June 18, 2014

Who Owns the Design?


In negotiations between architects and owners, the question often arises: Who will own the design when the work is completed? The discussion — invariably complicated — may result in agreements that are more baffling than illuminating. There must be a better way.

One exercises ownership over one's creative work by limiting or prohibiting its copying or use. To the extent that a design is expressed in an original work, the author of the work can stop others from displaying or copying the work or make them pay for doing so without permission. These powers are called copyrights, and they apply to architectural or engineering documents and can even apply to completed buildings.

Copyright protection never extends to ideas, procedures, systems, or concepts, even if they are completely original. As long as the work is not copied, no infringement occurs. Patents protect original ideas and inventions, providing absolute protection from willful or inadvertent infringement. Some building components may be patented, but the overall design cannot be. Thus, while architects and engineers may own their original models, drawings, and specifications, they do not own their designs.

Copyrights belong to the author of the work, except works "for hire," created as part of the author's employment. Those belong to the employer. An independent contractor is not an employee and keeps the copyrights. The copyright owner can license, sell, or give away all or part of his or her copyrights, and such transfers often occur as part of consulting contracts and employment contracts.

Project owners usually want two things. They want to know that the designer cannot delay or halt a project over a payment dispute. This is too much leverage. They also want assurance that the design, created to their needs and tastes, will not appear in their neighbors' or their competitors' projects. Commercial owners need to protect their business secrets and their trade images.

Architects and engineers worry that if their clients distribute copies of the work, the copies, by reuse or abuse, will increase the author's risk of liability. Architectural and engineering designs are derivative. A designer learns from his or her work experiences and by looking at designs by others. This body of knowledge lies at the heart of the designer's art, and no designer can give it up.

Viewing their analyses, drawings, and specifications as instruments of service, design professionals vie to keep their copyrights, granting the client a license to copy and distribute the documents for the project only. The license expires when the project is complete, when the professional relationship ends, or when fees are not paid. Unlicensed use of the documents exposes the user to injunction and damages.

Clients respond by demanding the copyrights. Some clients claim ownership of all project documents with the copyrights, including the designer's sketches, drafts, and internal communications. Of course, such transfers could put a designer out of business — unable to develop its own body of work. A complete copyright transfer also leaves the designer without recourse if others copy the work to his or her detriment without offending the client copyright holder.

The resulting compromises, including a tangle of copyright transfers, licenses back, and indemnification schemes, defy common sense and would probably befuddle any court or jury. I propose a simpler solution that addresses the real interests at stake.

First, leave copyrights with the author. The client has no need for all the documents. Let the designer be responsible for the originality of the work and for protecting original work from usurpation. The design professional should be bound to protect the client's trade secrets and assets with a confidentiality agreement. If a building's appearance is part of the client's trademark or trade dress, assign the copyrights to the completed building to the client.

Next, let the client own "deliverables" — actual copies (not the copyrights) produced for the client as part of the professional services. Grant the client a broad license to use the documents for any purpose related to the project and consistent with the purpose for which the document was produced. The client should accept the designer's disclaimer of responsibility for unauthorized use, such as using preliminary-approval drawings for construction, and agree to indemnify the designer from claims by others arising out of the client's use. This protects the owner's interest in progress and protects the designer from the risks of uncontrolled reuse or abuse.

Finally, uncouple the license from the fee. Construction-delay damages will dwarf the amounts typically at stake in a fee dispute. Provide for fee disputes and account collection rights in the contract and avoid the risk of liability to the client for economic damages. Good payment provisions, with late payment and collection remedies, are the best way to ensure compensation — not copyright litigation.

This article is intended to inform the reader of general legal principles applicable to the subject area. It is not intended to provide legal advice regarding specific problems or circumstances. Readers should consult with competent counsel with regard to specific situations. For more information on this topic, please contact marketing@jordanramis.com or call (888) 598-7070.


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