Corporate Designs: Does Your Business Really Have the Rights to its Designs?

When I speak with the average small business owner about what I do for a living, 9 times out of 10 they advise me that they wish they could use me, but that there is business just does not have intellectual property to protect. However, in most cases, when someone tells me this, they are overlooking at least one important piece of their company's intellectual property--its designs. Furthermore, in the majority of those cases, that is the one area of their business that is completely unprotected and vulnerable to a law suit.

Now, if you are one of those businesses, your next statement to me will likely be that there is no problem with the designs because you paid for them. A few of you would next go on to tell me that you registered your trademark, so there is no issue.

Unfortunately for most business owners, though, this is often just not true, and designs seem to be an area of particularly vulnerability, whether we are talking about corporate branding, website design, or the design of marketing materials.

Why is this? Well, it's simply because most small businesses buy design work for their business, and few designers or purchasers of their services use attorneys to draft or review their contracts. Thus, more often than not, the designer is paid for his or her design work, and the purchaser of his or her services never actually receives in exchange the ownership or even a written license to the intellectual property rights in the work. The purchaser of the work often assumes they own the full rights to the designs, when in fact they often have at most a very narrow implied license to use the work in a particular manner--and in some cases, they may really be infringing on the designer's copyright.

So, what happens? Well, increasingly attorneys like me are seeing disputes arise over who has the rights to the artwork, and these disputes are turning into copyright infringement cases. I am even seeing nonprofit organizations who are running into problems over this issue.

You might ask why there is such a problem in the area of design? Well, it is due to a fundamental lack of understanding over copyright law. U.S. Copyright law establishes that the creator of a copyrightable work owns the rights in that work when it is fixed in a tangible form of expression, unless the work at issue is a "work for hire." However, to have a "work for hire," the work had to have been (a) prepared by an employee in the scope of his or her employment or (b) the work has to have been commissioned for creation and the parties had to have agreed that the work was a "work for hire" in a written agreement. Thus, if you hire someone to create a design for you on a website, a marketing material, etc., and the designer was not your employee, you do not own the rights to what was created unless you have an appropriate agreement in place with the designer who created the work. Moreover, if the designer who created the work was not an employee of the business that you contracted with to design the work, you still may not own the rights even with the appropriate agreement in place with the business, if that business failed to have the appropriate agreement in place with its designer.

In the absence of ownership of the rights in the design, is there some other way to use the design work? Yes, in fact, the other option is entering into a license to use the work. While this would not give the purchaser the right to make changes to the design and would limit the ways in which the design could be utilized, a copyright license would enable the purchaser to secure in writing the ways in which the design could be utilized, provided that the license is entered into with the actual copyright owner.

In case this sounds a little confusing to you, this is exactly why businesses and designers alike should be consulting with an attorney prior to entering into any arrangement to provide design services. To date, however, this is still not the standard practice in the business world and the design industry.

So, the next time you start to apologize to an IP attorney for not being able to send him or her work, you might catch yourself and think about what you are saying. If you have a website that someone else created for you or if you even have your own business cards, there is a relatively good chance that you in fact could use the help of an IP attorney and just not realize it.