Erin Austin: Hello, ladies, welcome to the hourly to exit podcast. This week, we're going to talk about whether or not you can use a piece of intellectual property. Now, as you know, if you follow me for any amount of time that I like to say, IP is everywhere. When you are an expert, you make it all day, every day, every time you use your intellect.

Erin Austin: You're probably creating intellectual property. So the issue isn't whether or not you have IP. The issue is whether or not you own it. In other words, do you own what you think you own? So part one is ownership. Ownership is the key to asset creation and asset creation is the key to leverage. In other words, you need assets to help decouple your income and your impact from your time.

Erin Austin: So closely related to the issue of ownership is use. You may have or have access to a particular asset and wonder whether or not you can use it. That is very smart. And that is the right question to ask. Frequently, I hear this question in connection with use of a book. Can I use this book in my course or in my workshop?

Erin Austin: And those are important questions. And we're going to talk about, um, when we have the rights to use something that we don't own and what restrictions there may be. So ownership and use are linked, of course, you know, but there are many circumstances where you don't. On the IP that flows into your business.

Erin Austin: So it's essential to understand how you can use the IP that you don't own. And this conversation will be about how I don't like any of this. Uh, forget all of that. I'm starting over right now, starting from the beginning. Hello, ladies. Welcome to the Hourly Dexit Podcast. Today, we're going to talk about whether or not you can use an intellectual property asset.

Erin Austin: You know, as you know, I say that IP is everywhere. We make it all day, every day. As an expert, every time you use your intellect, you are probably creating intellectual property. The issue is, do you own it? I like to ask, do you own what you think you own now? Cause ownership is the key to asset creation and asset creation is the key to leverage.

Erin Austin: That means you're able to decouple your income and your impact from your time. A closely related to the issue of ownership. Is use. So you may have or have access to an asset and wonder whether or not you can use it. And yes, ownership is key to answering the question to whether or not you can use it.

Erin Austin: That is the right question to ask. I sometimes get this question in the form of, you know, can I use this book? In my course, can I create a, a workshop out of it? Can I, uh, you know, make worksheets out of it? And, uh, and so this will be a conversation about how you can use intellectual property in your business.

Erin Austin: Certainly, when you own it, but also when you don't own it, because, of course, there is lots of intellectual property that flows through our business that we do not own. So we need to understand how we can use IP that we don't own. So, you know, that there is a. Symbol graphic that goes with this conversation.

Erin Austin: It visualizes the categories of sources of intellectual property and uses of intellectual property that I will be discussing. Uh, you can find a link to that graphic in the show notes. It is also available in my library of free resources that are available to subscribers at my email list. So, uh, lots of, lots of good stuff there.

Erin Austin: So I do. Of course, highly recommend you get on my email list. So now let's dig in. So first, let's talk about the sources of the intellectual property that flow through your business and what we own and therefore what we can use or how we can use it depends upon the source. So the sources first, you, things that you create.

Erin Austin: Your employees, and by that I mean your W 2 employees, you're paying the employment taxes, you're withholding taxes and paying them. Third, contractors. So, these are the other people that are not your W 2 employees, and it doesn't matter how long you work with your contractors, how wonderful the relationship is, if you're not uh, issuing them W 2s, then they are not employees and they fall under the contractor bucket.

Erin Austin: So we have 2 types of contractors, those who work with a signed agreement and those who work without a signed agreement. And then we have 3rd, other 3rd party materials. They may be your clients materials. They may things that you have licensed to you where you're the licensee and there are other sources, such as the Internet or chat and things like that.

Erin Austin: So these are kind of undocumented sources. And then the uses, I put uses in 5 buckets, tools, marketing, client work, products and exit. So those are things that you would be able to transfer when you sold your business. So tools, those are any internal resources that you use to do the work. This could be productivity software, your CRM, certification materials, books, databases, frameworks, SOPs.

Erin Austin: Marketing. These include any materials created for public use but not for sale. These include lead magnets, white papers, your website, webinars and speeches, social media, PO posts, podcast episodes, email newsletters, client work. So those are the the deliverables from the services you provide to your clients under a services agreement.

