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If a client does not pay, do you own?

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Bryce Leverich
If a client does not pay, do you own?
on Sep 22, 2008 at 7:24:30 pm

Hello,
I am facing a client possibly not paying for services rendered. The deal is that I quoted the client a price, performed the production (Shot/Edited/Authored), now I am finding it very difficult to collect on the invoice. I believe that they are not paying because the pre-sales of their product have gone nowhere. Pretty much they are not planning on making any money on the product, and I think they are passing that bit of bad luck on to me.

My question is this. If the client outright refuses to pay for the product, do I essentially own that video? I paid for the production, I paid for my company to travel to shoot, and my company spent the time editing and authoring the dvd.

If my client refuses to pay, can I legally take ownership of the product, allowing my company to sell it as our own, to recoup production loses? This was not a cheap production, and we are out a good chunk of change.

I know you should always at least get half up front, but this is someone that I have known for quite some time. I really did not see this one coming... You live you learn, I guess.

Thanks



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walter biscardi
Re: If a client does not pay, do you own?
on Sep 22, 2008 at 8:14:10 pm

[Bryce Leverich] "If my client refuses to pay, can I legally take ownership of the product, allowing my company to sell it as our own, to recoup production loses? This was not a cheap production, and we are out a good chunk of change. "

Check with a good lawyer to verify, but I believe the answer is yes, you do own the footage and everything about that production. You have not been paid for your services so you have every right to retain that footage and use it as you see fit.

Again, check with a good lawyer to verify this, but if you're not paid, they have broken the contract and relinquish all ownership of the material.



Walter Biscardi, Jr.
Biscardi Creative Media
HD and SD Production for Broadcast and Independent Productions.

STOP STARING AND START GRADING WITH APPLE COLOR Apple Color Training DVD available now!
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David Roth Weiss
Re: If a client does not pay, do you own?
on Sep 22, 2008 at 8:25:13 pm

If the client does not pay you are entitled to claim a lien on their property that is in your possesion, but nothing is "automatic." Each jurisdiction has its own laws and regulations on these matters.

As has been mentioned here before, this type of lien is commonly called "a mechanic's lien," as mechanics do this all the time when customers cannot pay and do not bother to pickup their cars. Do a Google search and you can read all about it.

The bottom line is, you are probably best off taking them to small claims court, or at least threatening to do so. First, send the client a demand note, and give them a chance to make good within a reasonable specified timeframe, such as 10-days. Let them know that you will file in small claims court after that time has expired, and then wait for their response. If they fail to pay go file. The courts will side with you every time.



David Roth Weiss
Director/Editor
David Weiss Productions, Inc.
Los Angeles

POST-PRODUCTION WITHOUT THE USUAL INSANITY ™


A forum host of Creative COW's Apple Final Cut Pro, Business & Marketing, and Indie Film & Documentary forums.


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Mark Suszko
Re: If a client does not pay, do you own?
on Sep 22, 2008 at 8:42:55 pm

Not a lawyer (as mom constantly reminds me).

I think yes, you own it until they pay for it, however, it is less clear that you can do anything WITH it. I hesitate to point you to it, just because it generated a lot of heat, but this is covered in some length both pro and con in the thread about Walmart and their former video production company, Flagler. Over-compressed Summary: Flagler seems to own the footage absent a written document saying otherwise, but Walmart can make a strong case several ways that Flagler is not allowed to re-sell the footage to documentary makers and the press as he's tried to do.

Be aware, there is what is legal to do and what is ethical to do, and these are not always the same thing.

In your case your strongest position is that they might be able to recover raw footage they brought to you, but any elements that were created by you for them, you can hold until they pay for it. If they need to see samples of anything done, be sure to watermark them severely with your logo bug and time code window burns so as to make them useless to pirate.



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walter biscardi
Re: If a client does not pay, do you own?
on Sep 22, 2008 at 8:48:33 pm

[Mark Suszko] "Over-compressed Summary: Flagler seems to own the footage absent a written document saying otherwise, but Walmart can make a strong case several ways that Flagler is not allowed to re-sell the footage to documentary makers and the press as he's tried to do.

Be aware, there is what is legal to do and what is ethical to do, and these are not always the same thing. "


The big difference between this thread question and the Flagler case is that Flagler was paid for all of their work. They were reacting to Wal-Mart dumping them as a video production company and decided to try and make some money off their footage. There's a tremendous example of an un-ethical thing to do.

