Fight for your rights

Being clued up on the legal issues affecting a freelancer is as important as all the ideas, technical skills and creativity needed to be successful. Knowledge of a few key legal principles will make sure you get the most from your creativity and avoid being exploited.

Most of the problems faced by freelancers can be solved by having your own contract and knowing what to watch out for in clients' contracts, which often don't take the creator's interests into consideration. It can be tough to negotiate your terms with clients, especially when you desperately need the work and are competing with many other designers, some of whom don't seem to care what terms they work under. However, it's possible to protect your interests: you just need to know what your rights are, and how to look after them.

Nicolette Hamilton has advised on many copyright and legal queries for the AOI. She's worked for the Intellectual Property Office and now has her own independent illustration advice service. Here are her expert tips on protecting your rights.

Tip 1 Protecting copyright
Copyright is literally the right to copy and reproduce a given work in any way or form whatsoever. In order for a work to be afforded copyright, it has to be original. The creator is the first owner of copyright from the moment they make their mark, and this lasts until 70 years after their death. Copyright is an intellectual property that can be bought, sold and bequeathed, and is separate from the original work itself. It's possible to own one without the other.

Copyright is recognised in law for its significant monetary value, and protects the interests of the owner from unauthorised uses. The best way to protect this asset is to assert copyright ownership with a declaration such as 'Copyright of [name] all rights reserved' on your website, promotional material and samples sent to clients.

"Being ripped off is like being stolen from," says illustrator Jon Burgerman. "Last year I had three instances of large companies ripping off my work. It's a real pain as you have to get lawyers involved. If someone wants to use my work they should just email or call me. In the end, it would be cheaper for everyone involved and save a lot of time."

Tip 2 Who owns the copyright?
Freelancers always own the copyright in their work. If you're on the payroll or work at a client's premises, then the client owns the copyright unless otherwise agreed. In the USA, clients can own the copyright of freelance commissions in any contract that uses the words 'work for hire'. Try to avoid such contracts, or ask for the term to be struck out of the agreement. Work for hire is not legal in the UK.

Tip 3 Clients don't need to own copyright
Generally, clients only need an image for a small fraction of its potential uses. By acquiring the copyright, clients prevent the creator from further exploiting their own work. Only the copyright holder can claim from collective licensing schemes such as DACS Pay Back and DACS Resale Right and Public Lending Right. Should the client wish to fully exploit the image's maximum potential uses, then a licence for these uses can be granted for an appropriate fee. Once copyright has been sold, no further income can be earned from that image, nor can you use it for your own website. Words to watch out for that are different ways of acquiring copyright are 'assignment' and 'all rights'. Some clients think a 'buyout' is copyright but it's not, so check with the client what they want, as a buyout needs to have a clear definition.

Tip 4 Don't waive moral rights
Moral rights include the right of paternity (the right to a credit) and the right of integrity (no changes to your work without your permission, or using your image in a derogatory way). Again, you cannot claim collective licensing without a credit. Quite often contracts require illustrators to relinquish their moral rights, but ask for a clause where the publisher says they will endeavour to give you a credit. If you definitely want to be credited, don't sign such a contract because they're not legally obliged to.

An illustrator I know with a very successful book was unable to claim a PLR payment because the client forgot to credit the illustrator in the publication. Sometimes a credit is not always appropriate, for example in advertising, but certainly in editorial or publishing a credit should always be given.

Tip 5 Formal and informal contracts
The legal definition of a contract is an offer, a consideration (how much money or goods or services in lieu of payment) and an acceptance. Once these are in place, there's a contract. Contracts can take many forms, such as the formal contract set out in a legally binding document, or an informal contract - for example, a verbal agreement or the exchange of a few emails.

Freelancers should have their own terms and conditions to send upon accepting every commission. This will ensure that the terms under which you work are in your interests and not detrimental to your livelihood. When things go wrong you'll have legal protection, as not all rights are automatic and have to be asserted in order to be legally binding. With a document stating your terms, everything is clear to the client and you won't be in any danger of working under implied terms.

Tip 6 Implied terms
Without a contract you can find yourself in a sticky situation quite easily. If you were given a commission and you didn't provide your own terms and conditions, or get them from the client, and went ahead with the job, legally you would be deemed to have accepted whatever terms they usually operate under - however unfair they may be - without the opportunity to object.

Similarly, if you received a contract and didn't object to it, you would be deemed to have accepted the terms even if you didn't sign. You must also agree a fee for the job. Without negotiating a fee legally, you're agreeing to the client's usual rate, which could be outrageously low. Be warned: silence is not golden.

Tip 7 Previous course of trading
If you've been working for a client previously, the terms you were under in the first instance are the terms you'll work under until a new agreement is made. Sometimes illustrators sign awful contracts when starting out, then after many years of working for the same client realise that, as no new terms have been agreed since that first job, they're still assigning copyright, even though they haven't signed for each job.

