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The contract for the creation of designs and logos

Pubblicato in Intellectual Property
da Arlo Canella
Home > The contract for the creation of designs and logos

In this article we address the category of contracts concluded between companies and professionals, e.g. designers and illustrators, for the creation of designs, logos or other graphic works.

Summary:

What is the purpose of a contract for the creation of designs and logos?

A properly drafted contract usually prevents misunderstandings and disputes between the parties by clarifying their agreement through a few dedicated clauses. In addition to establishing the fee, the design and logo creation contract helps to define exactly what rights are to be assigned or granted to the client and exactly what work is to be created. This category of contracts comprises those for the creation of:

  • Product design;
  • Packaging (labels and packaging);
  • Trademarks and logos;
  • Designs and graphics for clothing or textiles;
  • Prints, wallpapers, coverings;
  • Posters, flyers, brochures;
  • Graphics and images for websites and social media;
  • Illustrations and graphics for advertising.

Why do clients sometimes refuse to sign the contract?

It is common for the client to refuse to sign the contract and for the work to be exploited even without a contract. In doing so, both parties are left in uncertainty as to their actual rights. In other cases, it happens that do-it-yourself contract templates are used or found on the web. These contracts are often unnecessarily complex and, most importantly, fail to comply with the actual will of the parties. It is for this very reason that, more often than not, one refuses to sign.

When drafting a contract, it would be very important to state at least the mutual understandings that have already been reached during the negotiation phase (so-called pre-contract) regarding:

  1. type and nature of the works to be created;
  2. destination and purpose of the creations;
  3. deadlines and possible responsibilities of the parties;
  4. price and terms of payment.

If the other party is not taken by surprise, they are more likely to sign the contract willingly.

What are the essential characteristics of a contract for the creation of graphic works?

Since the contract concerns the creation of works – including graphic works such as designs and logos – it is normally considered to fall within the civil law category of work contracts. Pursuant to Article 2222 of the Italian Civil Code, a work contract can be said to exist “when a person undertakes to perform a work or service for consideration, with work predominantly of his own and without subordination to the client“.

Now, the essential characteristics of a work contract are:

  • the performance of work, which must be predominantly personal;
  • the absence of subordination to the client;
  • the remuneration.

When the contract concerns illustrations (combined with texts and therefore with literary works) for which the author’s interest is publication, distribution and exploitation by a publisher – especially by means of printing on paper – reference must be made to the special discipline of the publishing contract (Article 118 et seq. of Italian Law 633/1941).

It should be emphasised, however, that if illustrations or designs are created for industrial/commercial exploitation, it is primarily such exploitation that affects the structure of the contract. Let’s see why.

What happens when the creative work is exploited by a company?

The company or client, when turning to a designer or illustrator, expects above all that the commissioned work will be new and original. Thanks to the contract, the company will in fact acquire the right to publish, reproduce and thus adopt the design or logo in the context of its business, transforming the author’s work into a real economic return.

So, even if one thinks that the author’s/designer’s quote is enough, in reality it is never the case. Actually, it is the transfer of “intellectual property” that needs specific provisions. These clauses are difficult to standardise because they concern:

  • the duration,
  • the type of exploitation,
  • authorship credit,
  • any exclusivity,
  • the remuneration in a lump sum or through royalties,
  • etc.

Can the content of the contract be arbitrarily defined?

As the legal framework is rather scarce, the company and the designer will have a broad margin to define the contract as they wish. There is indeed no standard facsimile or defined template of an assignment contract applicable to this sector.

As a general rule, more structured principals develop contract templates that are used to commission the creation of the graphic works that suit their purposes. Conversely, some designers or agencies adopt contract templates created to uniformly regulate (while providing for some open fields and alternative choices) the management of the client relationship.

In practice, a specialised law firm is called in to create the so-called “master contract”, i.e. the contract template that, being drafted on the specific needs of the client (designer or company that is), is customised but “reusable”. Alternatively, the law firm is commissioned to review specific contracts for individual orders of particular importance.

I must say, however, that in most cases the lawyer is only called in after the fact, when there is no contract or when it is disputed. In other words when there is already a problem to be solved.

What are the specific risks of contracts for the creation of graphic works?

Beyond the regulatory definitions, this type of contract should always be drafted on a collaborative basis. After all, the designer working for a company has the important task of declining its identity in graphic terms (e.g. brands, logos, websites) or is physically involved in shaping specific projects (packaging, textiles, products).

In the preliminary phase, the designer is always required to collect the client’s indications (so-called briefing). It will be difficult to fulfil the client’s requests if proper attention is not paid to gathering information, including information on the intended use of the creations.

The client must also commit to collaborating with the designer by providing him or her with all the information and documents useful for the design within a predefined deadline. A good contract also specifies the use that will be made of the works because the amount of the fee depends mainly on this.

