In today's Unsure? Insure! episode we talk about copyright ownership after an argument broke out 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?"
Client relationships breaking down leads to friction
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 done a lot of things right here, aside from working without a contract. Working without a contract is a definite no, but they deserve credit for:
- Doing their research around copyright ownership
- Keeping things professional by handing over PDF’s and branding elements
- Pointing 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 asked for just to avoid conflict and put the situation to bed—even if it left the freelancer in a worse position. This is the opposite of what With Jack is about. We want you to be a confident freelancer so it's great to see this designer set boundaries and stick to them 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 are useful for diffusing arguments because they 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, with no contract it has enabled the situation to escalate. 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.
To show exactly what was agreed to going into the project the freelancer could have simply referred to the contract. Since that doesn’t exist, let’s look at how professional indemnity insurance could help in this situation.
How professional indemnity insurance can help with arguments around copyright
The professional indemnity policy has a copyright infringement clause where the insurer will cover damages you're obligated to pay where there’s been an actual or alleged infringement of copyright.
With this situation there’s 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. This would trigger the designer's professional indemnity policy.
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 appoint the freelancer a team of legal experts to enter into negotiations with the client and try to get the best outcome possible.
Be a confident freelancer
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 with clients because the situation is only going to go one of two ways. The client will either back down or if they decide to escalate things to a legal threat or a demand for compensation, you have the support you need legally and financially to fight it.
Here's what to do if arguments between you and your client 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 they have in this instance where they wanted to recover the cost of hiring other freelancers, contact your insurer immediately
- Your insurer should be able to help you defend claims of copyright infringement, as well as provide you with legal experts to negotiate in regards to any 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