Intellectual Property - who owns it and how much is it?

Hi all,

This is my first post  so hopefully this isn't repeating other threads too much.

I'm trying to develop a pricing strategy for my e-learning projects and I've read a couple of threads here in the forums which offer interesting views.  However, none of them addressed the issue of Intellectual Rights - who owns the content and how much is it worth (with particular reference to more generic course types which can be re-sold).

I have 3 questions:

1. If I sell a course to a company such as (H&S in the Workplace), should I charge them more if they get to keep the course outright and they can reuse it with as many employees as they like by hosting it on their own LMS for example. Obviously this could be a huge saving for them over the years. If so, how much should one charge for the ownership of the intellectual property within the course in addition to the design. I'm intending to charge for the design element of the course at a daily rate.

2. The alternative I am thinking about, is to host the course ourselves on our own LMS and charge a fee per user so that way the company's staff only get to use it once and when new employees come along, they will also have to pay the user fee. This means that the company will not have ownership of the material. Again, how should one price this compared to the first scenario. Can we still charge a fee for design and a small user fee or just charge a higher one-off charge per user? Examples would be much appreciated.

3. If I develop a course which can be resold to other companies, how should I price it for both the first and second and subsequent company. Should company 1 incur the majority of the the costs and company 2, 3, 4 etc get it cheaper because of the lower development time?  Charge full price to all? Average the price between predicted no. of companies (I imagine this would be very difficult as one wouldn't know in advance how many companies may want it)

Any suggestions would be much appreciated and if I'm going about it all wrong, please tell me.

Many thanks,
Rob 

17 Replies
James Brown

I think these links should clear that question up.

Basically if you develop materials for a client, the client would own the materials but if you created the materials as part of your job then your employer owns the materials. Only materials you create in your spare time in a non employment environment would be considered your intellectual materials. This means if I decide to build a website during company time, technically it's my company who owns the website. 

Rob Tait

Hi James,

Thanks for replying. However, the first link doesn't work and the second links to a youtube file about something else. Could you repost. Thanks!

I will be developing projects for a client. I have set up a e-learning company that offers e-learning services for a fee.

So, if I sell a course to a company, you're saying they get to keep the course to reuse as much as they want. Can I charge an extra fee for this reuse right as opposed to just letting them access the course once via an LMS on my own company website?

The reason I query your answer is that if I were a freelance instructor offering Instructor Lead Teaching in the classroom, the company wouldn't then own the material so why do they own it if it's delivered through e-learning?

Thanks,
Rob 

James Brown

Man, where is Steve Flowers when you need him..

I'm not sure how the rest of the world is doing this but this is my 2c worth.

Here's the link above.

http://www.youtube.com/watch?v=CJn_jC4FNDo

I'm going to throw a scenario and I hope this makes sense. One of my jobs is that of a relational database technician and the product my company produces use a Sybase Adaptive Server Anywhere database to house the data. We wrote our own program in a programming language but we must house our data in the Sybase Database.

The product we created in the programming language is out own intellectual property however the Sybase Database Engine used to store the data is not and we must pay a royalty fee back to Syabse for each Sybase License that we sell.

In your case if you develop materials which include images, there may be a peruse fee associated with these images or there may be a one time flat fee. The fee that you pay does not mean that you own the image. It simply means you have paid for the right to use the image in your product. If you must pay a peruse fee, than you may want to pass that along to the customer.

On the same token, If you create a learning course that you are being paid to present, the course materials, if I'm not mistaken would become the property of your client.

You had asked,

    "you're saying they get to keep the course to reuse as much as they want."

and the response would be yes, they could reuse it as much as they want but unless they decided you pay you for the source files;in that scenario they would only get the e-learning materials.

If you are going to charge a per hit fee, than you are most likely going to negotiate a contract with the training company where they could have access to the materials for x number of days, months or years.

Here is something to keep in mind. Unless you want to teach these courses, I.e. instructor led training, I would not suggest a LMS. Instead you could use PHP or ASP pages to create a web portal that customers would log into to view your training materials. You would need to use SSH (secure socket shells) to keep the database with customer content safe. Of course there are hosting companies out there that would do this for you. Your job would be to code the pages and create a secure password db with a salt and hashed passed word to keep things safe and secure.

James Brown

Let me take something back. If you were per say presenting a course in a LMS and you are being paid to present the materials you would own the materials and you would be under no obligation to give the client anything besides the obvious handouts. But if you used graphics or images in the materials there may be a per use fee or a one time fee if you purchased the images or graphics.

I say this after thinking about the scenario, who owns the training materials if you pay a speaker to come in to a company and present a class. Naturally the speaker would own their training materials. However if the client paid you to develop training materials for their organization, they are paying for the training materials and therefore would own them.