But excellent to point out that sorry saga, it's an educational lesson on what not to do if you want to add and maintain clients.



Walter Biscardi, Jr.
Biscardi Creative Media
HD and SD Production for Broadcast and Independent Productions.

STOP STARING AND START GRADING WITH APPLE COLOR Apple Color Training DVD available now!
Read my Blog!
View Walter Biscardi's profile on LinkedIn


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Bryce Leverich
Re: If a client does not pay, do you own?
on Sep 22, 2008 at 9:08:31 pm

First, thanks for all of your advice. I do have an attorney that I am working with, and I will run it by them asap.

As far as them having raw footage that was brought to me, it doesn't exist. We shot all of the raw footage, I am looking at the tapes right now :)

Our production company handled this project from pre-production through completion. The video is watermarked by the music we added to the production. The music is a scratch track that has not yet been paid for, so the music itself is watermarked. I will send them a new copy if they decide to pay for the music, but this copy WILL contain a watermark and TC burn.

What we have been paid for so far is half of a shooting day rate. They still owe us for the other half of the shooting, the editing, and the DVD authoring. If they have partially paid, as mention in the previous sentence, do they own any of it?

The thing that really gets me on this project is that it was done on a VERY discounted rate. Over 60% off what we normally do the productions for.

I will talk to my attorney and let you know of any real legal advice that comes out of it. Maybe it will help someone else in the future.

Thanks again.


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David Roth Weiss
Re: If a client does not pay, do you own?
on Sep 22, 2008 at 9:30:20 pm

[Bryce Leverich] "The thing that really gets me on this project is that it was done on a VERY discounted rate. Over 60% off what we normally do the productions for."

Of course, those are the clients most likely to burn you. That's a lesson that everyone learns eventually.

[Bryce Leverich] "I will talk to my attorney and let you know of any real legal advice that comes out of it. Maybe it will help someone else in the future."

Typically, attorney's charge for every single conceivable thing they can, including $10 Xeroxes etc., etc., etc. While big issues with conceivably big liabilities attached are well worth a lawyer's fee, anything under 10 or $15,000 is a small claim and you should really learn to deal with yourself. Remember, it's not just about winning, it's about how much you keep in your pocket. I've never lost a small claims case against a deadbeat client yet, and never had to consult a lawyer. Just watch Judge Judy if you need a tutorial, she'll tell you exactly what to do and what to avoid.

David Roth Weiss
Director/Editor
David Weiss Productions, Inc.
Los Angeles

POST-PRODUCTION WITHOUT THE USUAL INSANITY ™


A forum host of Creative COW's Apple Final Cut Pro, Business & Marketing, and Indie Film & Documentary forums.


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Rick Dolishny
Re: If a client does not pay, do you own?
on Sep 24, 2008 at 12:00:38 am

The only thing I would say is to watch out if you don't have physical possession of the releases for talent. It could be argued you should have location releases as well, so it's kinda tough.

As an event videographer I have been stiffed once, and have some awesome party footage to show for it, but without a release I'm not going to use the footage ... just yet anyway.

---
Rick Dolishny
Discrete Editors COW Leader
http://www.thecreativeprocess.ca


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Michael Pruitt-Bruun
Re: If a client does not pay, do you own?
on Sep 26, 2008 at 4:54:00 pm

i agree with Rick's point. i have been in a situation where i had tapes and there was a dispute over payment. basically the client was disputing a contractual obligation to me for shooting. my argument was, if you have not contracted my services, these 20 hours of footage must belong to me. the only basis for them claiming ownership of material i produced would have to be contractual.

however, the shooting had not been completed, and in a gesture of trust and good faith i handed over the tapes and continued to shoot in anticipation of a resolution. while i could have held the tapes, i had no releases and probably could not have even used the footage for my reel.

but handing over the tapes was a mistake. i got stiffed.

you may not be able to use the material, but once you give it up, you're done.



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John Baumchen
Re: If a client does not pay, do you own?
on Sep 26, 2008 at 8:12:44 pm

Unless you have a written argeement that specifically states that the work you do is a 'work for hire', then you own all rights to the footage. Even if the client pays, you still own it. I used to give my clients a license to the material with every paid invoice. If they wanted a work for hire project, my rates tripled.

I don't understand why people on this forum keep thinking that the client owns anything without a specific clause in the contract stating as much. The copyright law in the USA specifically addresses 'works for hire' and how it affects ownership.

