INEQUITABLE CONTRACTUAL PRACTICES ARE STILL PREVALENT

08 November 2006
Julia Ptasznik, editor, Visual Arts Trends
Julia Ptasznik, editor, Visual Arts Trends

The story is as old as life - you don't get what you deserve, you get what you negotiate. The clients seem to be much better at the latter than the artists, as we continue to give away things like copyright ownership for no additional compensation. Here we offer an analysis of an intellectual property provision used by a prominent international organization in its blanket contract for services, explain what it means, and what can be done about it.

When the Graphic Artists Guild alerted the community to unfair contractual practices of Conde Nast Publications, Inc. in 1997, it waged an all-out war on behalf of all designers. The Guild not only contacted this publisher, but also created an on-line resource called The Contracts Monitor. The Guild's commendable efforts have helped many a designer be more aware of what constitutes a fair contract, and to be able to negotiate one.

Unfortunately, this problem is not going away. Rather, unfair contractual practices are escalating. While visual artists have an agreed-upon code of professional conduct (i.e. the Code of Fair Practices), there is no such thing as far as client companies are concerned.

Here we offer a brief commentary on the wording of the Intellectual Property Rights provision of a blanket Contract for Services presently used by a prominent international organization, which shall remain nameless for the purposes of this analysis. It is sufficient to point out that this provision is not unique to this particular organization. Many large companies in both public and private industry sectors have almost identical provisions in their own blanket contracts used to purchase just about anything, including graphic design services.

First, this provision states that "all intellectual property and other proprietary rights ... except pre-existing materials, collected or prepared as a consequence of or in the course of the performance of this Contract, shall become the sole property of [the Organization]."

Translation: If you, the designer, presented 5 initial designs of a brochure, for example, the client will own all five concepts, as opposed to just the one they select for publication. As a result, all unique layout treatments, design elements or even fonts you created with this project in mind become the client's property and can no longer be used by you. The standard creative industry practice is that all specially created fonts, sketches, concepts, and designs not selected remain the property of the designer, unless they are purchased at an incremental fee, for which this contract makes no provision.

The contract also asserts that the design firm - coincidentally, referred to as "the Contractor," as if the service at hand were the manufacture of a large quantity of industrial wire - "shall hold harmless and fully indemnify [the Organization] from and against all claims and proceedings for infringement of any patent rights, design trademark or name or other protected rights resulting from the Contractor s performance."

It is interesting that this client chooses to secure all rights, yet refuses to accept any liabilities for the project. While not illegal, this could not possibly be considered even remotely ethical.

What is more worrisome is the potential for legal action. Most design firms are willing to commit, in writing, to the fact that they will not knowingly infringe on the rights of others in preparing designs or trademarks. By the same token, a designer cannot possibly provide legal clearance for the actual use of a design without appropriate research and subsequent registration with an appropriate governmental agency, both of which cost money. For example, trademark design research on an international scale can amount to several thousand dollars in incremental costs. This contract makes no reference to these industry-standard practices.

What if a design firm chooses to perform the necessary research and add the incremental cost to their initial quotation for the job? A good idea, but this particular organization practices competitive bidding in all their purchasing. Unless all firms competing for a project do the same, adding even a few hundred dollars would almost certainly take a firm out of the running.

Potential clients could - and often do - argue that if the design firm performs its work in good faith and is not negligent or intentionally tortuous, the chance of infringement is very small. However, it still exists, as evidenced by the myriad copyright infringement lawsuits, some of them unintentional.

As designers, we do not create in a vacuum; we are trained to think symbolically, along the lines of common consciousness. For example, everyone would draw a heart to symbolize love. A very real example of common consciousness at work has resulted from the current craze over the "e" prefix among technology-driven businesses. Dozens of clever designers and business people all over the world have almost simultaneously come up with a symbol that makes the letter "e" appear similar to the "@" symbol used in e-mail addresses. IBM's e-business is the one presently using this symbol in its very extensive, and very expensive, advertising campaign.

Interestingly enough, IBM was recently sued by a French-American company called E Technologies Associates LLC, which had been using an almost identical trademark since April 1997, according to The Wall Street Journal. E Technologies had applied for copyright registration on June 10, 1997, while IBM had not filed until August of the same year. What's more, IBM had prudently conducted extensive research and acquired rights to the trademark from other companies. Clearly, the two businesses were not the only ones to come up with this idea.
Thus, litigation is a very real possibility, even when one takes the necessary precautions. The chances may be small, but who wants to take them?

In sum, if a design firm chooses to accept the terms of this organization's contract, it gives up all of the rights to the art, assumes all liabilities resulting from potential litigation, and, if it chooses to commission appropriate research to prevent potential infringement, it must do so at its own cost. Since this intellectual property provision is non-negotiable, the only alternative is to gracefully bow out of the running for a project.

Visual artists are becoming increasingly aware of the ramifications signing a contracts such as the one discussed here can have. While industry associations like The Graphic Artists Guild and the American Institute of Graphic Arts have been active advocates of designers' rights and interests, there is absolutely no hope for an industry-wide change, unless designers themselves refuse to do business on such inequitable terms. Unfortunately, large corporate clients are banking on the fact that there will always be someone "hungry enough." Thus far, they have been right.




About this article

The above article is reprinted from Visual Arts Trends, with permission. First published in Visual Arts Trends 1f (fall1999)

About Julia Ptasznik
Julia Ptasznik is an honors graduate (BFA) and a faculty member of the Advertising/Graphic Design department of the New York, USA-based Fashion Institute of Technology. She has written and presently teaches a course on Professional Practices to upper-class design students. In addition to being the editor of Visual Arts Trends, Julia is a freelance consultant specializing in marketing strategy development, copywriting and graphic design. Her portfolio includes work for companies and organizations such as the United Nations, Buick, Bertolli USA, Sprint PCS, The Fragrance Foundation and Domino's Pizza. Prior to starting her own business, Julia has worked on both client and agency sides, most recently as director of communications of an international trading firm, Atwood Richards Inc., which has offices in 32 countries. Her previous experience includes working on design projects for the U.S. Open Tennis Tournament, well-known apparel industry brands such as Bonjour, and varied toy packaging accounts.

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About Visual Art Trends
With offices in New York and London, Visual Arts Trends is an international quarterly "state of the industry" report for the creative professional. Focusing on graphic design, advertising art direction, photography and illustration, each report offers a brief, business-oriented, definitive and timely overview of industry developments that affect aesthetics, pricing, salaries, working conditions and client relations. Visual Arts Trends combines unique proprietary research with material gathered by monitoring hundreds of publications, companies, membership organizations, online sources, and other relevant sources of information. The reports review and analyzes professional trends by business category and by specialization. In addition, each report profiles client industries interviews with senior executives of leading companies and organizations. An annual subscription retails for US$29.99 and includes four reports available for download as PDF files. Visual Arts Trends is a trademark of and is published by Colonial Communications Corp.

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