Design File Ownership

[Ron Moorehead]

Hi,

I would first like to say this is a great forum for sharing information about laser cutting and engraving.

I have a small one man shop and have been doing laser work for the past five years, mainly cutting rulers for quilters. One of my customers that I do a lot of work for has asked for copies of all the files I use to make her rulers, she is concerned if something happens to me she would be lost. Her question "Is it possible to have a copy of the files you use for the rulers. I realized if something happened to you, I'd be lost. I'm willing to pay you for them.".

I have never charged her for any of my time to refine the designing she has provided me to get them ready for the laser or any of the samples I have provided to proof the rulers. The design of the rules are hers and she has been getting a US Pattern on some of them. My concern is once I sell or give her the Corel files she could easily shop around and try and find a cheaper place to have the rulers made (which I think would be hard as I feel I give her a really good price) hundreds of hours have gone into all the files and all the updates and she has made small changes to them all.

I know she has be talking with a lawyer about her company and have just gone over to a LLC, I am sure they asked about the laser files and if she has them or not.

So the question I have is what do you do about ownership of the files you get ready for the laser and cut or engrave even if the design is someone else's.

[Keith Winter]

I charge for the design time as I'm doing it. They don't normally want it back, but if they do I give them the art after they pay their bill. However, I know a number of large house promo and personalization guys keep the artwork hostage, unless you want to pay a huge fee. A long time ago I had a large house design some coasters for us, we wanted the art to use on other stuff still intending to keep buying the coasters from them. They wanted $3500 for it. It was fairly generic. Looking back it was probably mostly pre-done artwork and less than 4 hours design time. Needless to say we didn't buy the artwork and started over. However they've built a HUGE business off of this. You may have heard of them, Eskimo Joes? As in the world's 2nd most popular t-shirt. So reflecting back on this, I think we have probably been doing it wrong all these years. Holding the artwork guarantees future business unless you just tick the people off. Seems like Eskimo Joes is doing ok with it

In your situation, you really could go either way. However I think if you are going to give them the art you need to re-coop your cost plus some profit bare minimum.

[Bert Kemp]

If it was me I'd be careful . If she designed the files she all ready has them and if she wanted to find someone else to do them she can give those files to the new guy and he can do all the work to make them laser ready. I wouldn't wouldn't give them up with out some kind of contract and assurances . The original files are hers but the laser files and adjustments are yours.

[Gary Hair]

Nope, noway, nohow. Anyone can bring a design to me to laser, but the files I create to use on the laser are mine. Unless they pay me to create laser files for them, I'm not going to give them up to anyone. Even if you charge a setup fee, that is simply the expense of getting their design ready to use on your laser and doesn't mean they have any rights to the file. If "something happened to you", she could take the design, or the finished product, to someone else and they could make files to use.

[Ross Moshinsky]

The way it works legally is unless you say explicitly otherwise, they are paying you for a service and NOT the rights to the design. For example: If someone wants to get t-shirts made and the vendor makes them shirts, that's what the client is paying for. If they turn around and say "I'd really like to use that on a banner" you can absolutely tell them they need to either buy the design or tell them it's not for sale. You own that design. They bought t-shirts, not a design.

So you do not owe them the designs nor do they have any claim to them. They are your property. So you can do one of two things, and I've never done either because I'm too nice.

1. Give them the files for free. Tell them they are for their personal backup and can only be used by another vendor, including herself, if you go out of business or other terms are met. This way she has the files and you have security.

2. Sell her the files and whatever happens happens.

I'd go with option #1. Keep it simple and should keep you both happy. She gets her files and you keep the customer. It also takes any legal ambiguity out of the situation. If you make things complicated, she could leave tomorrow, take the physical object to the competition, they'll replicate it, and really, what are you going to do about it?

[Mike Null]

I agree with both Gary and Ross. The customer does not own the files you create unless you've contracted otherwise. It is rare that customers want the files but I generally give them to them.

On the other hand, I have done some logo design along with the design of various business forms incorporating the logo and it is always understood that those designs are the property of the customer and I make files available to them in several formats.

[Roy Sanders]

Hi Ron

As with most everything there are options.
1. You already have intellectual ownership over the ruler design. Like writing the response, I own the intellectual copyright on MY part of the thread, not the whole thread. As long as you retain the original designs, and updates, you already have copyright. The con side to this option is that to protect yourself takes considerable effort because you have to go and retrieve the files, etcetera.

2. You download and print all of the files, place them in a shipping envelop, box, whatever, (seal it tamper proof) and ship them to yourself (business address); make certain to insure it and sign received option. When the shipment arrives YOU sign for it, and never open it. Then you can produce the unopened designs to the court or . . . that will demonstrate that they are your designs,

3. The last option take some calendar days to complete. This is to Register your designs with the Library of Congress and receive your own unique identifying number.
this is the best option, in my opinion. Your ability to prove ownership is made simpler and less 'argumentative', meaning her lawyer may back peddle before pushing this issue. I pasted in a couple of definitions to help clarify what you mean when using the term copyright.