Read all about it here:
http://www.copyright.gov/circs/circ09.pdf


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Chris Blair
Re: If a client does not pay, do you own?
on Sep 26, 2008 at 10:23:46 pm

I'll add that video and film footage is covered under the same intellectual property laws that cover still photographers. It doesn't matter if you charge for the tape stock either, as I've read on this forum from time to time.

Photographers charge for their film or digital storage disks and the ownership of their photographs doesn't magically accede to the client. That footage and/or the projects that result from it are the only bargaining chip most companies have when they can't get paid for their work.

We're going through this very thing right now with a large client. It wasn't until we stopped all work, demanded payment, and withheld delivery of projects that we are finally getting payments from the client.

And guess what was the FIRST thing they did after paying us something. YOU GUESSED IT...they requested all their footage. Since they still haven't paid us in full, we politely told them we couldn't do that until all their bills are paid. In this case, if they pay everything, we'll gladly give them the footage, even though legally we could charge them a reasonable buyout fee.

I've seen people on this forum say they believe clients own the footage. This just isn't true. The client owns the usage rights to what's shot on those tapes specifically for the project it was shot for, but in the absence of an agreement stating otherwise, the production company owns the tape stock and footage. Naturally the production company cannot use that footage for anything without consent from the client. But likewise, the client cannot demand the tapes without expecting to pay some sort of license or buyout fee for using them (and the footage on them) in new projects. This is just like a still photographer, who has the right to charge for additional usage of his photographs each and every time they're used for a new project.

We've consulted with legal folks on this more than once, as this happened to us with a large Casino that was bought out a couple of years ago. The first thing the new owners had their marketing people do was call us and demand all their footage. We said "OK," but here's the buyout fee to get it. It was a VERY reasonable amount that pretty much just covered the cost to box and ship the stuff (probably 50 tapes) plus about $6000 extra as compensation for the footage. They were pissed, saying they owned the footage and we'd be hearing from their attorneys. Well guess what. Their attorneys never called, and we're still doing business with the Casino because their marketing people like what we turn out and enjoy working with us, and they realized it would cost them 20 times more than $6000 to reshoot all the stuff we had.





Chris Blair
Magnetic Image, Inc.
Evansville, IN
http://www.videomi.com


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David Roth Weiss
Re: If a client does not pay, do you own?
on Sep 27, 2008 at 5:30:08 am

[Chris Blair] "I'll add that video and film footage is covered under the same intellectual property laws that cover still photographers."

Chris,

That's an oversimplification. Intellectual property law is not so simple or clear cut that one rule applies to all cases simply because photography is involved.

I was discussing this very issue, in fact, this very thread earlier in the day with an IP attorney who'll be joining Franklin McMahon and myself on an upcoming Cow Business & Marketing podcast, on which we'll discuss this and similar "creative rights" issues. You should tune in to the podcast. I think you'll find it quite informative and perhaps you won't be quite as certain about what you've written above.



David Roth Weiss
Director/Editor
David Weiss Productions, Inc.
Los Angeles

POST-PRODUCTION WITHOUT THE USUAL INSANITY ™


A forum host of Creative COW's Apple Final Cut Pro, Business & Marketing, and Indie Film & Documentary forums.


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Chris Blair
Re: If a client does not pay, do you own?
on Sep 28, 2008 at 12:09:02 am

David Roth Weiss You should tune in to the podcast. I think you'll find it quite informative and perhaps you won't be quite as certain about what you've written above.

I realize there are many complications that could be involved in these issues, and it's also important to point out that attorneys that handle intellectual property cases don't even agree on these issues.

We consulted with an attorney on the Casino issue and in our case...in the absence of an agreement or contract stating otherwise, we owned the tapes and footage, they owned what they contracted us to do, which was create television commercials and marketing videos.

Naturally, we could not use that footage for other purposes, but we also were not obligated to turn over the raw footage for them to take to other production companies to create new projects.

Here's the analogy. A large audio sound facility mixes a complicated sound track for a corporate marketing video. It includes dialogue shot on location, voice-over, licensed music, and hundreds of sound effects provided by the sound facility. Does the client own all of that raw material? Well heck no! They own the finished, edited sound track. The sound facility owns all the raw elements that they created or provided.