Erin Austin: Products, anything for non internal use that is for sale, including books, software, courses, training programs, um, licensed products, meaning where you're the licensor, um, such as, you know, train the trainer type of licensing program and exit that refers to what happens to the IP in the event of the sale of your business.

Erin Austin: Could the IP asset be transferred to the buyer? So now we're going to talk about the unrestricted use of the assets and restricted use of assets. So first, anything that you own, that you have the unrestricted rights to, you can use for all Or any of those five buckets of tools, marketing, client work products and exit.

Erin Austin: So let's review what you own that you have unrestricted rights to. So you own anything that is original. So it wasn't based on somebody else's work and was created outside of a client engagement. We'll talk about the client engagement later. That's going to be restricted use. Um, so created by. Uh, something that's original created outside of a client engagement so that those could be created by you, of course, by your W2 employees, you automatically own by law, the things that are created by your W2 employees in the course of their employment.

Erin Austin: So that would be whether or not they've signed an employment agreement, and then by a contractor, but the contractor must have signed a services agreement that grant you all the rights and the deliverables. And there is some magic language that you need in your services agreement, um, work for hire language, assignment of all rights to the extent it's not work for hire.

Erin Austin: And to the extent that it is a license materials, sometimes contractors have their pre existing materials, then making sure that you have a license to do whatever you need to do with those deliverables. And and so, um, this is I'm reading this, I'm thinking about whether or not I've done, um, a. A episode about services agreements that I don't think I have.

Erin Austin: So I think that will be the next one. So in each instance created by you, created by your W2 employees, created by a contractor who signed a services agreement that granted you all rights in the deliverables, you are the copyright owner and you have unrestricted rights to use it for all purposes, tools, marketing, client work, products, and exit.

Erin Austin: So the exception would be. If for some reason against my strongest advice, you have granted some rights to a third party, such as some restricted uses in connection. Usually this happens with non competes. So you own something you're at, you know, you know, I hate this. It's your expertise. You developed it, you own it.

Erin Austin: And then you agree to a non compete in the client agreement, which basically tells you how you can use your intellectual property asset. You wouldn't let someone tell you how you can use your car, how you can use your house. Don't let anybody tell you how you can use your IP assets. All right. Restricted use.

Erin Austin: So if you aren't the exclusive copyright owner, there are restrictions on how you can use that asset and your permitted use typically will be set forth in a written agreement, or it may be deemed through intellectual property law in the absence of an agreement. So here are sources where you do not own the copyright and how you use the IP must be determined on a case by case basis by either the contract or IP law.

Erin Austin: So those are client deliverables, whether created by you, your employees, or your contractors with a route signed agreement. Those client deliverables, the agreement will have Uh, will dictate who owns the deliverable. Typically, a client will want to own as much as they can. And if you're signing, whatever they send you without looking at it, they're going to own 100 percent of those deliverables and they might even own some of your pre existing materials as well.

Erin Austin: So you always want to make sure that you are, um, you understand what's there. Um, Your contractors without a signed agreement. I'm gonna explain why that would be restricted in a minute. And then third party materials such as those where you're the licensee, so obviously you don't own it. The Licenseor owns the ip, the licensee has permission to use the ip, and then other sources like the internet, et cetera.

Erin Austin: So going back to the client work, as you know, it was in the, uh, use category above where, when you own all of that, when you own an asset, you can use it with your clients. You have the permission to use it however you want, including with client, uh, client work, and you can grant them rights in your, the IP that you own.

Erin Austin: But it also can be a source of intellectual property. You as the expert. May be commissioned to create the asset for a client and so you are actually creating the asset. But if you have assuming that you have a sign client agreement that vests the rights in that deliverable to the client, you do not own it.

Erin Austin: And so when the services agreement says the client owns it, that. Means you don't have the rights to reuse that or use it with other clients. Um, you would need permission from the client to use any client deliverable for any other purpose. Um, often, uh, the client engagement will say that that deliverable is confidential information of the client.

Erin Austin: So you cannot use it or you cannot disclose it, um, for any other purpose. Any purpose other than connection with that engagement with that client. So you need to make sure you are aware of what your client agreements say contractor deliverables. If you hire a contractor to create deliverables for you in this instance, uh, you're the end client.

