File Ownership Rights

Once a project is complete, who owns the electronic working files? The ownership of the electronic art files should be specified in the project contract, so there is no confusion or legal mess. Normally, the client will own everything upon the final payment of the project. For example, if you are doing a packaging design project, with a timeline of six months, and the client agreed to pay monthly installments, on the final installment the client would own the electronic files.

Past projects, now what?

If you are dealing with a past project where the ownership information was not explained in the contract you can do one of two things.

1. You could just send them the art files if the final invoice was paid. If the final invoice has yet to be settled, this is your one piece of leverage in order to have the invoice paid in a timely fashion.

2. You can ask for additional money for the files. BUT, and this is important. If you are planning to do future work with the client, it might make better business sense to just give them the art files rather than making them pay extra. Also, if client decides to sue for the art files, you will need to prove that for every client you require extra for the working art files. Without that business policy, you might be opening a can of worms.

What about concepts?

The ownership of concepts should also be spelled out in the contract. Typically, they are handled in the same fashion as the working art files; the client would own them. When you are estimating the project, you should think in terms of labor hours (graphic design after all is a service industry). So, sell the time it takes to come up with your ideas, not the art files.

Taxes, taxes, taxes.

If you are transferring your art files to the client or the printer, do it via FTP or download link. This will help you avoid charging the client sales tax.

Art files and the labor it takes to arrive at them are non-taxable if the art files are transferred via electronic means. But as soon as you burn a CD of the art file, all of the labor hours it took to arrive at the art file are taxable, OUCH!

Keep this in mind.

You are being hired as a freelancer or agency to complete a task. That task requires the development of electronic art files. You may have created the file, but the client was paying for your time to create that file, so who really owns the art file? The answer could be argued either way. Because of this it is always best to layout all the ownership terms in the project contract. This way you avoid misunderstandings later.

Source: designerstoolbox 2008/06/03
http://www.designerstoolbox.com/designlife/?PHPSESSID=b19212db97ec0a72d3...