When we shoot footage for a client, we don't just set up a camera, point it and hit "record." There's a ton of conceptualizing, pre-production, and professional input that goes into creating those images. We also create multi-layered motion graphics for these clients. Do they own all the elements (images, project files etc.) that go into producing the final animation? I think not.

Each case can be different depending on the circumstances of how the project is structured. But the key issue here is "in the absence of an agreement that stipulates ownership of the raw footage."



Chris Blair
Magnetic Image, Inc.
Evansville, IN
http://www.videomi.com


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Chris Blair
Re: If a client does not pay, do you own?
on Sep 28, 2008 at 1:32:41 am

I actually found an explanation our attorney sent us to answer our questions about ownership of raw footage we've shot for clients. They excerpted it directly from U.S. copyright law, which most multimedia works fall under when dealing with intellectual property:

You should not assume that you own the copyright if you pay an independent contractor to create the work (or part of it). In fact, generally the copyright in a work is owned by the individual who creates the work, except for full-time employees working within the scope of their employment ("work for hire") and copyrights which are assigned in writing.

The copyright law also includes another form of "work for hire," it applies only to certain types of works which are specially commissioned works. These works include audiovisual works, which will include most multimedia projects. In order to qualify the work as a "specially commissioned" work for hire, the creator must sign a written agreement stating that it is a "work for hire" prior to commencing development of the product

Our attorneys breakdown of this was that if a client hires a production company to create a video without a contract specifying ownership of the project, or a written agreement that it's "work for hire," the production company legally owns the copyright to NOT ONLY the raw materials, but also the finished work!

We also own a great book on intellectual property law for multimedia and it states the EXACT same thing....word for word in it's text. It's called

Intellectual Property Law Primer
for Multimedia Developers

Copyright 1994 by J. Dianne Brinson and Mark F. Radcliffe


I had forgotten our attorney's advised us that we also owned the finished work as we were only concerned about the raw tapes.

So I'd be very interested to hear other Intellectual Property Lawyers explanation of how the reverse could be true, when it's written in black and white in the law itself.



Chris Blair
Magnetic Image, Inc.
Evansville, IN
http://www.videomi.com


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John Baumchen
Re: If a client does not pay, do you own?
on Sep 30, 2008 at 1:29:00 pm

"Naturally, we could not use that footage for other purposes, "

If you own the copyright, you can use the footage in other projects. You can even sell the footage to their competitor if it came about, kiss the original client good bye though. I would think the only limiting factors would be how the model release is worded if you had talent on screen.

I used to use a model release that essentially gave me unlimited use. Mind you, I wasn't using union actors either.





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Chris Blair
Re: If a client does not pay, do you own?
on Oct 1, 2008 at 2:13:22 am

Yeah but I wouldn't do that to a client. The only reason I'd want ownwership is to insure we get paid and so that the client doesn't take our ideas to another production company to emulate it for a cheaper rate.

We've actually had that happen. A regional ad agency had us shoot for several days for a client. Then had us design a graphics package and cut the initial spots for a TV campaign. They requested the raw foogage and said it was "standard practice."

Being eager, stupid and naive, we gave it to them. A month later, they're editing with a competitor that charges about half what we charge, copying our graphic look, After Effects comps, using our footage etc. It sucked. This competitor couldn't have designed the look and feel of the spots in a hundred years, but here they were reaping the benefits of a long-term campaign based on our designs, photography and concepts. They went so far as to submit it for Addy Awards (which it won), and took credit for it!



Chris Blair
Magnetic Image, Inc.
Evansville, IN
http://www.videomi.com


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Michael Hancock
Re: If a client does not pay, do you own?
on Oct 1, 2008 at 5:19:13 pm

[Chris Blair] "Being eager, stupid and naive, we gave it to them. A month later, they're editing with a competitor that charges about half what we charge, copying our graphic look, After Effects comps, using our footage etc. It sucked. This competitor couldn't have designed the look and feel of the spots in a hundred years, but here they were reaping the benefits of a long-term campaign based on our designs, photography and concepts. They went so far as to submit it for Addy Awards (which it won), and took credit for it!"

Was this recently, or when you first started your business?


Michael.



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Chris Blair
Re: If a client does not pay, do you own?
on Oct 3, 2008 at 9:33:27 pm

This was over a decade ago when we were eager for business and would do just about any job and agree to just about anything clients wanted.



Chris Blair
Magnetic Image, Inc.
Evansville, IN
http://www.videomi.com


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