Tip 8 Make sure you get paid
Have a Retention of Title (RoT) clause in your terms and conditions. This means no rights are transferred until you have received full payment. Should your client use your images without paying, you can sue for breach of copyright. This is a very useful clause when working with a third party, such as a design agency. If the client has paid the agency but the agency has not paid you because they've gone bust, then the client will have to pay you directly in order to be able to use your work. This is unfortunate for them because they're paying for the same work twice, but an offer to split the financial burden equally by accepting a 50 per cent fee would be fair. This is by no means obligatory, but may keep them sweet if you want to work for them in future. RoT is a right that you have to assert because it's not automatically granted.

Tip 9 Cancellation and rejection fees
Have a cancellation and rejection fee clause in your terms and conditions, or make sure you check the client's cancellation and rejection fees. It's usual to have 25 per cent at the signing of the contract, 50 per cent at roughs with no rights transferring and 100 per cent at final artwork. This is especially important for big jobs that you take on.

I know an illustrator who recently signed a contract for a large children's book project, but when she submitted her invoice for the $8,500 advance the client pulled the job, only offering a $500 cancellation fee for all the work done to that point. "Unfortunately, the wording of the contract meant they weren't obliged to pay anything," she says. "It caused me significant financial difficulty. The experience was doubly frustrating as I'd turned down other offers of work, one of which was quite substantial, so I would be able to meet the deadlines of this large project. I will be inspecting the wording of all future contracts with great care."

Tip 10 Royalty agreements
The usual royalty fee is five to 10 per cent of the retail price. If the client is on a tight budget and unable to offer much of a royalty, request an escalator clause where the royalty increases after a certain number of units have been sold. Make sure there's a reversion clause; this ensures the rights transfer back to you if the item goes out of print. Check you have the right to inspect the accounts. If you think you're not being paid properly, you can instruct an accountant to investigate. This is very important for lengthy licence periods as royalties can be a substantial form of income.

Try to get competing works clauses struck out or made as narrow as possible. You don't want to be tied down to one publisher, or have to ask their permission to work for anyone else. In book publishing, the last advance payment is awarded upon publication, so ensure there's a clause 'to undertake to publish within 12 months' and make sure the advance is non-refundable.

Tip 11 Warranties and indemnities
This is like insurance and guarantees that your work is original and all necessary permissions have been sorted. The client doesn't want to be financially liable for a copyright legal battle with a third party. Check carefully the wording of these clauses, and don't agree to indemnify against any 'claims' or 'alleged breaches'. You should only indemnify against a 'breach'. This is because a client faced with a claim may not bother to defend it, but settle out of court. They may look to you for payment, whether an infringement has occurred or not, and you won't have the opportunity to defend yourself. If the client is providing you with visuals or reference material, make sure they're indemnifying you in the same way.

Tip 12 Negotiating and buyout
If a client asks for assignment of copyright, state that you don't sell copyright and ask for a different contract or offer a licence. Some clients aren't sure of all the ways they'll use your work, and ask for assignment to cover future possibilities. A buyout can cover a wide variety of uses for a set period of time at a set price. This suits the client as they have the freedom to use your work in different ways. A typical buyout licence could be 'all print and web media for five years'. When granting a licence for a long period, don't forget to insert a reversion clause.

Illustrator Kate Sutton says, "I was offered a low price for a design project with complete copyright of a character, so went back with a more reasonable fee. I didn't hear back from the client and assumed they had found another illustrator, but the client had gone ahead and used my work so I was in a strong position to negotiate a better deal. We agreed on a two-year licence for the UK only. I was also able to get a higher fee for the assignment of the character."

Tip 13 Retrospective terms
Some clients issue what's known as retrospective terms - you've completed the brief and submitted your invoice, and only then do they present you with a contract to sign declaring that no payment can be made until you've signed and returned the contract. This is very unethical, especially as more often than not it's not a contract that you would ever want to sign, simply because it's so bad. You're not obliged to sign any retrospective terms in order to be paid. The client must pay you what had been agreed without you having to assign copyright or any other detrimental terms.

Tip 14 Agency agreements
Some agencies have great agreements, some poor and some don't have any at all. You should have some form of terms setting out agency fees and payment terms, promotional costs, inspection of accounts, territory of representation and a termination clause. Some termination clauses include a restrictive covenant stopping you from going to another agency or approaching former clients directly. Try not to agree to these. If the agent isn't getting you much work, you need to be free to get work yourself or with another agent.

It's usual to have a clause granting the agency permission to charge the usual commission rate on work gained through them for six months after you have left; any longer is unreasonable. Don't sign an agreement with an agent to represent you worldwide if they only have an office in one country.