"A work is “created” when it is fixed in a copy or phonorecord for the first time; where a work is prepared over a period of time, the portion of it that has been fixed at any particular time constitutes the work as of that time, and where the work has been prepared in different versions, each version constitutes a separate work."

ACTUALLY,,I will stop at this point, you're a busy person. No sense in asking you to read a book. The last time I registered a Copyright it was all paper and snail mail.
now there is a very helpful and comprehensive electronic method. So go to http://copyright.gov/eco/ create your account and submit. I am fascinated to read much of the rules pertaining to my area, you may not be, they are there anyway; enjoy.

Did this help?
Roy

PS. I do wish to know your end results; will you update when that happens?

[Glen Monaghan]

Hi Ron

1. You already have intellectual ownership over the ruler design.

Not over the design the design itself, but over the (CorelDraw?) file he created for that design.

2. You download and print all of the files, place them in a shipping envelop, box, whatever, (seal it tamper proof) and ship them to yourself (business address); make certain to insure it and sign received option. When the shipment arrives YOU sign for it, and never open it. Then you can produce the unopened designs to the court or . . . that will demonstrate that they are your designs,

My understanding is that this process is not valid in a court of law. Too many ways to cheat it, perhaps the simplest being to leave the package unsealed when you send it so that you can later put whatever you want inside and only then seal it up. You could for example, send yourself a large envelope franked with postage appropriate for a newspaper, and a year later put a then-current newspaper inside and seal it up, and subsequently use that as "evidence" or "proof" that you'd used the prototype time machine you want to crowd fund to send that newspaper a year into the past...

3. The last option take some calendar days to complete. This is to Register your designs with the Library of Congress and receive your own unique identifying number.
this is the best option, in my opinion.

If you really are serious about protecting your work and you expect to succeed in that endeavor, this is the only reasonable approach. I'm pretty sure it requires submitting a copy of the work which truly documents the claim what you were trying to achieve in (2) above.

[Michael Hunter]

Simple and fairly cheap answer to put her mind at rest -

Have the working files held in esgrow by your lawyer (bank manager, priest, whoever).
As she requested it, she pays a reasonable sum for preparing the archive and any on-going storage costs.
You prepare a letter setting out the terms for release of the files to her (death, unable to deliver for n months etc.) and give a copy to everyone concerned.

Of course, if the real reason for wanting the files is for her to be able to shop around, then she won't agree to esgrow - so then you really know where you stand.

[Scott Marquez]

Ron,
It sounds like the horse has already left the barn on this one. In the future I would offer the option of "prototype" services, where the customer is hiring you to design something specific for him and he will own the rights to it. This rate is much higher than your standard shop rate.
In this situation would write a long letter explaining that you have X amount of hours that you have never billed them for, streamlining the design for the ease of manufacturing (you get the jest). The customer already has the "pattern", there is no need to release the digital format without being compensated.
Since they are taking there business to the next level, my guess is that they will eventually send the design to some third world country and bring the product back by the container load. With that being said, throw out a big fat number and make them blush, because the reality is that once they have the digital file they will put the job out for Bid.
All of this is just my Opinion, take it for what it's worth.
Scott
edit to add, that I was writing my long drawn out post before I had read Michael's post above mine.
Great minds think alike

[Dan Hintz]

I stopped reading after Gary and Ross's replies... listen to them. For me, unless it is specified from the beginning I am creating the file for their final ownership (in which case I charge design time) OR they are providing me the file (minor tweaks are generally free), I retain the file and no copy goes back to them.

There is ZERO stopping her from taking your file to someone else. If she wishes to pay for that file, then that's a valid option for you both... but you may want to consider what that file is worth at this point. I don't mean that from a lost business perspective as that would be unfair... consider the amount of time you have put into that file (initial design, changes over the months, etc.) and come up with a value based upon that. If you normally charge $100/hr for file design and you guesstimate you've put in 5 hours per file, then $500/file is a valid cost. But I will warn ahead of time that if she does pay for those files, you can be almost guaranteed she will take them elsewhere.

[Kim Vellore]

On the humorous side
What if something happens to her, you are left with her files and no revenue, Can you ask her to add you to her will

[Dan Hintz]

On the humorous side
What if something happens to her, you are left with her files and no revenue, Can you ask her to add you to her will

Actually, that's a pretty awesome view. I would only tell a BAD customer such a thing, but it does make a very eloquent point.

[Kev Williams]

Put the files on 2 flashdrives (redundancy) and password protect them.

Give them, and the password to your lawyer, or her lawyer if that works(?)

Draw up a simple contract that she's only to have access to the password and files in the event you can no longer supply her.
Etc. etc...

I'm not so worried about her shopping around for a better deal. My money's on her wanting to buy her own machine and do the job in-house.

I've had more than a dozen customers over the years do exactly that. And yes, they ask me for my files.
(but guess who's doing most of their engraving these days?)

[Ron Moorehead]

Thanks for all the feedback, what I am going to do is in part based on Ross Moshinsky recommendations of "Give them the files for free. Tell them they are for their personal backup and can only be used by another vendor, including herself, if you go out of business or other terms are met. This way she has the files and you have security." I am going to have her sign and notarize an agreement that she can only use the files if we go out of business or something happen to use.