Ip and Art: an International Perspective

• Jurisdiction: California,United States
• Citation: Vol. 46 No. 4
• Publication year: 2021
• Author: Cristina Manasse and James C. Roberts III
• topic: Business of Law,Contracts,Intellectual Property

IP AND ART: AN INTERNATIONAL PERSPECTIVE

AUTHORS

Cristina Manasse
Manasse Studio Legale, Milan

James C. Roberts III
Global Capital Law Group PC

LITTLE CONTRACTS, ESPRESSO AND DOWNLOADED AGREEMENTS: THE MODERN DILEMMA

How often have you had a client ask you to "take a quick look at this agreement and tell me if it's OK"? Or someone who asks you to review just a particular section of a contract? In Italy, lawyers often receive requests for a "quick look" or to answer a "quick question" over coffee. Or they are asked to draft a so-called contrattino, which translates into a "little contract." And how often has a client sent you an agreement obviously downloaded from the web?

Many such lawyers have quite a few examples of "odd" downloaded agreements, or of requests for a limited review of only one or two sections. In this edition of the column, we'll discuss a few of the issues raised by these requests, through hypotheticals based on actual events. We'll try to include or suggest some analysis and starting points on drafting solutions.¹

EXAMPLE 1: A Downloaded Agreement

A California lawyer gets a call from a software developer. The developer is looking for a lawyer to review a document that she downloaded from the web and has used in several engagements for clients. She has incorporated a company and has some employee and independent contractors. So she sends the downloaded agreement to the lawyer who may be engaged.

Who Is Whom? Here is the provision for the first problem with this downloaded agreement, which is: just who is the "Contractor"?

This Development Agreement made this _____ day of __________ between ABCX, Inc. (hereafter "Contractor"), and XYZ Corp, a Kentucky corporation (hereafter "Client").
Recitals
A. Contractor is an individual residing at xxx, Los Angeles, California xxxxx.

[Page 64]

Is the company identified as the Contractor as stated in the first paragraph or is the individual identified in the Recitals the Contractor? A solution can be tricky. One can look to the "acknowledgement" language commonly found in agreements, such as the following:

Now, therefore, for good and valuable consideration, the receipt of which is hereby acknowledged, the Parties hereby agree as follows: [...]

In other words, if the acknowledgement comes before the recitals, then (arguably) the parties agreed to everything following the acknowledgement—including that the individual is the contractor, and contradicting the first paragraph. Alternatively, if the acknowledgement is placed after the Recitals, then, (also arguably), ABCX, Inc., is, in fact and law, the Contractor. Sadly, there is no such statement in the downloaded agreement (and no choice of law).²

This confusion could be problematic because the individual-as-Contractor would then run the risk of unlimited liability as a person. In essence, the developer would have forsaken the limitations of liability that usually arise from using a corporate entity for engagements. We would not want to have to tell a client that sort of information.

IP Out of Thin Air? The lawyer then arrived at the IP section and found this language:

Products do not include general know-how and experience gained prior to performance of the Services.

Huh? The lawyer is a bit puzzled. Developers, like other professionals, always rely on their "general know-how and experience." Looking back at the Recitals, the lawyer sees that the client acknowledges as much:

C. Contractor possesses the experience and expertise to perform the Services at the highest level of industry standards.

Were this language to be enforced, the Contractor probably breached it the instant she used her tools to develop the Product. How, exactly, can the Contractor provide any "Product" (i.e., intellectual property) without including general know-how and experience gained prior to the performance? For example, most software developers bring pre-existing tools to the engagement, develop their own tools as part of the work and invent new ones, all based on their prior experience. These do not come out of thin air. Like game developers, immersive environment programmers often bring pre-developed "characters," even backdrops that are then "skinned" to suit the engagement. They also might bring their own tools for, say, synching audio and video along with likely eye movements of users.

California Wrinkles. This downloaded agreement included intellectual property provisions for a "work-made-for-hire" agreement.³ Surprisingly to some lawyers, independent contractor agreements (of which this example is one) present unusual problems, among them risks under California employment law. If the independent contractor is an individual and the agreement includes the "magic language" of "work made for hire," then there could be risks of civil and criminal penalties for the company engaging the independent contractor under both workers compensation and unemployment insurance code provisions. For example, "employee" for purposes of workers compensation means:

Employee

...