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Chapter
1

Understand ownership and its subcategories

Let’s recap important pieces of contracts

In Part 1 of this two-part playbook series, you learned why you need a contract, the components of valid contracts, and a step-by-step guide to understanding and including these components in your own contracts. Now that you've nailed down the key components of reading and writing a contract, it's time to delve into a few other important elements that you can include in a contract. 

As you're going through this playbook and learning new terminology, write down your own definitions in your workbook. Using your own words can help you remember and understand terms better, and make you feel more confident requesting a client amend parts of a contract. You should also take note of when you might want one of these clauses added to a contract. Try and pinpoint specific scenarios where that clause would protect your rights or your business' rights.

Pollen is an education platform for freelance businesses. We’re not a law firm nor an accounting firm. We don't give legal or accounting advice. Have your contract reviewed by a lawyer or an accountant if you would like professional advice

Key terms

  • Intellectual property

  • Copyright

  • Ownership

  • Exclusive license

  • Derivatives

Intellectual property, copyright, ownership, exclusive license, drafts, and derivatives

What's intellectual property (IP) and copyright?

Here's a quick primer — IP stands for intellectual property. It's a catch-all term that includes things like copyrights, patents, and trademarks. It's also a type of property that includes things like art, music, and software. 

Copyright is a type of law that protects IP. When you create something, you automatically get copyright protection. This means that no one can copy or use your work without your permission. Copyright is a type of IP that protects original works of authorship, like books, music, and art. 

Freelancers typically own the copyrights to their work, unless they sign a contract that transfers those rights to their client. Software developers also typically own the copyrights to their code, unless they've signed a contract that says otherwise. The next section covers other elements that fall under the umbrella of IP and copyright. 

What’s ownership?

Ownership is the legal right to possess, use, and dispose of something. In a contract, ownership can be transferred from one party to another. 

Consider Dom, a graphic designer. Dom wholly owns or has exclusive rights to the logos he designs. He can tell people not to use them without his permission, and because of copyright laws, he could utilize the court system if they aren’t taken down after he asks. 

What’s an exclusive license?

A license is an official permission or permit to do something. If you’ve ever used services like Adobe Stock or Getty Images, you’ve obtained a license to use certain content. The distributors of that content (the platform) are paid for their services, and the creator is paid royalties for your instance of licensing their creations for use.

Exclusivity is when only one party has the right to use something. When it comes to intellectual property, ownership can be exclusive, meaning that only the owner has the right to use the IP.

An exclusive license in a freelance contract is when the freelancer allows only the client to use their content. The freelancer is giving up the right to sell their work to another party or to use it on another project. This is often seen in contracts between freelancers and clients where the client wants to be sure that they are the only ones who can use the work that the freelancer produces.

Drafts and derivatives

Be sure to clarify what happens with early drafts and preliminary versions of the work — who owns them? Will you be required to delete them once payment is made? If you want to make sure you won’t be compelled to delete copies of your work, then make sure you have that term in place in your contract. 

The same goes for any derivative works based on materials provided by the client — if you want to make sure you can use these in your portfolio, for example, then you'll need to make sure that ownership is specified in the contract. 

When you may want to own the IP

There will be situations where you may want to own IP and situations where you may not care. 

Kobi is a freelance writer and writes an article for a client on logo design. He is planning on writing an ebook about design in a few months and wants to use pieces of the article for the ebook. In this situation, Kobi would want to own the IP, or at least get express permission to use it. For another client, he is writing a newsletter about a specific software product this client has developed. The client is the only one who'll want to use this piece of writing and Kobi has no use for it later; therefore, he doesn’t care about owning the IP.

If he decides later, he wants to use this newsletter as a sample of his work to show another client, he can always ask the client for permission. However, they may say no, and that’s within their rights.

If you ever want to own the IP, you must make sure that’s clearly stated in the contract. For some freelancers, like illustrators or app developers who use proprietary components in client work, it might undercut your entire business strategy if you lose the rights to your IP. It's important to think about what you want to do with the work you create before entering into a contract so you can make sure your rights are protected.

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