Your Most Valuable Intellectual Property (Plus, How to Compensate Partners)

The Transcript

Your Most Valuable Intellectual Property (Plus, How to Compensate Partners)

Voiceover: Welcome to Unemployable, the show for people who can get a job, they’re just not inclined to take one — and that’s putting it gently. If you’re a freelancer or solopreneur, Unemployable is the place to get actionable advice for growing your business, improving your processes, and enjoying greater freedom day to day. To get the full experience, register at no charge at Unemployable.com. You’ll get access to upcoming webinars and more. That’s Unemployable.com.

Brian Clark: Hey, everyone. Welcome back to another episode of Unemployable. As always, I am your host, Brian Clark, and thanks a lot for joining me. This is episode nine of the Unemployable podcast.

Today, I want to talk a little bit about intellectual property. And I did used to be an attorney, but I’m really coming at this from a business perspective. There’s a lot of confusion on the actual law, but I think there’s even more confusion about perhaps the best way to deal with problems involving, for example, someone infringing your trademark or your copyright or that kind of thing. So let’s talk about that a little bit today.

Those of you who are creative professionals, creative entrepreneurs, such as a freelance writer or a designer, you tend to think of what you do in term of services, which, of course, it is. But ultimately, what you’re selling is your copyright, so that’s why when you sign up a new client, you should have an agreement to make sure that your payment terms and other things are crystal-clear.

The Critical Importance of Work-for-Hire Agreements

But you’re also placing in that contract what’s known as a ‘work-for-hire agreement.’ That’s necessary, because if you don’t have that provision, which effectively transfers copyright over to the client, they don’t own it. Whether they pay you or not, you still own it. Of course, it’s just good business to offer the proper contractual provisions to the client in exchange for the money, but it’s cool, because that’s the reason the contract has to exist.

If you get a client who doesn’t want to sign your agreement, you can say, “Well, if you don’t, technically you won’t own my work.” That will usually get people to sign that agreement, and of course, that means your payment terms are now contractual.

The flip side of that, of course, is if you’re a solo or a start-up working with freelancers, if you don’t get a signed work-for-hire agreement, you do not own that content or that design or that logo. I’ve seen this jump up and bite people several times. It’s kind of amazing, so keep that in mind.

Now, if you have employees, it’s presumed that the work they create during their job belongs to the company, so that’s not the issue. If it’s someone outside of your company, someone who’s a 1099, then you do have to have a written agreement that transfers copyright over to you.

If any of you have questions along those lines about work-for-hire and related issues, please go to Uemployable.com/Ask, and let me know. It’s pretty standard in the industry, and most freelance agreements or retainer agreements contain work-for-hire provisions, but if there’s any confusion there, I’m happy to follow that up on another show.

The Misunderstanding of Content Syndication

Let me talk about a more bewildering aspect of copyright law, in that people just don’t seem to understand that when you publish something online, even if it’s for free, that content or that image or that logo or design belongs to the creator, period. You have to have express permission to make a copy of it. That’s what ‘copyright’ means.

So if, for example, you see an interesting article on someone else’s site, and you decide you want to syndicate that on your site, it doesn’t matter if you provide attribution. It doesn’t matter if you provide a link. And it doesn’t matter if you say, “This isn’t my content.” You still committed copyright infringement.

Just the other day, I got a quick Tweet on Twitter, someone telling me — a colleague — that someone had been stealing our content. Surprise, surprise, it’s been happening every day for 10 years. What may surprise you is that I don’t get all that worked-up about it, as you might expect, especially being a former attorney. But basically, this person gives us a heads-up, and usually, we’ll do the same thing. We’ll say, “Look, you can’t really publish our content without our permission,” and sometimes, we end up giving it, depending on how that conversation goes.

This guy, though, did that. He went to these people and said, “You can’t publish my content. You didn’t ask my permission. I want you to take it down,” and then they responded with, “Well, we said it wasn’t ours.” Again, so what? You still committed copyright infringement. And then he responded and then basically said that: “So what? That’s not the law,” and they basically called him rude.

It always amazes me when the people who are on the wrong side of the legal issue become defensive and insulting. Yeah. The interwebs: amazing stuff, right?

Though, just keep that in mind. You cannot republish images, content, anything that is subject to copyright, without express permission.

How to Crucify a Content Infringer (and Why You Shouldn’t)

Now, on the flip side of that, say you’re a content creator. Your site’s out there. You’re publishing great content, and someone is taking it. From what I just said, you’re like, “Well, I’ve got a slam dunk,” and of course, we have mechanisms like the Digital Millennium Copyright Act and all this, so we do have legal means to get those people to quit infringing on our work. You can even get an award of your attorney’s fees when you win.

You’re thinking, “Okay, great. I’ll sue everyone, and that’ll become my new cash-flow thing.” No. It’s an incredible time suck. Odds are, you’ve got someone in another part of the world that you’re going to have a very difficult time enforcing anything against. And let’s say you end up litigating. You’ll have to pay attorney’s fees out-of-pocket, even though you have a right to collect them later, but here’s the real big thing: odds are, you’re never going to see a dime, because the kind of people who steal content online are not exactly loaded with cash.

So business-wise, enforcing copyright online is just one of those things that may drive us crazy, but you’re really better off focusing on building your business, making more money. Google has pretty much figured out how to determine the original source of content.

Again, ask people to politely take your content down because you didn’t give your permission. If they give you attitude, play it by ear. If they refuse, technically, you have legal rights, but it’s just so much hassle and not worth it to distract yourself from your business to mess with that.

What to Do If Someone Sullies Your Brand

That said, let me tell you about something that you take the exact opposite approach with, and that’s trademark. Trademark is the legal mechanism that protects your brand. Your brand is everything, especially online.