Sheila Bulthuis

Here's my two cents, based on my understanding of the law (disclaimer: I’m not a lawyer!) and my own experience:

You can do it either way - you own it or they own it - as long as you are very clear in your contract.  For example, I have a standard "Work Made for Hire" clause that I use with clients who are basically hiring me to produce something that they will then own.  On the other hand, I've also had contracts with clients where I charge a flat fee for delivering a course X times, and the fee includes the materials given to the participants but it does not include licensing, I retain the copyright.  I haven't done this with e-learning - all my e-learning projects have been work-made-for-hire - but I don't see any reason you couldn't.  Obviously if you’re creating a course from their content (for example, a company process or product or policy) then it's going to make the most sense for the client to own the finished product. 

As to your question #2, one option could be to create the learning on a work-made-for-hire basis but as part of the contract stipulate that you'll also do the hosting, and charge on a per-user basis for that service. 

Question #3: If you develop something for client #1 on a work-made-for-hire basis, you legally can't leverage that same content for another client, because client #1 owns it, not you.  On the other hand, you could develop something you think you could sell to different clients, and then you would contract with each client to give them the rights to use the content/materials, but you still retain the copyright.  Your fee would be for the right to use, not for development.

Hope that helps...  By the way, a book I found really useful as I was setting up my business and putting contracts together is The Legal Handbook for Trainers, Speakers, and Consultants - not sure if it's even in print anymore, but if you can find it I highly recommend it.

Rob Tait

Hi 

Thanks for all the responses. It's great to be apart of a community where people respond ... and quickly too!

David Anderson said:

Rob - are you asking about content you've already created or new content a client contracts you to design? 


@Dave - I am referring to content that I would create myself on behalf of the client. For example, imagine a client asks my (new) e-learning company to develop an e-course for their employees on Food Hygiene. As I'm not an expert on Food Hygiene I would ask a Subject Matter Expert to write a course which I can convert into an e-course for my client. However, because this is such a generic topic that can be used by other companies/clients I may want to resell the exact same course to another client in the future. I understand that if I created bespoke content that was solely relevant  to the the client, the client would own the material, but what about resaleable courses? I am coming to the conclusion  that for off-the-shelf type courses such as Food Hygiene I may have to sell a per user licence fee and absorb the development costs myself with the first client. Is it standard to offer a different price for off-the-shelf type courses vs bespoke courses and how much? And should I absorb the development cost for the off-the shelf course for the first client?

I hope that's clear.

Cheers,

Rob

Rob Tait

James Brown said:

Let me take something back. If you were per say presenting a course in a LMS and you are being paid to present the materials you would own the materials and you would be under no obligation to give the client anything besides the obvious handouts. .. 

I say this after thinking about the scenario, who owns the training materials if you pay a speaker to come in to a company and present a class. Naturally the speaker would own their training materials. However if the client paid you to develop training materials for their organization, they are paying for the training materials and therefore would own them.


@James - Thanks for your replies.

I think we're getting close to the crux of the matter. I like you're differentiation between Presenting vs Developing material for a client. 

I imagine that for off-the-shelf courses, these would be "Presented" to a client and sold a per user licence fee whereas for bespoke courses, these would be "Developed" for the client and sold a flat rate fee. Do you agree? This means that when Presenting  a course, my e-learning company that created the course still owns the copyright/intellectual rights and we can resell it as much as we want. However, this would not be the case if we Developed a course. 

How would one go about pricing a project if one were Presenting the course (through an LMS for example) as opposed to Developing the course for the client to do with as they wish.  Is there a difference in pricing strategy? I suppose another question is, can I pass on the design costs of creating an off-the-shelf course to the first client that requests it?

Thanks,

Rob

Rob Tait

Sheila Cole said:

Question #3: If you develop something for client #1 on a work-made-for-hire basis, you legally can't leverage that same content for another client, because client #1 owns it, not you.  On the other hand, you could develop something you think you could sell to different clients, and then you would contract with each client to give them the rights to use the content/materials, but you still retain the copyright.  Your fee would be for the right to use, not for development.


@Sheila - Thanks for your reply. That made a lot of sense.

I suppose this answers my last question to James above which is that I can't charge the first client a development fee if I create a course which they only have a per user licence access. This means that I would have to absorb the costs of development of the project myself  for the first client.

What are your views on courses that are of an off-the-shelf nature (that can be resold) but there are bespoke elements within that course? For example, if I create a bespoke course for a client on a work-made-for-hire basis on Food Hygiene for example, you say they own the material and I can 't resell it. However, because it's quite a generic topic, there may be a lot of elements within that course which I could reuse for courses for other companies. Differentiating between wholly bespoke courses and off-the-shelf courses is easy and the ownership issue is not a problem. However, how does one deal with ownership issues when there is an overlap and a client wants a  project on a work-made-for-hire basis on generic content? How do you deal with this?