Erin Austin: Like you're the client you're, you're, you're asking it. Them to create it for you, or it could be that there are subcontractor. You have an end client and there's some piece of that engagement that you need to hire a subcontractor for what you own will depend on the existence of. And the language in the services agreement, you enter with the contractor, you know, first, you know, always, always, always have a written agreement.

Erin Austin: Now, so if you have a written agreement and it includes that very important work for hire and assignment language, then you own it. And if you it's subcontracted, then the client work rules would apply. So I'm going to explain that. So let's say you're the end client. You hire a contractor to write some copy for your website, and you have a written agreement that says everything that they write, you're going to own.

Erin Austin: So you will be the contract owner and you can do whatever. Copyright owner. And you can do whatever you want to with that website copy because you own it. You can use it in marketing materials. You can use it in your webinars. You can use it in a book that you write someday. Um, that's yours. Now let's say it's.

Erin Austin: Subcontracted. So let's say you are an advertising agency and you, um, let's say you're a web designer, you're a web designer and your, um, client also wanted you to, um, create some niche thing that needs a little bit of programming, um, to make it work. And so the client. Your client agreement says that they will own all of the deliverables and then you subcontract the programing piece to a to a subcontractor.

Erin Austin: You need to make sure that you're getting all the rights from that subcontractor via. A written agreement with the magic work for hire assignment language, and then that would flow right through you to the client. So that those rights wouldn't even stop with you. They'd flow right through you to the client.

Erin Austin: You get in trouble, of course, if you don't have that agreement with the subcontractor and the client, your client agreement says that you need to deliver 100 percent of the rights to the client, then you are in breach of your client agreement. So, again. Always be mindful of written agreements whenever intellectual property and whether or not you think of it that way or not, whenever deliverables are being created by by experts, you want to make sure that they're written agreements that tell you who owns the

Erin Austin: deliverables. So, if there is no written agreement, the contractor owns it. So, if no written agreement. The human being who creates a copywriter copyrightable material is the copyright owner, unless you know they're your employee or you have a written agreement. So that contract will own it. If you don't have a written agreement, what you would have is a non-exclusive license to use it.

Erin Austin: So that's kind of the default under IP law. And in this case, the contractor is the license or the licensors, the party who owns the IP and you are the licensee, the person who has permission to use the IP, but you are not the owner. So, because you have a not exclusive license and not ownership in that piece of IP, that means the license or.

Erin Austin: In otherwise, in other words, the contractor remains free to exploit the same intellectual property and to allow any number of other licensees to also exploit that same intellectual property. So, if you want to get exclusive rights, or you want to own it outright must be in writing. All right. The last source would be third party materials.

Erin Austin: So where might these, these come from, from your former employer? You know, a lot of us come out of corporate and we do work similar to what we were doing in house. And maybe there are some things that you created there as an employee, but as an employee, anything you create is owned by the employer. So anything you take from your former employer is owned by your former employer.

Erin Austin: We get stuff off the internet. We all do it. Um, but we got to think about how we're going to use it. All the things that we got off of the internet, you may go to a conference and they hand out these great materials. You may go to a training and you get these great materials. Those are all third party materials.

Erin Austin: You do not own those. And so you need to understand what rights you have to use them. So, uh, we talked about the implied license in the contract of context when you don't have a written agreement, but we also have explicit written licenses. You know, we enter these all the time, you know, with your software that you use your website host, you know, maybe you, um.

Erin Austin: Have a certification, typically certifications will give you a license to use some of their materials with your clients. Like, maybe there's an assessment tool that you get to use or evaluation tool that you get to use and that is owned by the certifying entity and you as a participant have a license to use it, but that license Usually, we'll have restrictions on how you can use it.

Erin Austin: Um, it will be a non exclusive license. Typically, these are all typical. Obviously, every license is different because there are contracts and every contract is different. But typically, uh, under these circumstances, you will have a non exclusive license and that you will not have the right to sub license it.

Erin Austin: And so, um, if you, you know, get that valuation tool from, you know, you are certified, uh, by, um, Institute of management consultants, and you have a CMC, and they provide tools for you. That does not mean that you can then use those tools to create. Other materials that you're going to sell to 3rd parties are licensed to 3rd parties.

