In today's Unsure? Insure! episode we talk about copyright ownership inspired by an argument between a client and freelancer about who owns the original source files.
"I had a client relationship go sour. Upon parting ways I handed over everything that they legally had rights to. This included a collection of all final PDFs and branding elements.
Now they're asking for my original source files. I pointed out that they don’t own the rights to these files. I have done enough research to understand that copyright remains with the original creator of the work unless those rights are passed along as stated in a contract.
I never said that I would supply these files. There was never a contract written up between us. There is no signed documentation that states I must give the copyright to the client.
When I pointed this out I received a threatening email from my client. They ended it by saying "If you decide to not release what I have asked for, I will get them redesigned and recover the cost of this from you”.
Is this legally possible? Does anybody have experience dealing with a similar situation that could tell me what action I can take to rebuke this attack?"
Relationships breaking down = friction = problems
There isn’t any detail around why the relationship soured, but we don’t need to know the nitty gritty. This is typically how claims arise in insurance. Relationships break down and friction heightens between freelancer and client leading to problems.
The freelancer has actually done a lot of things right here, aside from working without a contract. That’s a definite no. They did their research around copyright ownership, they kept things professional with the client by handing over PDF’s and branding elements, and they pointed out that without a signed contract around copyright ownership they copyright remains with the creator unless otherwise agreed.
I think a lot of freelancers would have given the client everything they were asking for just to walk away from the project, even if it left the freelancer in a worse position. It's great to see this freelancer set boundaries and stick to those boundaries even when the relationship was crumbling.
A contract would have put this argument to bed
This argument around the original source files and who they should belong to would have been put to bed quickly had there been a contract. The freelancer could have referred to the copyright clause in the contract to show what was agreed to by the client.
Contracts can be useful in these types of situations to diffuse arguments and make things like copyright ownership black and white. I can’t emphasise this enough. Contracts won’t completely eliminate problems, but they can help to get everyone on the same page and nip issues like this in the bud so that they don’t escalate.
Unfortunately, in this situation it has escalated and the client has threatened to hire somebody else to redesign the work and recover the cost of this from the freelancer.
This is a common claim we see at With Jack and the freelancer has asked what action they can take to rebuke this attack. I mentioned it already, but a signed contract would have been the simplest option.
The contract could have been referred to to show what was agreed to going into the project. Since that doesn’t exist, let’s look at how professional indemnity insurance could help in this situation.
How insurance can help
The professional indemnity policy has a copyright infringement clause where the insurer will cover damages which you have to pay where there’s been an actual or alleged infringement of copyright. With this this situation there’s essentially an argument around who owns the copyright and the client is asking for compensation to hire another designer since the freelancer is retaining the original source files.
All situations are different and assessed on a case-by-case basis, but typically the insurer wouldn’t just give the client whatever they’re asking for. The insurer would enter into negotiations with the client and try to get the best outcome possible.
This situation is a good example of how being insured gives you the confidence to stand up to clients and say “Hey, this isn’t something we agreed to”. Being insured helps you to stand your ground because—if the client decides to escalate things to a legal threat or, like they did in this case, a demand for compensation—you have the support you need legally and financially from your insurer.
To recap, here's what to do if arguments ensue about copyright ownership:
- Know where you stand in terms of copyright laws, but preferably have a contract in place that leaves no room for confusion
- If there are any arguments around copyright or IP ownership, refer to the copyright clause in your contract to show what was agreed to by both parties
- If your client tries to recover compensation from you—like in this instance where they wanted to recover the cost of hiring other freelancers—contact your insurer immediately
- Your professional indemnity policy should be able to help you defend claims of copyright infringement, as well as provide you with legal experts to negotiate with your client in regards to their demands for compensation
- Being insured gives you the confidence to stand your ground with clients who are trying to take advantage. If the client escalates things with a legal threat or demand for compensation you have the support you need legally and financially from your insurer