Agencies Look to Defend Intellectual Property Rights in Reviews

4A's Missive Sent to Search Consultants Argues for New Agreements in New-Business Pitch Contracts

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NEW YORK (AdAge.com) -- In a move that demonstrates a hardened stance on the issue of intellectual property, the 4A's is urging agency search consultants to adopt contract language that reflects advertising agencies' right to retain creative ideas presented during new-business pitches.

In a letter sent last night to some 30 major industry consultants -- which marketers hire to help find and evaluate prospective agencies to handle their ad business -- the trade organization wrote: "Members of the 4A's new business committees would like to encourage you to consider including a stipulation in all of your agency search agreements that specifies the rights to intellectual property created by agencies during the review process remain the property of the agency until the marketer either hires the agency to execute the work or the parties agree to a commercially equitable payment for the assignment of usage rights."

The 4A's letter was endorsed by nearly 50 Madison Avenue standouts, such as JWT, Anomaly and R/GA, which sit on the 4A's new-business committee.

4As letterClick for PDF

The intellectual property debate is hardly a new one, but the trade group contends it is growing into a bigger problem, and more ad agencies are griping about it. As the recession squeezes agencies' margins -- and as more marketers are turning to their procurement departments to try to put a specific price on marketing costs -- Madison Avenue shops are trying to protect their piece of the pie. "There are more reviews that request some form of speculative agency work," according to the letter. "Because of the economics associated with changing industry dynamics, the importance of equitably structuring agency-developed new-business IP has become more compelling."

The 4A's says the issue has taken on increasing importance as the economy picks up for some marketers. "Since Labor Day, the level of review activity has picked up noticeably, and more and more reviews are requesting some form of speculative thinking or work," said Tom Finneran, executive VP-agency management services at the 4A's. "That may well be a byproduct of marketers and CMOs being under so much pressure for ideas that can move the needle now."

Rising tension
According to Mr. Finneran, the 4A's has seen a spike in recent months in agencies complaining about clients' desire to own ideas and work shown during the new-business process. "The nature of the complaints is that [requests for proposals] will come out, and, buried in the 14th paragraph of a [non-disclosure agreement], is a paragraph or sentence that says, 'Oh by the way, and in addition to protecting the confidentiality of our agreement, we the client want to own all ideas and work product that comes out of the review process.'"

Based on a number of search consultants Ad Age spoke to about the letter, the agency search community seems to generally agree with the sentiment outlined by the 4A's. However, they don't necessarily agree there's been a rise in advertisers asking to own ideas presented by agencies during pitches -- and consultants don't think the burden should fall on them to regulate the intellectual property issue.

"We totally agree with the 4A's stance on this, and we've always adhered to the same guidelines they are articulating," said David Beals, president-CEO at consultancy Jones Lundin Beals. "Having said that, we've not had a client in the 10 years I've owned this company that has disputed this take. We don't run into clients that unfairly ask for ownership ideas."

Additionally, said Mr. Beals, "What we don't agree with is the 4A's asking us to exercise some type of contractual formal agreements with our clients. ... This is a legitimate issue, but it's between the agency and the client prospect, not something to be asking the consultants to do. The agency should be the one to make the stand that 'No, we're not going to participate if they ask us to give the ideas away for free.'"

Consultants report that if marketers do request to own ideas, they'll be willing to pay for them. The biggest reason why advertisers ask to own ideas at all? They are fearful of being sued by a non-winning agency that happens to produce a similar idea to the winning one, consultants say.

Uncomfortable push
"It isn't because clients are assholes," said Hasan Ramusevic, owner of Hasan & Co. in Raleigh, N.C. "There are a lot of legal factors to consider."

Mr. Ramusevic said that about a year ago he voluntarily altered language in contract agreements to reflect that, in a pitch scenario, agencies should retain ownership of ideas if they are not the winning agency. Still, "I don't know how I feel about the 4A's pushing that on us," he said.

"I think that this has been an issue that's ongoing, not a rise in it," Mr. Ramusevic said. "The difference is that the agencies didn't fight back on the issue as much as they are today. There's a heightened awareness, and agencies are more willing to speak up about it."

Joanne Davis, head of Joanne Davis Consulting in New York, addresses the issue by requiring agencies to sign a letter acknowledging that, in the "likely situation" where multiple agencies submit similar ideas based on the same brief, or ideas similar to ones the client has developed internally, they will not seek to enforce copyright protection.

Ms. Davis said the problem manifests itself during pitches more often than one would think, recalling a situation a few years ago when two finalists in a pitch for a retailer presented the same tagline.

Still, Ms. Davis thinks the fact that 46 of the 55 agencies on the 4A's new-business committee endorsed the letter sent last night is noteworthy. "I was impressed with the number of agencies that signed it -- it shows you it's a widespread issue that affects large agencies, independent agencies, holding company agencies ... it's not just a few agencies who feel that they've been wronged complaining."

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