Erin Austin: So those 3rd party materials, whether, you know, how you can use them. Typically, the use is restricted. You will typically, um, and so you will have to look on a case by case basis. How you can use them in those 5 buckets? Um, can you use it as a tool? I mean, maybe it's, it's licensed to you as a tool. So obviously you can use it.

Erin Austin: Can you use it in your marketing if it's something that is for internal use only, and they don't give you permission to use it in your marketing materials. Like, you can't say I, I use this. Um, you can't put it in your marketing that you are using this tool that you got from a 3rd party, um, then you can't use it in your marketing.

Erin Austin: Um, typically you can use tools in. Client work, but, um, there may be restrictions if your client wants to own the deliverable and you're using something that you only have a non exclusive license to, then that would be problematic. I mean, that would be the case. Let's say you are creating a website for someone and you put photographs on there that you don't own the rights to, um, or that there aren't, you can't get it.

Erin Austin: You know, a perpetual rights to that is something that only, you know, you can only use for 1 year for and renewing license fee. Your client's going to be very unhappy that it has, um, you've delivered this work that it wanted to own a 100%, but you have these short term license materials in there. Um, typically you can't use license materials and products.

Erin Austin: You could typically products would only be things that you own. It's possible that you have the right to, um, sub license. Some of those things. Let's say you would pay. Um, let's say you are creating a book, for instance, and you have. Uh, gotten permission from a third party to use a graphic that they have that has, you know, data and material data on it.

Erin Austin: And you want to include that in your book and you would go to them and get permission. That's what a license is. I want permission to use this graphic in my book. It may or may not be for a fee. Typically it would be for a fee if you're making money. They should make money. Um, but, uh, in any case that you would need to make sure that you have the rights to that.

Erin Austin: That's not something you can do without getting permission. And then with the exit, it would depend again on the nature of the permission to use it. Some things are transferable. Like, if you have a software license, you know, that you typically, you can assign it to the acquirer of your entire business, but there are other things where someone's providing.

Erin Austin: Um, something that is specific to you, and they would not want you to be able to assign rights in that in that item to an acquirer. So that really again, um, the value would be in the things that. Can be transferred to a buyer and those would be the things typically that you own or things that you have a license that is transferable.

Erin Austin: So, but that would be restricted and you want to make sure that you, you understand the uses there. So, this brings us to fair use. I'm not going to spend a ton of time on this because fair use. Very simply, it is a defense. It is not an affirmative right to use somebody else's I. P. A license is an affirmative right to use an I.

Erin Austin: P. I license or owner of the I. P. give you permission licensee to use this piece of this asset. Fair use would be, um. If it is deemed to be fair use after an analysis by a federal court that it's fair use, then it would not be considered. An infringement. Well, that means you have to go through the process, you know, if you have an objection, you might use something for fair use and the copyright owner goes, yeah, it looks fair to me and they don't they're fine with it.

Erin Austin: They're not offended by it. And it's fine. It's fair use. But if they are the only way to, um, uh, You know, say that Nope, it's not infringement. It was fair use. Well, that requires a, a federal law, a lawsuit in federal court and nobody wants to do that. So, um, you know, I would be very, very careful about relying on fair use.

Erin Austin: Um, you know, obviously things like. The nature of the work that you're used to. It's something that's kind of historic facts, you know, is less offensive than something that's highly creative. I'm using something that you're taking a teeny tiny portion of is less offensive than using something. That's like the most recognizable part of the work.

Erin Austin: Um, if you do something that would effectively replace, um, the. Original owners work, like, you know, creating a summary of a book. Um, then, you know, now they don't have to buy the owner's book. Um, that's obviously not going to be fair use. And so just so we're clear, what will never be considered fair use is.

Erin Austin: Providing credit to the source. It's that is not the same thing as permission. And so, you know, giving the owner a link or an acknowledgement doesn't matter. That would still be infringement if it's not a fair use and any disclaimers that you didn't intend to commit copyright infringement. Except you did.

Erin Austin: So if you have any questions about whether you can use somebody else's work, book and Aaron book and ask Aaron call. I look forward to hearing from you. Thanks guys.