The Whole Truth

It sounds to me like she is not, in fact, handing over the full copyright to you after full payment, but is essentially selling you an exclusive license to use her designs for your website.

If she were handing over the full copyright, you would fully own the rights to the creative material and could do what you wanted with it.

It's for sure a good deal for her.

Whether it's a good deal for you is a strategic question you should answer based on your expected likelihood of wanting to re-purpose the work versus the cost/energy/quality of using a designer who will actually give you REAL full rights to a design. (Or, alternatively, the cost of re-negotiating the price of this contract to remove that provision).

I think that once you pay her in full for her services and you own the copyright to the work she has no ownership of it nor future earnings. She provided a service which you are paying for. The agreement should state that upon delivering the product that came about as a result of that service, she no longer holds claim.

I worked in business mgmt/technology consulting for YEARS and I have NO claim to all of the great ideas, work, or anything else that the companies are still generating revenue with clients from.

It's a tricky situation when dealing with “creative rights” as opposed to just hiring someone to do work for you. It's often something clients don't quite understand but essentially, the designer still maintains rights to their creative work (unless they agree to give you full copyright, and in which case there is usually a higher cost involved) and sells you the rights to use the design on whatever she was hired to develop the design for, but not for everything else you could use her designs for.

It is customary that when a logo is designed, full rights are given with the logo design files so that it can be used for whatever marketing materials needed; however, for website/blog design etc, the design itself still belongs to the designer (just the design, nothing else).

It boils down to giving the designer credit where credit is due – if her work is used on other things, the consensus in the design industry is that she should be paid appropriately – just as you would for any other artist's work.

Many designers don't bother/worry about such details but this gal is being savvy enough to protect her designs.

It sounds to me like she is not, in fact, handing over the full copyright to you after full payment, but is essentially selling you an exclusive license to use her designs for your website.

If she were handing over the full copyright, you would fully own the rights to the creative material and could do what you wanted with it.

It's for sure a good deal for her.

Whether it's a good deal for you is a strategic question you should answer based on your expected likelihood of wanting to re-purpose the work versus the cost/energy/quality of using a designer who will actually give you REAL full rights to a design. (Or, alternatively, the cost of re-negotiating the price of this contract to remove that provision).

Copyright and usage rights are very complicated areas.

Web design is different from logo design, as Susan mentioned. It's usual to pass copyright over for a logo design (along with the appropriate fees) because it's expected that the client will be using it in lots of places like biz cards, t-shirts, letterheads, etc.

Web design is trickier because generally the work is considered just the web design for the particular web site, not for other media. Your business name and logo are not considered part of the web design. Neither is your content. Just the design itself of the website.

In most cases, it's not inappropriate to request a percentage of usage fees for other media because that was not originally part of the original estimate and it's consider a fair compensation to the designer later on.

For example, say the designer does a website which then parts of the design are used in a hollywood movie. A lack of compensation for that wouldn't be fair. It works much in the same way when royalties are given for music licensing and illustrations for books, etc.

That said, and as other commentors have also mentioned, many web designers will negotiate a fee in order to pass over the copyright to the final design. That's meant to help compensate the web designer in the event that the designer's work gets used elsewhere.

As far as copyright resources on the web go, I've found Ivan Hoffman's site a invaluable resource over the years:
http://www.ivanhoffman.com/web.html

I think that once you pay her in full for her services and you own the copyright to the work she has no ownership of it nor future earnings. She provided a service which you are paying for. The agreement should state that upon delivering the product that came about as a result of that service, she no longer holds claim.

I worked in business mgmt/technology consulting for YEARS and I have NO claim to all of the great ideas, work, or anything else that the companies are still generating revenue with clients from.

It's a tricky situation when dealing with “creative rights” as opposed to just hiring someone to do work for you. It's often something clients don't quite understand but essentially, the designer still maintains rights to their creative work (unless they agree to give you full copyright, and in which case there is usually a higher cost involved) and sells you the rights to use the design on whatever she was hired to develop the design for, but not for everything else you could use her designs for.

It is customary that when a logo is designed, full rights are given with the logo design files so that it can be used for whatever marketing materials needed; however, for website/blog design etc, the design itself still belongs to the designer (just the design, nothing else).

It boils down to giving the designer credit where credit is due – if her work is used on other things, the consensus in the design industry is that she should be paid appropriately – just as you would for any other artist's work.

Many designers don't bother/worry about such details but this gal is being savvy enough to protect her designs.

Copyright and usage rights are very complicated areas.

Web design is different from logo design, as Susan mentioned. It's usual to pass copyright over for a logo design (along with the appropriate fees) because it's expected that the client will be using it in lots of places like biz cards, t-shirts, letterheads, etc.

Web design is trickier because generally the work is considered just the web design for the particular web site, not for other media. Your business name and logo are not considered part of the web design. Neither is your content. Just the design itself of the website.

In most cases, it's not inappropriate to request a percentage of usage fees for other media because that was not originally part of the original estimate and it's consider a fair compensation to the designer later on.

For example, say the designer does a website which then parts of the design are used in a hollywood movie. A lack of compensation for that wouldn't be fair. It works much in the same way when royalties are given for music licensing and illustrations for books, etc.

That said, and as other commentors have also mentioned, many web designers will negotiate a fee in order to pass over the copyright to the final design. That's meant to help compensate the web designer in the event that the designer's work gets used elsewhere.