Being professional also means being able to handle the briefing phase quickly and concretely. A professional contract, through specific options and checklists, helps in the timely classification of requests in order to match them with the application of clauses dedicated to exploitation.

The request for changes to graphic works.

It is natural for the client, after creation, to ask for modifications to adapt the work to his taste or specific needs. The contract must provide for this hypothesis in a practical and specific way, offering reasonable solutions to the parties.

In some cases, it is provided that the designer must propose a number of alternatives to the client from which the latter may choose. In other cases, the contract provides for and limits the number of change requests after the official presentation.

In order to solve the thorny issue of modifications, every specialised lawyer knows a number of alternative clauses, already tested, to put at the service of his clients. In special cases, a good drafting technique, combined with knowledge of the sector, allows the lawyer to prepare dedicated and customised clauses.

Originality of the works, remuneration and liability of the designer

Come detto sopra, ogni progettista viene selezionato soprattutto per la sua capacità creativa e, conseguentemente, molti contratti prevedono semplicemente che, in cambio di un congruo compenso, il progettista garantisca l’originalità di quanto creato.

Si badi bene però, anche se in molti casi il compenso del designer viene agganciato in modo proporzionale (c.d. Royalties) al numero di riproduzioni e/o di copie vendute, egli non è mai tenuto a garantire il risultato commerciale associato e/o derivante dal proprio apporto creativo.

Cosa accade però se l’opera risulta “non totalmente creativa” o comunque dia adito a contestazioni da parte di altri soggetti?

As mentioned above, each designer is selected mostly for his or her creative ability and, consequently, many contracts simply provide that, in exchange for a reasonable fee, the designer guarantees the originality of what he or she creates.

Be aware that although in many cases the designer’s remuneration is proportionally linked (so-called royalties) to the number of reproductions and/or copies sold, he is never required to guarantee the commercial result associated with and/or deriving from his creative contribution.

What happens, however, if the work turns out to be “not totally creative” or otherwise gives rise to disputes by other parties?

Obviously, in the event of disputes, one would have to defer to the assessment of a judge. However, a professional contract could have limited this. A designer cannot be expected to know the client company’s sector and its competitors inside out.

Could the designer be held liable if Puma were to complain about a logo depicting a leaping feline, designed at the express request of a client?

Rather than asking such complex legal questions, given the bona fide design of an original work by the designer, it would have been more appropriate to clearly provide for such a hypothesis in the contract.

A clause in the contract, could indeed provide both for the client’s right to register the logo or design in its name with the Patent and Trademark Office and to take charge of the normal technical-legal verifications (so-called prior art searches) that ritually precede the exploitation of a graphic work in commerce, for example as a trademark.

Who owns the intellectual property of graphic works?

In a contract for the creation of creative works, it is always advisable to specify who is entitled to the intellectual property of the works or, more specifically, who is entitled to the relevant patrimonial exploitation rights over them.

According to the Italian Supreme Court, the patrimonial rights accrue to the principal as a general rule, but only within the terms and according to the purposes of the contract itself.

As we have seen, the contract sometimes does not exist (or exists only verbally) and is not sufficiently clear in this regard. That is why these aspects should be clarified by means of dedicated clauses in relation to:

  • duration of the exploitation;
  • forms of exploitation;
  • channels;
  • exclusivity.

The remuneration reserved for the designer may vary substantially as a result of these clarifications or according to the extent of the exploitation rights granted by the author.

Please note! The fact that the legal principle is that of contractual freedom does not mean that commercial practice does not provide for operational rules or granite commercial procedures that must be known and respected by the operators (e.g., in advertising agency contracts there is a product exclusivity pact between the creative agency and the client: it would indeed be very curious for the same agency to serve two competing companies).

Referential use of trademarks and designs.

There is no rule that explicitly allows the parties to use trademarks, designs or logos on each other’s websites, just as there is no legal handbook illustrating the ways in which authorial credit should be given.

For this very reason, it is important to clearly specify in the contract what use may be made of such elements.

Moreover, it happens that the client in the negotiation phase promises the designer an increase in reputation from the order, while at the same time asking for a favourable price. Particularly in these cases, it should be clarified where the credit will be inserted by the client so that this promise of visibility is realised through an obligation contained in a contractual clause.

It must be remembered that the principal is not obliged by law to include any kind of credit, but only not to include an incorrect credit (because in that case it would be plagiarism).

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Publication date: 30 August 2022
Last update: 31 October 2022
Avv. Arlo Cannela

Avvocato Arlo Canella

Managing Partner dello studio legale Canella Camaiora, iscritto all’Ordine degli Avvocati di Milano, appassionato di Branding, Comunicazione e Design.
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