4A’s MSA Guidance: Software and Software Tools – Ownership and Use Contracting Considerations When Creating Digital, Online and Mobile Content

Objective

The ownership, intellectual property and indemnification provisions of many agreements between agencies and advertisers have not been adapted to accommodate the change in the services that agencies provide.

This 4A’s position paper addresses the ownership of, and contracting considerations related to, software and software tools. The paper notes that, at a minimum, the ownership provisions in agency services agreements need to carve out software-related materials.

The 4A’s recommends that agency agreements with clients preserve agency ownership and agency right to use agency developed software and tools.

Background

Technology has brought about many changes to the advertising industry. However, the provisions of the typical advertising service agreement have not evolved to accommodate these changes. In particular, the ownership, intellectual property and indemnification provisions of many agreements between agencies and advertisers have not been adapted to accommodate the change in the services that the agencies provide. In the past, all content that an agency created was relatively similar and could be subject to the same rules. For example, clients would pay for a thirty second commercial and own all intellectual property rights to that advertisement. It was simple. It worked well enough for the agency, because the commercial was only of value to the particular client for which it was created.

As the services that agencies provide have expanded and as the content has become more varied, there has to be an appreciation that not all content is the same, nor should it be treated the same. No client would ever think to try to own a stage direction in the production of a commercial, yet by not adapting the current agreements, clients, perhaps inadvertently, are asking the agency to grant all rights to the technological equivalent. In addition, many compensation structures treat all content the same, and for the most part, fail to recognize the different values of the different types of intellectual property that an agency creates. Finally, in the past, agencies generally could secure insurance coverage, at cost effective rates, for all the intellectual property claims that would typically arise out of the creation and use of advertising materials. As content has evolved, that is no longer the case.