Episode 80

E80: Did You Know That You Are Already Licensing Your IP to Your Clients?

We’re discussing how to spot the hidden license in your client agreements.

In this episode, Erin dives deep into the nuances of protecting your intellectual property with your clients and uncovers the hidden licenses that may exist within your client agreements. Here are 3 key takeaways from the episode:

1. Understanding the Levels of Ownership: Learn about the varying levels of ownership and permissions in copyrights under intellectual property law – from work for hire to assignment and license.

2. Granting Limited Licenses: Discover the importance of limiting the license you grant to your clients for the use of your materials, ensuring it aligns with your compensation and use parameters.

3. Protecting Your Intellectual Property: Gain insights into how to carve out your preexisting materials, clarify the exclusivity of the license, and ensure it is solely for your client's internal use.

Tune in to the full episode on the "Hourly to Exit" podcast to equip yourself with the knowledge needed to protect your intellectual property and navigate client agreements effectively. 

Don't miss out on these valuable insights!

Connect with Erin to learn how to use intellectual property to increase your income and impact. hourlytoexit.com/podcast.

Erin's LinkedIn Page: https://www.linkedin.com/in/erinaustin/

Hourly to Exit is Sponsored By:

This week’s episode of Hourly to Exit is sponsored by the NDA Navigator. Non-disclosure agreements (NDAs) are the bedrock of protecting your business's confidential information. However, facing a constant stream of NDAs can be overwhelming, especially when time and budget constraints prevent you from seeking full legal review. That's where the NDA Navigator comes to your rescue. Designed specifically for entrepreneurs, consultants, and business owners with corporate clients, the NDA Navigator is your guide to understanding, negotiating, and implementing NDAs. Empower yourself with legal insights and practical tools when you don’t have the time or funds to invest in a full legal review. Get 20% off by using the coupon code “H2E”.  You can find it at www.protectyourexpertise.com.

Think Beyond IP YouTube Page: https://www.youtube.com/channel/UCVztXnDYnZ83oIb-EGX9IGA/videos

Music credit: Yes She Can by Tiny Music

A Team Dklutr production

Transcript
Speaker:

Erin Austin: Hello,

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everyone.

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Welcome to this month's

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LinkedIn live.

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I do these every last

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Wednesday of the month,

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whether there are four

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Wednesdays or five Wednesdays

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like this month, I was

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shocked by how much time I

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had to prepare for today's

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LinkedIn live.

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And we talk about different

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topics of interest to

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experts in the areas of.

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Contracts and intellectual

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property and copyrights in

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particular.

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And so I do these are

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recorded and you can

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find them on my profile.

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at Aaron Austin and also on

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my website thing beyond.

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I.

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P.

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do sometimes release these

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as podcast episodes.

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My podcast is hourly to exit.

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and it depends on

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how clean this recording is.

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We'll see if this 1 gets

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on, or if I rerecord it

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afterwards.

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So, please do check out

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those resources as well.

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If you are listening to

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this and audio only there

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are, PowerPoint presentation

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that has slides.

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I will be talking you

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through it, but you're

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interested, then go find

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the video.

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So you can also see the

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resources for those of

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you who are here live.

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I'm happy to take your

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questions.

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I'll talk for a bit and

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then open the floor to your

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questions and you can post

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them in the comments at any

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time, as well.

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And so let's get to today's

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topic, which is spotting the

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hidden license and our client

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agreements.

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So what we're going to

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talk about is particularly

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how we protect or fail to

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protect our intellectual

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property with our clients.

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And in particular,

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with our client agreements.

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So we protect our

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intellectual property

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in 2 ways.

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There is the intellectual

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property law, which is

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the default in the U.

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S.

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and which applies when

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you don't have any contracts

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at all.

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And so I actually don't

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have a slide about what

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happens when you don't

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have contracts at all.

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So, if you have questions

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about that, then ask me

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about that when we get to the

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Q and a, and then the other

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way is with our contracts.

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So we can change the

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default through the use of

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contracts.

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You know that I like to

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talk about copyrights

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in particular because we

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are experts with corporate

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clients, the copyrighted

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works, the things like

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our trainings, our workshops,

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our PowerPoint presentations,

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our courses and books,

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those are all copyrighted

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works.

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The things that are the

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expression of our expertise.

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Those are things we

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protect with copyright.

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It's different than

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trademarks.

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I don't talk about

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trademarks because,

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that's not what provides value

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to our clients.

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stylized I.

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P logo on the corner there.

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I think it's kind of cute,

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but you get absolutely

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no value from that.

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You get the value from the

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stuff that I.

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Talk to you about and so

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we will focus on protecting

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our copyrighted works when we

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enter client agreements.

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And so intellectual

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property law, just

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briefly, under copyrights,

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the human, it always has

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to start with a human, the

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human being who creates

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something original and

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puts it in a tangible form.

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They write it down, they

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record it, photograph it.

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At the moment of creation,

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copyright protection

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attaches, and it is the human

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who creates it, who is also

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the owner, and so that is the

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default, but we can change

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that through contracts.

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And so we'll talk

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about that.

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in our client agreements

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there, we're going to talk

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about the provision

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specifically, In your client

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agreements that addresses the

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contractual provisions

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that change the default.

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And so some of the paragraph

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headings, you will

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find it under intellectual

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property is probably the

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number 1, probably 75

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percent of the paragraph

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headings will be intellectual

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property.

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but other ones might be

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deliverables or work product or

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just ownership.

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I went through, a couple

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dozen examples of client

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agreements that I've worked

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on just to see what they

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generally say.

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And so these are where you

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will look for the language

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regarding intellectual

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property rights in connection

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with the work that you do for

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your clients.

