Brian Miller, Creative Director, Luxgraphicus Design Agency
How would you pay for the intellectual property of your business?
Specifically, the visual material which forms a vital part of the intellectual collateral associated with your business.
I’m not going to tell you the best way, or the cheapest way, or even my opinion here. I’m going to pose the question and provide some alternatives, then let you decide, or at least think about, the answers. Of course, if you’d like to discuss your ideas I’d love you to contribute to the blog here with comments and questions.
As designers, we’re creating intellectual property. But who owns it? Our clients commission us to do it. They pay us. (usually!) It’s created to be used in the operation of the business. But on what basis is it sold to the business? Does the initial fee cover the ownership of the intellectual property? Who owns copyright? Who has license to use the material?
Most of these are legal issues of course, which is not my area of speciality, although I do have some knowledge of copyright law and its application. I’m not going to dive into the deep waters of the legalities here!
But, as the owner of a design business, I am interested in how other business owners would be prepared to pay for the material created.
Recently I’ve been working on several approaches to licensing and payment for branding and identity projects. How would you be prepared to pay for the intellectual property which is so important to your business?
Here are some options;
Pay an upfront fee for the design work, and a license to use the work for the intended purpose. (later negotiation required for use beyond the original scope)
Pay a lesser upfront fee for the design work, with an ongoing (monthly or quarterly) fee for the license to use the work. (with outright transfer of the copyright after a negotiated period)
Pay a lesser upfront fee for the design work, with an ongoing premium on subsequent use of the work in designed and/or printed material. (with outright transfer of the copyright after a negotiated value of work completed)
Pay a greater upfront fee for the design work and full copyright ownership of the work. (no further negotiation required)
All have their strengths and weaknesses. There are, no doubt, alternatives too. As well as analogies from other industries.
As the owner of a design business I have my own preferred options, and as an innovator and entrepreneur, I can offer business owners added value through additional services within the licensing options, but which would the market support? (I’ll fill you in on the added value bits in subsequent posts!)
So which would you, as a small business owner or operator, be prepared to accept, to secure the intellectual property of your business?
Over to you…
Brian.
Canberra Small Business Blog 
I’ve always been of the view that you should be paying for the full rights to use the materials, i.e. the intellectual property becomes mine (or my company’s as the case may be). I can see benefits in the other two licensing models you have proposed, but I would be concerned about someone else having effective control over something as valuable as my logo and other branding collateral.
This issue comes up in other arenas on a pretty regular basis, especially in the world of software development, where the developer will often be paid to create a piece of software for their customer, but then not supply them with the underlying source code, only the right to use the application. The danger is if the relationship between the developer and the customer deteriorates, the customer will find it very difficult to move to a new developer. The developer effectively locks the customer into using them forever. The customer is also potentially exposed to unethical practices, such as unreasonable price increases, and would have basically no path to resolve the issue because they don’t own the rights to the materials.
Cheers John, I appreciate your input here.
Clearly the devil is in the detail of the licensing agreement. Provided the client was assured of being able to use the work as intended, and the creator was not able to hold them to ransom or somehow sabotage their use of the work, the question would come down to total cost.
The models I propose all end with the copyright being transferred to the client and a similar cost ultimately. The licensed options take the approach of spreading the costs out over time, which can be a major consideration for a small business.
I also like these options as they provide opportunity for us to become the businesses consultant designer over this period which has benefits for both parties.
I’ll put up a detailed proposal on our website once it is sorted out a little more.
Thanks for getting involved.
Brian.