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Five golden rules for good copyright transfer with your service providers

The elements likely to be protected by copyright are often inherently linked to the first stages of company setup: creation of a logo, a visual identity, software, a website or app, a platform, product design, etc.

In this context, fully acquiring copyright from your service providers is key to constituting the assets of your company from the word “go”.

This article overviews 5 golden rules for good copyright transfers:

Rule n° 1: A simple service provision invoice is not sufficient

You are considering giving over the creation of your logo or the development of your application to a service provider or a freelancer. You may, in fact, have already done so. He or she is a friend, a connection, a friend of a friend, someone you trust or who is just helping out. Everything worked out very simply with this designer, but you still wanted to do things properly: you paid the person and have an invoice that mentions the nature of service provided.

Unfortunately, an invoice alone (even paid) is not sufficient to secure the transfer of copyright to your company.

It is essential to sign a detailed copyright transfer agreement, on the one hand to guarantee the very validity of the transfer, and on the other to determine the extent of the rights your company becomes the holder of (see rules 3 and 4 below).

Rule n° 2: The sooner the better

In your relationships with your service providers, it is highly recommended that you obtain and formalise any copyright transfer to your company as early as possible.

If you ask your service provider (designer, developer, graphic artist, etc.) to confirm the transfer of the rights attached to their creations prior to the completion of the project (and before settling the invoice), you will obtain it without difficulty. Not only will the principle of rights transfer be set as a condition for choosing the service provider, it will also be much easier to ask for the rights you need within their scope (territory, duration, source codes, etc.).

Conversely, when this discussion takes place after the completion of the tasks and without a written prior agreement, rights transfer frequently becomes the object of negotiations to a varying degree of complexity, and is likely to become an obstacle. The transfer of intellectual property rights or their broadened scope (adaptation rights, etc.) can be used as leverage by service providers to obtain price hikes.

This situation is frequent, so anticipate it!

Rule n° 3: Respect compulsory notices

According to the Code of intellectual property, a valid transfer of copyright must respect certain notices that determine the nature and the scope of the rights transferred (L.131-3).

Copyright transfer must therefore indicate:

  • The detail of each transferred right: reproduction rights, representation rights (public communication), adaptation rights, translation rights, etc.
  • The field of rights exploitation: the transfer agreement must determine as far as possible the destination of the creations and the transferred rights (the framework, the field and the authorised exploitation methods);
  • The duration and the territory(ies) covered by the rights transfer: the transfer can be granted for a limited duration or for as long as copyright is valid (usually until 70 years after the death of the author). The transfer can also be granted for one or several countries or worldwide, but this must be specified.

Although omitting these notices does not always call into question the actual validity of the transfer (in particular in the case of a transfer between two corporate entities), it is highly recommended to respect and detail these notices in all circumstances, in order to guarantee your company the scope of the rights it is acquiring and ensure it can enjoy them in full.

Rule n° 4: Determine to the best of your abilities the rights and exploitation you will need

Above and beyond the compulsory notices, the general rule as regards copyright is that “all rights that have not been expressly granted remain the property of the author “.

For instance:

  • The transfer of copyright on a website does not necessarily grant the right to use the same elements as an app;
  • The right to use a work as a book does not necessarily grant the right to use it in the press.

For this reason, practice consists in detailing (sometimes in-depth) the list of rights and uses covered by the transfer, as well as the different types of media on which the creations can be used, the methods of exploitation depending on usage, as well as creation modification or adaptation technical conditions.

These elements are often detailed in a relatively standardised way to try and cover the broadest types of use possible.

It is nevertheless advisable to pay particular attention to the content of rights transfer clauses, and to ensure that all uses likely to be considered by your company are covered by the transfer.

This exercises sometimes requires creativity and projection over time, but it is necessary to guarantee efficient copyright transfer.

Rule n° 5: The importance of guarantees

The transfer of copyright directly involves a transfer of responsibility. By using the creations, your company will become legally responsible of them vis-à-vis third parties. This responsibility can be brought into question if a third party considers that the creation violates their own intellectual property rights (counterfeit).

As regards the transfer of rights, you must therefore obtain from the author (your service provider) that he or she guarantees (financially in particular) against legal actions from third parties as regards the creations of which he or she transferred the rights.

These guarantees are all too often forgotten or neglected, while they are crucial to the proper use of the rights.

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For startups, the rules applicable to copyright transfers often seem too complex or unnecessary. Your service providers create your logo or one of your software bricks without asking anything from you apart from payment on the basis of simple quotes and invoices, but your legal counsel or investors will ask you to sign a five-page legal document that focuses entirely on the transfer of intellectual property rights.

Unfortunately, valid and efficient transfer of copyright cannot be brought down to a simple handshake with your service providers. Respecting the rules indicated above is certainly restrictive, but absolutely vital.

Examples abound of startups (and even of well-established companies) that fell into the hands of blackmailers or that had to hold back their development because of intellectual property disputes. Those who had to change – or buy back, for a fortune – their logo and their entire visual identity 18 months after setting up their business will be able to tell you their story…