A Cautionary Tale
This is how experts lose control of their expertise.
I was reading an article on Forbes.com about the growth of freelance management consulting marketplaces. Catalant is one of the larger platforms that corporations use for buying professional services (think Upwork for corporate consultants). Per its Wikipedia page, as of 2018, Catalant served more than 30% of the Fortune 100 and 20% of the Fortune 1000, including GE, Pfizer, Staples, and Shell.
That got me thinking about what Catalant’s terms of use look like. So I took a peek. 👀
Not to say, “I’m happy,” but I found an example in the wild(!) of the language in client services agreements that I am constantly harping on you to be aware of.
Catalant’s terms of use state that the client and the expert must enter a project agreement and provide a copy of it to Catalant so Catalant can process payments in accordance with the project agreement.
Catalant, rather helpfully for clients, provides a project agreement template and directs that any agreement between the client and expert be “substantially in the form of this suggested Project Agreement.”
If you are curious, this is suggested agreement: click here to see the agreement.
But the part that we care about is this [emphasis added]:
Section 5. Intellectual Property. a. Work Product. Expert will make prompt disclosure to Client of any and all reports, work papers, presentations or any other information and/or material or related documents or work product developed or created by Expert for Client in the course of performance of work or services for Client (“Work Product”). Notwithstanding the foregoing, Work Product does not include items developed or otherwise obtained by Expert prior to the Effective Date of this Project Agreement (“Expert IP”). To the extent permissible under applicable law, Work Product will be considered “work made for hire” pursuant to the U.S. Copyright Act, 17 U.S.C. § 101 et seq., and any foreign equivalent thereof, and Client is the sole and exclusive owner of all Work Product and exclusively owns all related intellectual property rights thereto. To the extent any Work Product may not be considered a work made for hire, Expert hereby assigns to Client all right, title and interest in and to all Work Product (including all related all patents and inventions (whether or not patentable), copyrights, moral rights trademarks, trade secrets and any other form of intellectual property rights recognized in any jurisdiction, including applications and registrations for any of the foregoing) without any additional compensation. If the Work Product includes Expert IP, or if Expert IP is necessary in order for Client to fully exploit its rights in the Work Product, Expert grants Client and its affiliates, for no further consideration, an unrestricted, royalty-free, perpetual, irrevocable license to make, have made, use, market, import, distribute, copy, modify, prepare derivative works, perform, display, disclose, sublicense and otherwise exploit such Expert IP.
What does this mean?
Yes, you retain ownership of your Expert IP. However, the license granted to the client to use your Expert IP is so broad that the client can—literally--do the same things that you, as copyright owner, can do with your IP, in perpetuity, for no further consideration to you. Ouch.
This is not meant to demonize Catalant. This is standard language in most client-drafted services agreements when you have corporate clients. Also, know that this is a starting point, and reasonable changes can be negotiated, even with Fortune 100 clients.
But let this be a cautionary tale for making sure you read and understand what rights in your Expert IP your agreements are giving away.
Got questions? Reach out!