Pooja Ahuja Nagpal
Jul 28, 2014

Should agencies retain IP rights to their work?

Can they? Certainly not with adland divided on the issue - or so it seems.

Should agencies retain IP rights to their work?
Creative agencies can claim credit for their work, but not the IP (Intellectual Property) rights. By contract, they are assigned work for a fee, which means the IP rests with the client commissioning the work. Adland is divided on whether this status quo should change - on whether a one-time fee justifies use of an idea for perpetuity by clients. And the voices in favour of retaining IP rights are getting louder and are more frequently heard today.
Nagesh Alai, group chairman, FCBUlka, points out that while IP rights were approached casually in the 15 per cent agency commission ecosystem, it needs to be taken up seriously and addressed in the present circumstances.
He raises a fundamental question on what the fee paid entitles the client to: “Is it just the day to day 24x7 intense servicing and understanding consumers and competition or does it also include the ‘brand thought’ or the ‘creative idea’ that the agency ultimately gets to the table? In the past, because of 15 per cent system, the agencies were covered in a way. But today, with the fall of 15 per cent regime in many cases, it will only be fair that agencies are remunerated separately and adequately depending on whether the use of that idea is for a limited period or for perpetuity.”
Joseph George, CEO, Lowe Lintas and Partners, believes it is unfortunate agencies do not get any IP royalty and sign contracts handing over IP rights to the client, preventing any future claim to the intellectual property.
He adds, “Another aspect is that when many agencies participate in these pitches and share the strategy and creatives, there is no legal guarantee that the client will not use the idea. This is a real issue and it is hurting agencies especially in times when revenues and margins are under pressure. And since an idea is the only transactable ware of the agency, if it has such a limited and narrow definition of how to be remunerated (for), obviously agencies will be affected negatively. Creative agencies need to desperately find ways of getting clients to pay for IP.”
Both Alai and George cite changes in allied industries with respect to IP rights. They believe that eventually things will change in advertising too.
There are others like KV Sridhar, CCO, SapientNitro, who believe that IP rights should remain with the client. He reasons, “Clients share a lot of vital information and strategies with the creative agency, and so virtually agencies become the brand custodian. They pay for the agency’s time, provide the environment and ecosystem to create ideas. Without it a creative agency will never be able to create ideas. If you take the brand away, the idea will not be good enough on its own.”
Sunil Kataria, COO, sales, marketing and SAARC, Godrej Consumer Products, believes that assigning IP rights to the creative agency goes against the principle of agency-client partnership. He states, “A creative idea delivers stronger brand equity and a healthier business. These are two common goals driving the agency-client partnership. With creatives asking for the IP rights you are somewhere questioning the partnership principle itself. ‘The idea is mine’ and ‘the brand is yours’ results in ‘me’ versus ‘you’. I find a flaw in this.”
For a creative person, the greatest high is seeing the idea communicated and executed well not that the IP rights belong to him/her, he argues.
S Yesudas, MD - Indian subcontinent, Vizeum, says that if an agency is assigned to produce work for a brand for a certain fee, logically the IP would rest with the client, ‘unless creative agencies are willing to reinvent their assignment/fee models’. He terms the status quo ‘fair’, and uses the opportunity to make the case for media.
“Ideas are many and can originate from various sources. What’s critical is to see the idea reaching a logical conclusion, more so in today’s convergent world. Creative agencies have fabulous opportunities here to align with media agencies to create content which embraces the generic essence of any brand,” he explains.
Nagesh Alai, Group chairman, FCBUlka
“Look at what is happening in the surround industry - lyrics, music direction, film producers et al. In all these cases, the clients have to pay separately and additionally for the usage, over and above the creation. Only agencies are languishing in imposing this.”
Joseph George, CEO, Lowe Lintas and Partners
“Agency-client relationships are getting so much more transactional that the IP is not even discussed. Even in normal AoR relationships clients are unwilling to discuss IP with agencies, let alone short-term projects.”
KV Sridhar, CCO, SapientNitro
“Agencies should ask for more compensation and value their ideas right, rather than trying for IP rights. In today’s day and age, ideas keep changing because consumers are changing. So how can you hold on to one IP right? Gone are the days when people run a commercial for even one year. They run for a quarter, and the ones on YouTube run for not more than 15 days.”
Sunil Kataria, COO,  sales, marketing and SAARC, Godrej Consumer Products,
“Many companies like us link remuneration to performance. There are large percentages that are variable, linked to performance in terms of brand health parameters, business etc. If an idea kicks in big time then you also get a monetary upside to it.”
S Yesudas, MD - Indian subcontinent, Vizeum
“Media agencies can capitalise on the content hungry media environment for the content to see the light of day as earned media opportunities. Brand owners have the opportunity to tag the brand name to the content and make it more brand-centric. Media owners could have the opportunity here to partially monetise on the same. Such avenues can pave the way for different IP ownership discussions.”
(Published in the issue of Campaign India dated 25 July 2014.)
Campaign India

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