Thanks once again. 

Rob

Rob Tait

I've now had a bit more time to think about it all and it all seems so obvious really with hindsight. I've created a simple chart to help me understand the differences you've all highlighted which I've attached below for others to use or comment on. I believe that most course I will be asked to create will either be: Bespoke, Generic or Personalised Generic.

With Bespoke courses I am happy to give a way full ownership of course content but for Generic courses I want to retain full ownership of the content. Therefore I will sell Generic courses via a per user Licence fee with no development costs.

The only downer is that the first time you create a generic course you will have to absorb the development costs yourself in order to retain ownership of content.

What do you think?

Cheers

Rob

David Anderson

Rob that looks good. You could also look to the model used by elearning vendors who create off-the-shelf courseware and custom courses.

Off-the-shelf courses are those the vendor created - absorbed initial content costs - and then resells and/or licenses to clients. They might customize one of those courses for a client and the client may or may not own the rights to the final product. Everything is negotiable and there are plenty of examples of "white label" courses, software, etc. So you could come up with your own pricing agreements there.

Also consider that you could partner with someone - sme, trainer, client - to co-develop a course. For those courses, a revenue-sharing agreement would be appropriate and you each benefit from those sales.

And good addition of "small dev fee for personalization of generic content" - trust me, clients will want that!

Sounds like you have some good things going on!

Rob Tait

Thanks Dave. I think a revenue sharing agreement with an sme is the way forward for generic content courses. At least this way I won't be out of pocket upfront except for my development time.

I've recently started a thread on this topic. However, no answers yet. Click below to see

http://community.articulate.com/forums/t/911.aspx

Cheers

Rob

Cathy Moore

Rob Tait said:

However, how does one deal with ownership issues when there is an overlap and a client wants a  project on a work-made-for-hire basis on generic content? How do you deal with this?


If I research and write a course on a generic topic as a work for hire, the client owns everything I've written, even if the topic is generic. For example, if I write a course about safe Twitter use for one client, and another client comes along and asks for a course on safe Twitter use, I can't reuse anything I wrote for the first course. I can use the research I did for the first project, but there's no copying and pasting of anything I wrote before. I have to come up with new activities and new ways of saying the same stuff.

That's how work for hire works, unless you agree in writing on a different arrangement that gives you rights to the content. Since every client thinks that their situation is unique, it might be hard to convince someone that you should have any rights to "their" course, especially if it contains anything remotely proprietary, such as phrases from their social media policy.


After the second or third time that I wrote a course on safe Twitter use, I might conclude that there's enough demand for that course to justify creating a generic one myself and selling it as a customizable product. In that case, I would spend my own time writing yet another version of the course, but this time I would own the copyright. I'd then license the course to clients and charge for customizing it.

Helena Froyton

Hi Rob,

I have a similar question to the #1 question you posted on this thread. 

"1. If I sell a course to a company such as (H&S in the Workplace), should I charge them more if they get to keep the course outright and they can reuse it with as many employees as they like by hosting it on their own LMS for example. Obviously this could be a huge saving for them over the years. If so, how much should one charge for the ownership of the intellectual property within the course in addition to the design. I'm intending to charge for the design element of the course at a daily rate".

If I am developing a course which will be saved onto  a CD and various teachers will be using copies of these CDs to teach their courses, should I charge for each of the copies of CDs that are made, since I have the ownership of the intellectual property?  What is normally done in cases like this?  How did you approach the situation with described on this thread?

Shiraz Contractor-Papas

Great discussion; I thought I would chime in.

My understanding of copyright law is that it protects the expression of ideas and information, not the ideas and information itself.  Therefore if you are the author of the training course you will automatically hold the copyright UNLESS you agree to "transfer" the copyright to your client by way of written contract. if your client provides you with a PowerPoint training course that they want you to develop in Storyline, your contract should state that the client grants a license to you to use the content for the purpose of developing the published output. This protects you from a future copyright claim by your client.  Your contract should also then transfer copyright of the final output to the client.

TRAPS: have you licensed stock assets (photos sounds etc)? Well in this case you may be infringing on the copyright owner of these digital assets by transferring copyright in the published output to your client, unless your contract states that yiur client agrees to be bound to the terms and conditions of third party licenses and they indemnify you for any misuse or breach. 

Ownership in copyright is not a matter of what you think is right for your client, it's legal stuff which must be considered in your contract so that you don't inadvertently put your client in a position that exposes them to copyright claims and infringements.

Moral of story:  you must have professional indemnity cover and a contract written by a lawyer (not downloaded from a website) that accounts for all possible scenarios and risks.