Top Advertising Agency IP – going cheap or creating value

The following note deals with the creation of IP by an advertising agency, remuneration and the creative possibilities that copyright offers.  This was originally posted on the blog of marketing management gurus  TrinityP3

The original note can be read here

Perhaps the number one (silly) copyright misconception is that copyright protection is somehow obtained by mailing your work to yourself and retaining the unopened envelope.  This is commonly known as Poor Man’s Copyright.

The number two (perfectly understandable) copyright misconception is that if you commission someone to create something for you, then you automatically own copyright in the work. This seems logical but any well advised person will have their lawyers’ advice ringing in their ears at all times – IN ORDER TO OBTAIN COPYRIGHT YOU MUST OBTAIN THIS IN WRITING.

The position is often different in relation to registrable design rights, trade marks and patents.  However, generally ownership of copyright in commissioned works belongs to the author (or author’s employer), not the commissioning party. The commissioning party may be acquiring merely a license to use the work for the purpose for which it was commissioned.

Therefore, the natural approach of savvy advertising clients seeking creative work from an agency is to avoid the mistake of unsophisticated players by carefully capturing all intellectual property (IP) that forms part of the job or emerges during the relationship.  After all who wants to be beholden to some creative for time and eternity for that sliver of inspiration?

Yet from an agency’s perspective this is akin to putting all of the IP in an envelope and mailing it to someone else without thought to the value of what is being transferred or without negotiation.  Objectively, this could be viewed as even sillier than Poor Man’s Copyright.

However, it does not have to be like this.  A wonderful thing about copyright is that it is divisible and IP generally can be assigned, licensed, commercialised in a multitude of ways.

The film, music and book industries have a long tradition of sophisticated arrangements for carving up IP rights for commercialisation. This is not to say that those (increasingly troubled) industries are directly analogous to advertising, rather the point is to focus on IP from the outset and that as an alternative to a “client takes all” approach, there are many creative contractual solutions for ownership and  commercialisation.

For example, copyright in original work created for a client may be retained by an agency and only assigned upon completion of various milestones or if the client proceeds with a particular option.   Alternatively, the agency could retain copyright and other IP rights but with a long term mutually beneficial remuneration system in place coupled with exclusive rights for a particular segment.  The possibilities are endless if you move away from the mindset that one party takes all and nothing else will do.

A specific job can in fact involve multiple copyrights. You can think it like layers of an onion – the onion continues to exist even if you peel off the outer layers and give them to your client to do whatever they wish in the future. Each layer has its own copyright. Of course, if you give the entire onion away in one go then it is difficult to ask for some of it back in the future.  On the other hand, if you are strategic and give just one layer to a client until the next milestone is met, you hold the rest of the onion in your hand with the right to determine how to carve up later, including any relevant fees.

An overriding question is whether an agency’s IP leakage is in fact a practical problem in terms of subsequently being prevented from using concepts the agency has pitched to a client.  What can or cannot be used by the agency in the future depends very much depends on the terms of the contract and what specific copyright works (if any) have been created (keeping in mind that copyright does not protect ideas, just the original expression of ideas).

IP issues can be complex.  However, rather than not considering the issues in any depth, the preferred course is to adopt the approach of other industries and view the multiple layers of IP as multiple opportunities for both agency and client.

Lance Scott


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