A brand is nothing more than a story that the marketplace tells itself about you. It’s your reputation, or value, and service, so if someone starts using your brand or your trademark illegally, you have got to go after them, and that means you have to formally request that they stop. If they don’t do that, you should probably get that in the form of a letter from an attorney, and here’s why.

Here’s an example. A lot of people are kind of upset with WordPress, because they’re very strict about stopping people from using the word ‘WordPress’ in their domain names or their product names or their site names, and people think that’s sort of uncool, but they have to do that.

The ‘Protect It or Lose It’ Aspect of Trademark

Trademark is not like copyright. I still have my copyright even if I let you get away with infringing it. I can change my mind next week and come after you. With trademark, you have to defend your trademark or you start losing it. Even when people start using a brand in a generic sense, like Xerox and Kleenex and Google … you might have even noticed that Google has to periodically issue a statement that says, “You shouldn’t use Google as a verb, blah, blah, blah.”

It’s funny, because when your brand gets to that level, you know you’re gigantic in the minds of people, and yet you have to defend the generic use of the term. So if you come across someone using your trademark in an improper way, or at all, trademark law is designed to prevent confusion in the marketplace. And if you allow that confusion to go on, it not only could hurt your business, but you could lose your actual mark.

So don’t worry about copyright too much in the context of people scraping your content, and do worry about trademark all the time.

Now, one solution that we use, you may notice that there are people in our community around the Genesis Framework who use the word ‘Genesis’ in their domains and titles and services. That’s because we licensed it to them. If you license your mark with your permission, they have to follow certain rules to protect the integrity of your brand, and in exchange for that, you allow them to use it. That is a way where you can allow a trusted person to use your brand name and still not be in any danger of losing it.

All right, that’s enough on the business side of intellectual property law. We’ll talk about more of this type of stuff in the future. Right now, we have another listener question, so let’s see what we’ve got.

Listener Question

Scott Ellis: Hi, Brian, it’s Scott Ellis, and listen, my question for you is this: how do you recommend handling the allocation of equity in ownership when you are growing from being a solopreneur or freelancer to bringing on a partner and maybe even down the road even other partners or employees under the business? This is something that I think a lot of entrepreneurs struggle with. We don’t necessarily know the right way to handle this or the path. It can certainly cause a lot of trouble, so I’d love to hear your thoughts.

Brian Clark: All right. Thanks, Scott. It’s good to hear from you. For those of you who don’t know, Scott runs a podcast on the Rainmaker.FM network as well called Technology Translated. It’s really demystifying all this techie stuff for business people, effectively, whether you’re a content creator, a freelancer, a start-up entrepreneur, whatever the case may be. Tech can become hugely overwhelming, so check out Scott’s show if you’re interested in that. It’s really good stuff.

Scott, to your question, it’s an excellent question. I get it all the time, and the answer is, ‘it depends,’ which always drives people crazy, but it’s the truth. Let me give you my philosophy when it comes to partnering and equity sharing and all that.

One thing I always talk about is that I was a business attorney who never took a business class or read a book. I was kind of thrown into it as a liberal arts major who did really well in law school, and the thing that really stuck with me, and I reflect on this all the time because I think it was the foundational principal of my entire entrepreneurial career. Unlike the stereotypes of the evil business man or the Gordon Gecko of the world trying to screw people over, our business clients on the transactional side — not litigation, once you get in litigation, all bets are off — but when they’re doing a deal, the business people were always trying to give the absolute best deal they could to the other side as long as their objectives were getting met.

That was an epiphany to me, because the stereotype is the opposite of that. But real business is done making win-win deals, so when it came to starting new companies with a co-founder or letting someone in at an equity level, I always tried to give the fairest, best deal that I could. Most of those were 50/50 relationships.

Now, I know that the position I was in, with people coming to me because I had the audience and they had maybe the skills or the product or the service, I could have gotten more. I know I could have, because I am in that highly leveraged position of being able to say, “Look, you can build your thing, but I am doing distribution and marketing,” but that’s a horrible way to start a relationship in my mind. It violates that principle that a happy partner is a good partner. So I’ve always been as fair as I could be, and that’s my personal approach. It tends to work because everyone is happy, and it actually smooths things over when things get rough, maybe, going forward.

I will say this, though: give your best deal at the equity level, but have provisions either in the LLC agreement or contractually, where there’s some sort of performance criteria. I have had partnerships in the past where that bit me hard, as far as there was no provision that said the partner had to show up to work, really. So going forward, we addressed that by having mechanisms for if a partner is not doing their job. For example, you could have a provision that says, “We will hire someone to do the job you’re supposed to be doing, and their salary is going to come out of your portion.” That’s a good way to motivate people to step up and do what they said they were going to do, so I hope that helps a little bit.

It really depends on the need, the context. How important is this person to the business? Will you make more than twice as much money by giving them half of the business? That’s a good way to think about it. When it was me proposing the arrangement, that’s what I said. I said, “You will make at least double the amount of money. Therefore, you’re not losing anything by not owning the company 100 percent,” and I’ve always been able to deliver on that, so I hope that helps.

All right, everyone. Just real quick. Our sponsor, as always, is the Rainmaker Platform. If you are interested in creating some amazing content that even has a chance of being stolen by someone else and building an audience that builds your business, go to RainmakerPlatform.com. Take it on a free 14-day trial, and see what it can do for you.

Like I said, if you’ve got additional questions, I’d love to hear them. Unemployable.com/Ask. You do have to be a registered member to record a question for the show, but I will have information very soon for you on our webinar series, which is kicking off this month in August, so you will get access to all those limited-capacity webinars that we’ve got coming up. So head over to Unemployable.com, and register for free today. I will talk to you more next week. For now, keep going.