also for their benefit. By having everything in writing it also allows them to conduct the relationship with clear boundaries. Furthermore, it should be of comfort to them that you take intellectual property rights seriously and wish to do things correctly.
