You made that! You took that idea and you made it a reality. You are a maker! At Trellis Legal, we have mad respect for our maker clients’ refreshing ability to do just this. Whether you’re an artist, a crafter, developer, designer, or something else, this blog post covers a couple of questions to ask yourself as a maker to help protect and properly account for the incredible things that you create, build, re-purpose, refurbish, and bring to life to ensure your art (and your business!) are made to last.
Are Your Business and Sales Protected?
There are a number of ways to help protect your business from liability. A few overarching protections include having an entity and insurance. You will also want to make sure you have the appropriate sales tax registrations and, if required, you’re paying them according to what and where you’re selling (definitely talk to an accountant to help you with sales tax!).
If you’re selling in person, for example at a market, there are a number of specific considerations for selling your wares. Check out our blog post about legal considerations for a market booth.
Are You Protecting Your Intellectual Property?
Intellectual property (IP) is an area of the law that works to protect who owns the rights to creative works. These include copyrights, trademarks, patents, trade secrets, and contract language. You can protect your IP through federal registrations if applicable, clauses and disclaimers (for example your website, contractors, or product labeling), understanding and enforcing your rights surrounding them, and having clear language surrounding who owns the rights to use and control your work. These are often provided through licensing agreements and releases, as explained below.
Licensing Agreements and Releases
Very often, companies contract with makers for their designs, ideas, and awesome abilities. For example, a clothing company might hire a pattern designer to help them create a specific pattern for a bandana they want to release. Or maybe a hotel company wants to hire an artist to make paintings for its lobby. There are various levels of transferring intellectual property ownership you will want to understand and clearly identify in writing who owns what intellectual property, and what each party’s rights are with respect to that ownership. A licensing agreement authorizes one party to use another’s intellectual property without giving them the outright ownership. A release, however, is where a creator grants another all of the ownership rights to something that creator made so that it’s no longer theirs.
For example, if you’re a designer, and you’re designing a pattern for that clothing company, you can create a licensing agreement that gives the clothing company the right to use your design on their bandanas but doesn’t give them ownership of it. The licensing agreement may grant the rights to exclusively use the design, or you could make it so it’s non-exclusive and you could let another company use your design as well. It may address what percentage of the proceeds you earn for every sale, or it might give you a lump sum for a certain amount up front. You could license them the rights to do this for a short or a long period of time. Similarly, for the hotel artist, you could give them title (aka physical ownership) of the art, but allow you to sell the designs through your business as prints as well.
There are also releases that can be used. For example, if the clothing company contracts the pattern designer to make a pattern that they want to own and use completely, then the company and artist will likely sign a release that says that the artist is hired to make the pattern for the company and releases all of their rights to the pattern so that the company owns it and can do whatever they want with it.
Clearly, both of these – releases and licenses – come with different levels of exclusivity, ownership, liability, and control so it is important to understand, make sure you’re on the same page, and negotiate if applicable, the different ownership rights. We’ll be launching an agreement for makers in our template library that contains language depending on whether you’d like to release the intellectual property completely to another or grant them a license for a limited time. Like all of our templates, it includes detailed comment boxes with explanations for each section and options for what you need depending on the contract.
Also, be sure to check out last month’s Intellectual Property Toolbox available for download in the Resource Library.
DISCLAIMER: This blog post is meant for informational purposes only and does not constitute specific legal advice or create an attorney-client relationship. Readers should discuss their specific situation with an attorney.