As far as copyright resources on the web go, I've found Ivan Hoffman's site a invaluable resource over the years:
http://www.ivanhoffman.com/web.html

Suggestion – simply tell here that you are uncomfortable with that clause and ask her to remove that part of the contract. If she did not clearly negotiate that as part of her oral agreement, I would not be comfortable with that clause AT ALL. It would be like saying – sure you are buying my car – and not knowing that there is a rental fee if you leave the city. If there is any right/wrong in the issue, it is whether or not she clearly stated that in the oral agreement. If she did not, that is wrong – bordering on unethical. If she did, then it is right and you simply get to say yes, no, renegotiate. Keep rocking the house!

Suggestion – simply tell here that you are uncomfortable with that clause and ask her to remove that part of the contract. If she did not clearly negotiate that as part of her oral agreement, I would not be comfortable with that clause AT ALL. It would be like saying – sure you are buying my car – and not knowing that there is a rental fee if you leave the city. If there is any right/wrong in the issue, it is whether or not she clearly stated that in the oral agreement. If she did not, that is wrong – bordering on unethical. If she did, then it is right and you simply get to say yes, no, renegotiate. Keep rocking the house!

First off — Separate the technical part of the problem from the business aspect.

The technical part — There is nothing inherently wrong with the idea of full transfer of the copyrights (or whatever IP rights might be at issue) while seller still retains a right to collect some money based on some formula such as a percentage of the sales the buyer may make in the future based on the sold IP — That's merely a way of describing the consideration for the sale in a way other than a specific dollar amount. For example, that's how musical artists always do their deals with the record companies. (As an aside to the one who is selling — Consider that the obligation framed that way would be an executory obligation of the buyer to pay you. If you're afraid that the buyer may go belly up in the future, and subsequently might file bankrutpcy, all you'll have is an unsecured debt owed to you and little chance to get the underlying IP back. Just another thing to think about…) (Not that I'm suggesting any such issue with Alexis!)

HAVING SAID THAT…

As a business matter, agencies are often held to a standard that work-for-hire means everything is sold with no strings attached. That's not a legal matter, but rather a custom and practice of that particular sort of deal. What you raise here suggests that the designer has not fully valued what the design is worth in all possible configurations of business models, and she wants to hedge her risk by attaching a formula based on actual use by you outside of a particular realm, which allows her comfort to know she didn't leave money on the table.

To be fair, I think the designer probably could not adequately value it — The agency industry is in turmoil today as their customers come to realize that the old rules are much more difficult to apply in today's world. And, the sort of problem you face now is hardly the first one I've heard — It gets even worse when agencies working in interactive realize their customers believe that all of the interactive software that might be baked into the website that just got delivered should now be owned by the customer, even though the designer/agent thought it should only be granting a license to the underlying software and only selling the 'creative' part of the site. (And, if your head is spinning trying to decide exactly where the line is between 'underlying software' and 'creative', well, welcome to my day job!) Customers and agencies/designers who haven't taken the time up front to negotiate that issue in detail will often find one, the other, or both are extremely wrong about what they just bought or sold or licensed.

Long story short — I don't think one should necessarily find fault with the designer's proposal, but neither should one accept that it is necessarily the right answer. The market is very much in turmoil though, so this is not going to be easy to answer.

First off — Separate the technical part of the problem from the business aspect.

The technical part — There is nothing inherently wrong with the idea of full transfer of the copyrights (or whatever IP rights might be at issue) while seller still retains a right to collect some money based on some formula such as a percentage of the sales the buyer may make in the future based on the sold IP — That's merely a way of describing the consideration for the sale in a way other than a specific dollar amount. For example, that's how musical artists always do their deals with the record companies. (As an aside to the one who is selling — Consider that the obligation framed that way would be an executory obligation of the buyer to pay you. If you're afraid that the buyer may go belly up in the future, and subsequently might file bankrutpcy, all you'll have is an unsecured debt owed to you and little chance to get the underlying IP back. Just another thing to think about…) (Not that I'm suggesting any such issue with Alexis!)

HAVING SAID THAT…

As a business matter, agencies are often held to a standard that work-for-hire means everything is sold with no strings attached. That's not a legal matter, but rather a custom and practice of that particular sort of deal. What you raise here suggests that the designer has not fully valued what the design is worth in all possible configurations of business models, and she wants to hedge her risk by attaching a formula based on actual use by you outside of a particular realm, which allows her comfort to know she didn't leave money on the table.

To be fair, I think the designer probably could not adequately value it — The agency industry is in turmoil today as their customers come to realize that the old rules are much more difficult to apply in today's world. And, the sort of problem you face now is hardly the first one I've heard — It gets even worse when agencies working in interactive realize their customers believe that all of the interactive software that might be baked into the website that just got delivered should now be owned by the customer, even though the designer/agent thought it should only be granting a license to the underlying software and only selling the 'creative' part of the site. (And, if your head is spinning trying to decide exactly where the line is between 'underlying software' and 'creative', well, welcome to my day job!) Customers and agencies/designers who haven't taken the time up front to negotiate that issue in detail will often find one, the other, or both are extremely wrong about what they just bought or sold or licensed.

Long story short — I don't think one should necessarily find fault with the designer's proposal, but neither should one accept that it is necessarily the right answer. The market is very much in turmoil though, so this is not going to be easy to answer.