Who owns the work? A plain guide to ownership and usage rights in client agreements

A project ends, the client has paid, and then someone asks: "Can we use this somewhere else?" or "Can you send me the source files?" If your agreement is silent, the answer is an argument. This post explains the main ideas in plain language, shows how to cover them in your agreement, and works through the cost of one gap: third-party materials.

This is general information, not legal advice. Rules on ownership differ by place and by type of work, so use this as a list of questions to bring to a qualified adviser.

Start with three questions

Every agreement should answer three questions about the work you deliver:

1. Who owns it? Does ownership move to the client, stay with you, or depend on the type of work?
2. When does that happen? On delivery, on final payment, or at another point?
3. What can each side do with it? Can the client edit it, resell it or use it in other places? Can you show it in your portfolio?

If you answer these in writing before the project starts, later disagreements have a document to point to.

Ownership versus a license

There are two main ways to give a client rights to the work.

• Transfer of ownership. The client becomes the owner. Reusing the finished work for others may then need the client's permission.
• A license. You keep ownership and give the client permission to use the work in defined ways, such as in certain places, for a certain time, or for a certain purpose.

Neither is better in every case. A client who wants complete control of a brand tends to want ownership. A client who needs a tool or template may only need a license. The terms of each are a legal matter, so have them reviewed.

Tie the transfer to payment

One approach is to move rights to the client only when the invoice is paid in full. Until then, you keep them, or the client has a limited right to use work in progress.

Say a project is $10,000 and the schedule is a $3,000 deposit, a $4,000 milestone and a final $3,000. Check the total: 3,000 + 4,000 + 3,000 = $10,000.

If the client pays the first two amounts, they have paid 3,000 + 4,000 = $7,000, or 7,000 / 10,000 = 70%. Under a payment-linked clause, rights to the finished work have not yet moved, because the final $3,000 is outstanding. That gives you a clear reason to follow up on the invoice. See how to chase late invoices for a courteous way to do it.

Whether such a clause is enforceable depends on your contract and your place, so confirm it with an adviser.

Cover your portfolio rights

If you want to show finished work in your own marketing, say so in the agreement. A short clause might state that you may show the work in your portfolio, and that the client may ask you to delay or limit this where there is a confidentiality need.

Without this, you may have to ask each time. With it, both sides know the arrangement from the start. Check the rest of your contract using the client contracts checklist.

Third-party materials: the gap that costs money

Many projects use things you did not create: stock images, fonts, plugins, templates and software licenses. These come with their own terms, and those terms may not allow you to pass the material to the client in the way you expect.

There is also a cost question. Say your project has a price of $10,000 and a 40% margin, which is 10,000 x 0.40 = $4,000 in profit. You then buy five stock images at $200 each: 5 x 200 = $1,000. If your agreement did not mention them and you pay the cost yourself, your profit falls to 4,000 - 1,000 = $3,000. That is a drop of 1,000 / 4,000 = 0.25, or 25% of the profit, from a line you did not plan for.

To avoid this, list third-party materials in your scope statement, say who pays for them, and say who holds the license. A simple approach is to pass costs through to the client at cost, with the license in the client's name where the supplier allows it.

Hand over files in a defined way

State what you will deliver at the end. For example, final exports only, or exports plus working files. Working files, such as layered design documents, can be a separate question from the finished product. Some businesses charge for them or keep them.

Record what you handed over and when. The project close-out steps are a good place for that, and client access and assets covers logins and files in more detail.

What to take to a qualified adviser

Bring this list to the person who reviews your standard agreement:

• Does ownership transfer, or is the client given a license?
• At what point do rights move, and is that tied to payment?
• What happens to work in progress if the client cancels?
• How are third-party materials handled, and who holds those licenses?
• What are your portfolio rights?
• Which files are delivered, and which are kept?

Once the answers are in your template, you can reuse them. An agreement structure such as an MSA with separate scopes of work lets you keep the ownership terms in one place and change only the project details.

Next step

Read your current agreement and mark where each of the six questions above is answered. Where it is not, write the question down and ask your adviser for wording. Then add the third-party materials line to your scope template so costs and licenses are settled before work begins.