Contracts with freelancers: the importance of intellectual property rights assignment clauses.

Riestra Abogados.

A few days ago, we reported on the news that the owner of the firm Kukuxumusu had filed a lawsuit against five former artists of the brand, urging them not to use 15,000 drawings because they had been assigned to the firm.

The question arises when differentiating between the artist's style and the 15,000 completed drawings, as it appears the style used could be so identifiable with the former that it could be confused.

In this scenario, it is prudent to keep in mind that when hiring an illustrator, draftsman, photographer, etc. to perform services, it is important to consider the implications related to intellectual property.

We're going to focus this article on a situation we see very often: an advertiser or an advertising agency hires the services of a professional to create illustrations, photographs, or videos, which will be used to promote a specific brand, product, or service.

From a very general perspective, we're talking about a service provision contract, the purpose of which is the creation of a design, drawing, or photograph. At this point, we should clarify that the material commissioned, whether by an advertising client or their advertising agency, is protected by the Intellectual Property Law (Royal Legislative Decree 1/1996, of April 12, approving the revised text of the Intellectual Property Law), which states that the intellectual property of a literary, artistic, or scientific work belongs to the author by the sole fact of its creation. Intellectual property is comprised of personal and property rights, which grant the author full control and the exclusive right to exploit the work, with no limitations other than those established by law.

Therefore, from the moment a person creates a creation (literary, artistic, or scientific work), that creation is protected by intellectual property rights. The author, as the creator of the work, may freely dispose of the exploitation rights and is therefore entitled to assign these rights to a third party.

Having addressed the legal basis of the matter, when commissioning a specific work, we must specify it in a contract. In this contract, we will detail the scope and characteristics we want the work to have, as well as the scope of the assignment of intellectual property rights.

Clauses on the transfer of rights

When determining the scope of the assignment of rights, we must first keep in mind that this is not a mere license to use the work or the commissioned material. We are talking about a custom commission, a specific drawing, a design, a photograph. The advertiser needs to have the work to use for their own benefit. Below we describe the elements that must be considered when considering an assignment of intellectual property rights:

- Originality. To avoid surprises and to ensure that the commissioned work is completely original and innovative, we must expressly require this characteristic of the work. The author must agree to be original and creative, and not to imitate other possible works owned by third parties. In this way, the assignee will be covered against possible third-party claims.

- Exclusivity. Whether or not this term is included will determine whether the work may be used by the author or by third parties outside the commercial relationship. If we include this term, the transfer of intellectual property rights will be limited exclusively to the transferee entity. That is, neither the author nor other entities may exercise the exploitation rights of the work. The LPI determines exclusivity as follows: The exclusive transfer must be expressly granted for this purpose and will grant the transferee, within its scope, the power to exploit the work to the exclusion of any other person, including the transferor, and, unless otherwise agreed, the right to grant non-exclusive authorizations to third parties. It also grants the transferee legal standing, independent of that of the transferring owner, to pursue infringements that affect the rights granted to it.

- Power to transfer to third parties. In cases where an advertising agency contracts with the supplier, the agency must ensure that the transfer of exploitation rights does not expire with the agency itself, but that the agency must also be empowered to transfer them to its client, the advertiser.

- Exploitation rights. We must be clear at all times about what we want to do with the assignment. We may simply want to use it as is, without modifications. We may need to modify it slightly and adapt it to the advertiser's needs. We may want to incorporate the work into other audiovisual material or offer it for sale, rental, or simply publish it. The LPI lists the exploitation rights in Article 17: The author has the exclusive right to exploit his or her work in any form, and in particular, the rights of reproduction, distribution, public communication, and transformation, which may not be carried out without his or her authorization, except in the cases provided for in this Law. Furthermore, if the exploitation rights are not specified, the transfer will be limited to those necessarily deduced from the contract itself and essential to fulfill its purpose.

- Duration and territorial scope: It is important to determine a period for the transfer of exploitation rights, as well as to agree on a sphere of influence. This is crucial if we want to distribute the work for a specific event in a specific territory, such as an advertising spot. The LPI establishes that the exploitation rights of a work may be transferred by "inter vivos" acts, with the transfer being limited to the right or rights transferred, the exploitation modalities expressly provided for, and the time and territorial scope determined. The lack of a time limit limits the transfer to five years, and the territorial scope to the country in which the transfer is made.

And what would happen to the employees?

Although this article has focused on contracts with freelancers, how would the transfer of rights be regulated in the case of an in-house illustrator?

According to the LPI (Spanish Industrial Property Law), the relationship between the company and the author, and therefore the transfer of rights, must be set out in a written contract. In the absence of a written contract, it is presumed that the rights are transferred exclusively and to the extent necessary according to the employer's activity:

1. The transfer to the employer of the exploitation rights of the work created by virtue of an employment relationship will be governed by the terms of the contract, which must be in writing.

2. In the absence of a written agreement, it will be presumed that the exploitation rights have been transferred exclusively and to the extent necessary for the exercise of the employer's usual activity at the time of delivery of the work produced under said employment relationship.

3. Under no circumstances may the employer use the work or dispose of it for any purpose other than those established in the two previous sections.

Therefore, regardless of the approach, whether freelance or salaried, we must be very clear in advance about the purposes for which the work will be used. Before starting work, if possible, we must specify all aspects related to the transfer of intellectual property rights in a contract. We must not waste time without firmly establishing the obligations and responsibilities of each party through the corresponding contract.