IP protection for an advertising agency
The product: advertising IP
Katrina Rathie, a partner in Sydney legal firm Mallesons Stephen Jaques, says:
'Other industries, such as films and book publishing, have made a fortune selling their intellectual property, based on royalty fees linked to box office and sales figures.
'Legally there is nothing to stop an ad agency retaining control of a campaign's intellectual property rights and collecting residual payments from clients, in the same way television actors are paid 'residuals' when their program is repeated.'Under the old regime, agencies gave their ideas away for free and most still do. Why? If creative ideas are the cornerstone of the advertising and design business, why do agencies insist on charging service fees for account management and other esoteric charges rather than charging a fee or royalty-based payment for their ideas?'
The example: FHA Image Design
FHA Image Design, the company that was appointed creative director of the Sydney Olympics, is one agency that understands the value of its ideas. It has successfully re-engineered itself from logo designer in the late 1970s to IP-aware brand architects today.
Branding is critical
FHA creative director Trevor Flett says:
'There's a recognition now that we have to do a lot more than manufacture a good product - we also have to package it and market it. This makes the whole exercise of branding and advertising vital to a company's success and it's important for an agency, and its clients, to know their worth - what their intellectual property is - and to lever it and commercialise it.We raise these issues with our clients but it's unusual in this business. Branding literacy is still very naive in Australia compared with the world's best practice nations - the US, Japan and Europe - and most graphic designers don't understand the business of intellectual property or the importance of what they're doing.
'A company's trade mark - its brand or logo - is one of its most valuable assets and the delivery of that brand is as important as the image. It covers off on everything the company does'.
The importance of this came home to Trevor Flett when, on one of the rare occasions FHA did not assign copyright to its client, it had to take legal action to protect the brand IP:
'We developed a new image for a firm which was later subject to an aggressive takeover by a company which, without permission, began using our client's letterhead. Our client challenged their right to use the letterhead and, as the owner of the copyright, we sued the aggressor on their behalf and won with an out-of-court settlement'.
The lesson: change IP strategy
Katrina Rathie suggests that service fees and media commissions - agencies traditional sources of revenue - may become minor forms of remuneration as agencies start to take proper advantage of IP.
In their contracts with clients, agencies should include an IP clause that clearly states who owns the IP rights in any new brand or advertising campaign. Katrina advises:
'The client or agency contract should also cover third party rights, including express disclosure of any limitations on the ownership of advertising materials. For example, restrictions on the use of celebrity talent, limited form music licenses and so on. As well, your client should require you to procure intellectual property rights from any sub-contractors such as production houses, freelance writers and photographers and any others not employed by the agency'.
Importantly, she says:
'Agencies should also look to create a mutually rewarding system with their clients which exploits the success factors of advertising campaigns and rewards the agency over the long term. For example, what's to stop agencies being remunerated through a licensing of their intellectual property where royalties are linked to the success of the campaign, or the number of times an advertisement is shown, with bonuses on overseas use, climbing brand sales, consumer awareness and the like? Under such a scheme, clients would not necessarily have to pay for dud campaigns any more'.
Last Updated: 15/9/2012
