Design Dilemma: Negotiating Logo Copyright Issues

Stayce L. writes:  My client, whom I’ve worked with for many years, is doing her own logo design, but wants me to do a sketch of their business ‘mascot’ that will be included in the design. The sketch would be a significant part of the logo. How should I handle the fee/rights in this situation?

I was asked to look into this question posted on the LinkedIn Graphic Artists Guild group and weigh in with other designers. Join us as we delve into another Design Dilemma, helping to answer your questions, queries and concerns about the murky world of design…

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It’s More Complicated Than it Sounds

Stacye clarified her question a bit more:

My client is not a graphic designer, either – more of a do-it-yourself-er. But I’m guessing the equivalent would be if a graphic designer hired an illustrator to provide a logo sketch. Has anyone out there done this before?

My answer was not complete because there was too much information not provided. I hoped that she would provide more as the discussion went on:

A friend of mine did an illustration for a fledgling company that they could use on their first annual picnic T-shirts. They then used it as their mascot and now it appears on every TV commercial, print ad and web site/digital ads. He started his suit at $5 million. It is now up to $20 million. That should give you a good idea of what an illustrated logo can be worth.

Another friend of mine is a well-known comic book artist. When he started out, a major studio bought the rights to hold his characters for $125,000 each. That was just so he couldn’t sell the rights to someone else.

You say “sketch” but don’t mention if the client wants a finished piece of art for reproduction. Is the client going to get another artist to do the finished art? If you are creating the art, charging an hourly rate is just plain foolishness. It’s about usage and not how long it takes you.

Stacye did reply with a bit more information:

Thanks for the perspective. This is a relatively small company (start-up). And, yes, they want a finished, (but loose) drawing. No concept, though; it’s just a drawing of a sculpture (of the mascot) that’s going up on top of the building.

“Remember, your illustration can hold a copyright but if it becomes a part of a trademark you must sell, or give up your copyright or there will be a huge legal problem for you and the client.”

I will definitely be careful with the usage rights; perhaps I’ll put in a clause for in case the company gets “big.”

This was still not enough information and it sounded like Stayce was confused by the assignment herself. All I could answer at that point was:

Yes, definitely list the usage (my friend listed his character was for a T-shirt). If they want to buy more rights later, then they can.

She replied:

I think restricting the usage rights will allow for ‘room to grow’. For ex: if I sell them usage rights for a year, & the biz takes off during that year, we can renegotiate the rights for the second year.

I’ll probably ask for a greater payment up front, too… I confess I haven’t looked at the Graphic Artists Guild Pricing & Ethical Guidelines book (GAG – PEGs) yet, as I’ve been busy. We’re waiting for the sculpture to be completed before I can draw it anyway, so there’s still time.

There was still no concrete answer as to how this whole project was proceeding and what exactly was the role of her illustration (or “sketch” as she worded it). My response was meant to close this discussion as best I could without writing an entire book chapter on copyrights and trademarks:

The GAG – PEGs will give you a ridiculously high fee that a smaller client won’t be able to fathom. Keep the copyright for the first year or two, ask for $2,500 for the art usage for that period of time (I assume it’s a local client) on stationery, a web site, flyers, and certain promotional items, and consider yourself lucky to get that much in that market (if the client is doing her own logo, she must be a very small business). At the end of two years, or if the client wants to place the art on more products, negotiate more money per usage. If the business really takes off, then you can charge more.

One of the problems is; you are sketching a statue that another artist is creating, which will devalue your contribution to the logo and may present trademark problems for you if the client goes to trademark the mascot image. If the sculptor was working off your sketch, that would be a different story.

Remember, your illustration can hold a copyright but if it becomes a part of a trademark you must sell, or give up your copyright or there will be a huge legal problem for you and the client.

“I worked up proposals, etc. He was ready to move forward until I presented a contract.”

Stayce closed the discussion by writing:

Maybe this is foolish of me, but I’m not worried about trademarking. Most of the creative work was done by the sculptor, so she deserves the credit. I’m just drawing a picture of it. I think I will be happy selling limited rights to the client, & re-negotiating rights in a year or so, when/if the biz gets big.

There were other designers who weighed in, usually echoing what I had written, concerned about the contract and copyright issues. One poster, Tim B. had an interesting story:

I recently encountered a prospect who wanted me to rebrand his business, but didn’t have a huge budget. He came to me as a friend-of-a-friend. I worked up proposals, etc. He was ready to move forward until I presented a contract.

I was completely upfront about what he would be purchasing and under what terms. He wanted carte blanche but I wasn’t willing to hand over exclusive rights for nothing. I tried to explain my position, and the fact that what I was offering was quite normal. Things fell apart after he questioned my integrity and we eventually decided to part ways.

I know it might be difficult at this stage to walk away, but just be prepared to if your client can’t agree to your terms.

Where This Should Start and Finish

This is one big mess the client should have foreseen and solved with a work-for-hire contract, making suitable payments to each party responsible, then the client would be free to trademark the logo without difficult copyright problems popping up. As far as I can tell from the information Stacye provided (and I’m sure it was all she had), the sculptor, as creator of the statue to be placed on the building and act as the corporate mascot, owns the copyright to the image of the statue.

Stacye, as the illustrator, owns the copyright to the drawing she does of the statue but has no rights beyond that as the sculpture is already a copyrighted image, and the designer who does the logo, incorporating Stayce’s drawing cannot own the copyright to the logo as it contains copyrighted material belonging to Stacye, which is of a copyrighted statue. Does that make sense?

“There are questions that have to be asked, creative briefs that must be written and contracts that have to be issued before work begins.”

One poster on the GAG LinkedIn group did ask if Stacye could be bypassed for the finished art, that could be given to another illustrator to render for use in the logo. The answer is; yes… no… maybe. The fact is, all of this, and everyone involved needs to have a contract that spells out all rights that are being purchased with everything being created. It sounds like the client has neglected to do that and is facing a huge headache… or rather just assumes all rights will revert to him/her. Stacye did mention the client is not a graphic designer but a “do-it-yourself-er.” That means the client has no idea what he/she is doing. It’s messy.

Unfortunately, many creatives get excited when presented a project and their only response is; “okay!” There are questions that have to be asked, creative briefs that must be written and contracts that have to be issued before work begins. Let this story be an example of why.

Stayce at least had enough information to make her nervous, but not about the copyright issues that surrounded her. You may not be as lucky to know about hidden goings-on behind a project such as this. The strongest protection you can have are questions and answers and a contract that set those answers in legal concrete.

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Speider has created designs for Disney/Pixar, Warner Bros., Harley-Davidson and Viacom among other notable companies and is a former member of the board for the Graphic Artists Guild and co-chair of the GAG Professional Practices Committee. He writes for global blogs on design ethics and business practices and has contributed to several books on the subject of business for designers.

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