Have you ever had this conversation with a client?

Client: “Looks great, just go ahead and send over the Photoshop files and I will send out a check.”
Designer: “But…the source files are mine. You only paid for the finished product.”
Client: “What are you talking about? We paid for it, so we own it! It’s simple. Send them over or the job isn’t complete and I’m not paying.”

It is not unusual for a designer and his or her client to get into a dispute over who owns and can use the source files generated during a project. By source files, I am talking about Photoshop files, Illustrator files and other intermediate items that may have been generated on the way to finished product. A client will often believe that since they paid for the work, they own the source files. A designer will generally believe that the source files are theirs. I have heard of clients demanding source files from designers and then designers feeling as if they had to give up because they were unsure of what exactly had to be delivered or what their legal rights are.

Conflicts arise from divergent assumptions. Neither parties’ assumption is necessarily off-base, but we can head off conflict by understanding the issues and discussing them with our clients before they become a problem.

The designer’s intellectual property rights
You know how they describe property rights in law school? As a bundle of sticks. I don’t actually remember where this analogy comes from, but ask any lawyer and they will know it. But the point of this analogy is that as someone who “owns” something you actually “own” a bundle of rights that you are free to separate and dispose of in many different ways. As the creator of intellectual property (which, as a designer or other creative professional, you typically are), the property rights are yours to begin with (unless you are working as an employee or under the limited situations in which a work for hire agreement applies).

So as the owner of a bundle of sticks, you can decide which sticks you want to sell, and on what terms. The bundle of sticks contains anything that the designer made during the course of the project. This is the basic assumption that we can work from in this discussion. And based on this assumption, we can sort of see how a problem might arise. Look at like this: the client gave you money and now assumes that since “they paid for it, they own it”. However it is not always clear what “it” happens to be.

The designer likely assumed that “it” meant only the finished product. So now we have a potential conflict because the designer only intended to sell the “finished product” stick from the bundle.

As the creator of the source files, you are the owner of those files. Aside from some exceptions, you are not required to part with them. You can keep them to yourself, or you can sell them at a price that you deem acceptable.

But let’s be practical about the whole thing
Now that we have a sense of the legal rights, let’s look at things from a more practical perspective. Even if you are right from a legal standpoint, you want to keep your client happy so that they give you more work and refer you to others. The best way to protect your legal rights while managing your clients’ expectations is to discuss things upfront and as early on in the project as you can.

At the very least, the designer should state clearly what he or she is selling to the client. What sticks are coming out of that bundle for the price that the client paid? This means having a conversation where you make sure that the client knows that they are paying for a finished product – a website, a magazine layout, a poster, etc. Your goal is to disabuse them (gently) of any assumptions that could later lead to conflict.

Naturally, you will also want to get things down in writing. That means that your contract should be clear about what the client is getting for the price that they paid. Many creative service contracts define the deliverables as well as intermediate products or “design tools” (parts of a design that you will use across multiple projects). Making this distinction can help prevent later misunderstandings.

But say that you haven’t gotten anything in writing and you haven’t discussed this with a client upfront. What then? In most cases you don’t have to deliver the source files if you don’t want to. Whether or not you deliver the files depends on your business judgment, which will be informed by your relationship with the client and whether or not they have offered you sufficient compensation in exchange.

Why would the client want source files anyways?
“Why would the client want source files, anyways?” you may be asking yourself. There are a number of reasons, some nefarious and some innocent.

An innocent reason might be that they are worried about being able to make legitimate changes down the road and not being able to get the original designer or creator to do them. For instance, perhaps you have created a template for a monthly ad that they will want to change copy and imagery on every time they run. They may be willing and able to pay you to make those changes, but they might also be concerned about their ability to function should you become unavailable for some reason. Having the source files might be a way for them to feel secure that they can hire a different designer to make those modifications.

A nefarious reason might be that they want to take your design for the ad template apart and use the elements for their website or marketing brochures in an effort to avoid paying a designer to do those things. They paid the ad template price and are hoping to reuse the same elements in a misguided attempt to save money. And they are probably going to have their 16 year old nephew with a cracked version of Photoshop do the damage.

You may not know your client’s motivations, but I wanted to highlight these possibilities to help you come to a better understanding with your client by exploring their concerns. If you do feel the need to sell your source files to a client, you might want to make an agreement with them that they are only to use them for specified purposes. That they can use them to update their monthly ad, but they cannot use them in a new product. Doing the latter could amount to breach of contract or copyright infringement.

No matter what, being open to understanding your client’s concerns might present an opportunity to find a creative solution to your disagreement.

Conclusion
Ultimately, the choice belongs to the designer as to whether or not she will part with the valuable source files created during a project. Designers begin with a fairly strong legal position in a source file dispute, but this position would do well to be tempered with attention to your relationship with the client and with your overall approach to business. And lastly, your best friends in this issue are upfront, frank discussion with your client and a well-written contract.

About Jonathan Tobin
Jonathan Tobin is a California attorney and co-founder of Semi-Aware, which helps creative professionals use the law to do better work, make more money and keep clients happy. In his legal practice he works with creators and creative professionals and can be found at Counsel for Creators.

This article is provided as general legal information and is not intended to form an attorney-client relationship nor is it meant to be a substitute for legal advice. If you believe you have a specific legal problem, seek an attorney in your jurisdiction. Use of this information is solely at your own risk. You probably knew all of this, but I have to be sure.