Ask a Lawyer // April 2017 // When Everything Goes Bad: A Case Study in Why I Say What I Keep Saying

I don’t normally do this here, but I am going to get all lawyerly and review a particular case from about three years ago that is a great illustration of what happens when everything goes bad between a graphic designer and client. The case of Smith v. Mikki More, LLC, 59 F. Supp. 3d 595 was decided by United States District Court for the Southern District of New York in New York City in October 2014. More specifically what I’m going to be talking about was decided by the court at the summary judgment stage at that time but did not end that particular lawsuit.

The plaintiffs were graphic designers, website designers, and copywriters and the lead plaintiff was an experienced designer with the improbable name of Adam Smith. Smith was approached by defendants Darian Braun and Mikki More, LLC to create designs for a line of haircare products in late 2012. Smith created a logo and other materials that were then used on product labels, marketing materials, and the company’s website. Plaintiff Frank D’Angelo assisted Smith in this work as well as engaging in other activities to promote the Mikki More, LLC business. Plaintiff Dawn Jasper was hired to perform a variety of services including social media and website design and copy writing.

No contracts were signed by anybody or even proffered for signature. (Yes, that’s going to be a problem).

All three plaintiffs were promised payment that never materialized. At one point, Smith and D’Angelo were owed as much as $8,000 and received only payment of $250. Jasper was promised $1,500 per month for the first three months of her work and $3,000 per month thereafter. Jesper received only $1,000 and was physically threatened when she asked for further payment.

Ultimately, all three plaintiffs obtained copyright registrations on the work that they had produced. They sued the defendants alleging copyright infringement, each contract, and similar causes of action.

In the October 2014 decision the court granted summary judgment on the copyright infringement claims but did not make a decision with regard to the breach of contract claim or other claims, saying those were issues for a jury to decide.

There are number of lessons that can be gleaned from this case.

Have a written contract. Although contracts can be entered into on an oral agreement, the plaintiffs probably would have obtained summary judgment on their breach of contract claim that there been an actual written contract. They were promised payment to produce certain kinds of work. They produced the work but did not get the pay. The issue here is that on oral contracts there can be what is legally referred to as “a genuine dispute of material fact.” However, in a written contract there would be no dispute as to the terms of the contract, the plaintiffs only would’ve had to show that they did the work and did not get paid.

Work made for hire contracts protect the designer and the client. The only way ownership of the copyright or an exclusive license can be granted is through a written document. One of the factors that protects graphic designers as well as their clients is that a written work made for hire contract automatically vests the copyright to the work created in the client’s name upon payment in full. In this case, the client was arguing that Smith, D’Angelo, and Jasper were employees of the defendant’s the court dispensed with that idea rather quickly, the only other way to have a work made for hire condition without a written agreement. The facts were clear that the plaintiffs were actually independent contractors. So the defendants actually had no rights to the created work even if they had paid the plaintiffs the full amount that was owed because there was no transfer of the copyrights, either through a work made for hire contract or a copyright assignment.

Be prepared to copyright your work. When a dispute arises between a designer client about payment and ownership of the work that was created, the designer has an enormous amount of leverage in the works created. Copyright law, as a starting point, grants all rights to the creative work in the author of that work. (Author is congressional shorthand for writers, artists, musicians, and other creative professionals). So if the designer has created something, they maintain all the rights to assign or give away the work or to license, exclusively or not exclusively, to any person. The purpose of the work made for hire doctrine or a copyright assignment is to transfer the ownership of the copyrights work. Until such time as the payment is received, the author does not grant nor is obligated to grant the assignment or license to the work. So designers must be prepared to copyright their work in the event of a dispute.

The Copyright Act and Office is helpful. So when everything goes bad between a client, which may not happen for several months after delivery or non-payment or both, the Copyright Act is quite generous with time. If the author of the work registers the copyrights with the US Copyright Office within five years of the creation of the work, it is presumed to be the property of the author. Normally, copyright registration may take months to process, however, the Copyright Office does have a shortened registration process material that is subject to a pending lawsuit or soon-to-be-filed lawsuit. Not only is copyright registration helpful but the Copyright Act will often award attorneys’ fees to plaintiffs who successfully prevail on copyright infringement action in certain circumstances.

Now I don’t want to get off on a rant here, but this particular case highlights many of the issues regularly talk to designers about their work and its intersection with contracts and copyrights. Many of the lessons learned by Adam Smith, Frank D’Angelo, and Dawn Jasper are the very lessons that I hope all designers learn and take to heart.

A written contract is not just a hurdle to your business or an annoying “legal thing” but a manner of protecting your interests and your client’s interests. A written contract signifies professionalism. Mentioning the big gun of copyright infringement in a contract is not mean or domineering, it is good business sense because copyrights are your friend and probably the only leverage, very powerful leverage, you have against a non-paying client.

I don’t like beating dead horses, but I don’t like seeing designers get screwed over, so I will say this till I am blue in the face: Contracts Matter!!

Thus endeth the rant.


BIO Disclaimer

MATT JOHNSTON IS A SOLO ATTORNEY WITH A FOCUS ON SMALL BUSINESS REPRESENTATION, COPYRIGHT AND TRADEMARK LAW, AND DISPUTE RESOLUTION. MANY OF MATT’S CLIENTS ARE DESIGNERS AND CREATIVE PROFESSIONALS WHOSE CONCERNS OVERLAPPING MATT’S PRACTICE AREAS. MATT CONCENTRATES ON DRAFTING CLEAR CONTRACTS OF ALL TYPES AND HELPING DESIGNERS WITH THE LEGAL SIDE OF THE DESIGN BUSINESS. AS A BENEFIT TO AIGA MEMBERS, MATT OFFERS A 10% DISCOUNT ON ALL CONSULTATION APPOINTMENTS, FLAT FEE PROJECTS, AND HOURLY FEES.

THE CONTENT OF THIS COLUMN IS FOR EDUCATIONAL AND INFORMATIONAL PURPOSES ONLY AND SHOULD NOT BE CONSTRUED AS LEGAL ADVICE APPLICABLE IN ANY SPECIFIC SITUATION. NO ATTORNEY-CLIENT RELATIONSHIP IS CREATED THROUGH THIS COLUMN. IF YOU NEED CONFIDENTIAL LEGAL ADVICE, MATT IS AVAILABLE FOR PRIVATE AND PRIVILEGED CONSULTATIONS. CONTACT MATT IF YOU HAVE SPECIFIC CONCERNS.

By Matthew S. Johnston
Published April 6, 2017
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