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before we get into a

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real example that we will.

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want to just talk about the

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concepts that we will find

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in a client agreement

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in that intellectual

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property provision.

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And so these are, the types

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of ownership.

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Or permissions that we have

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in copyrights under

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intellectual property law.

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So the highest level, and

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I'm going to use that term

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highest level and you'll

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see why in a minute.

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well, actually, the highest

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level isn't even on this

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slide because when we just

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do work for ourselves.

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So I sit down and I write.

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A post as Aaron Austin,

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and I am the human being

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who created it.

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So I am both the author

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and I'm also the owner.

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So I'm the creator and

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the owner.

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There's, just 1 human or entity

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involved in the creation

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of that copyrighted

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work.

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But when we are doing work with

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3rd parties, when we're

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doing client work, there's

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obviously.

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2 parties involved,

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there's, you and I as

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consultants and then there

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is our client.

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And so the top level

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of ownership is the work

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for hire.

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the, work for hire means

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there is.

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The human being who created

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it, but there's somebody

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else who is the owner.

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There's a 2nd entity who's

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the owner.

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So the, classic example is

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the employee employer

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relationship, you whether

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or not there's an agreement

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in place if I create

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something as an employee,

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and I create it in the course

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of my scope of duties.

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So I am.

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the head of H.

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R.

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and I write the employment

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guide, the employee,

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handbook I created that in

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the course of my employment.

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I am the human being who

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created it, but the author

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for copyright purposes is

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my employer and also.

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The owner, so if we were to

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look that up at the copyright

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office, there's only 1 entity

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listed their employer.

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I don't appear anywhere

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on there.

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I don't even exist for the

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purposes of the creation

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of that asset when it's not

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an employee and it's

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contractual relationship

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like.

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What we have with our

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clients, then the work for

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hire concept also exist.

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You do have to have the

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magic words work for hire.

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We'll look at that in

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a second.

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, and then when we have that

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it's in writing and it's signed

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and it's work for hire.

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The human being, the

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consultant is creating it,

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but the, client is the owner.

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And again, there's

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only, they immediately

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own it as if they created

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themselves.

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There's no separation

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there versus assignment.

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When there is an assignment,

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I have the creator.

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And that is the human, of

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course, and then I have

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the person who's going

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to own it.

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So, if we were to look

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at that in the copyright

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office, there would be the,

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author, the human, and then

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the owner would be the separate

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entity, the client.

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So, there is actually a

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transfer of rights from

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the creator to the owner,

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and that's the assignment.

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And then license is

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the last level where The

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creator and the owner is

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the same, but they're giving

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permission to the 3rd party

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to use, some or all of my

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rights that I have in

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that work.

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these are the 3 kind

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of concepts that we will

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find in.

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A client agreement, so

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let's look at a sample this

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is going to be a very typical

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provision.

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it will have this 1st

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section.

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not going to read the

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whole thing to you, but

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I'm going to point out, the

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key provisions that we are

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looking for.

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So, in this 1st paragraph,

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it is talking about the

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rights that contract or

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use the term contractor

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instead of consultant

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here is.

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Providing to the client,

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so this refers to the

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deliverables that the

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contractor is agreeing

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that all the deliverables

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are owned by the client

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and that the contractor has

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no rights in it and that it is

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a work for hire for the client.

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So that is that 1st level, as

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soon as it's created by the

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contractor, It is as if the

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client created it and they

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immediately own it and

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immediately have all the

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rights under copyright law

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in that work.

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However, the bucket of

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things that can fall under

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work for hire when it is

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a contractor relationship

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versus an employment

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relationship is actually

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defined, like, not everything

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we do qualifies as a work

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for hire when contractual

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relationship as opposed to

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an employment relationship.

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So there is a bucket of

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things that it applies to.

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if it doesn't, for some

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reason, fall into one of

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those specific buckets, a

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work for hire eligible work

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product, then the assignment

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comes in because then

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the client, okay, if it

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doesn't qualify as a work for

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hire, I still want to make

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sure I get all the rights.

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So if it's not a work

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for hire.

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Contractor assigns 100

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percent of the rights in that

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deliverable to client.

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So here, again, the client ends

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up with all of the rights, but

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it is through an assignment

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as opposed through as if

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they created it themselves.

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But still they get all the

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copyrights with the client, and

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the contractor retains no

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copyright interest

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in that deliverable.

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And then the second,

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paragraph refers to those

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elements that the contractor

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brings to the table.

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I mean, there's a reason

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they're coming to you instead

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of somebody else, because,

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you have a system, you

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have a model, or you have,

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, some research or data or

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something that you're bringing

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to the table, and you want to

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make sure that you continue

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to own those.

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Materials, so we want to make

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sure that we are carving

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out from, that work for

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hire and that assignment your

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pre existing materials.

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paragraph says you retain

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ownership in those things.

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But where is the license?

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So, the, last part of that

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sentence is the license

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that you are granting to

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your client to use your,

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materials.

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Obviously, they have to

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have a license to use it.

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Let's say you do A strategic

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analysis, and as part of

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that analysis, you're

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using some preexisting

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research that you have.

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You're using some models

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and templates that you

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have and you package that

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together for the deliverable

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and you present that strategic

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analysis to your client and

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so they have to have the right

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to use, the things that you

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incorporated in that

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deliverable.

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The issue is how broad is

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that license?

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This is.

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Very standard language

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that you will see from

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the client.

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Now, first of all, this one

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is fairer than a lot of client

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agreements, because a

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lot of client drafted

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agreements won't even have

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this second.

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Paragraph in it, it will

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just be 100 percent of the

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deliverables.

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I own it because I'm

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the client, probably

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at least 40 percent will

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also have this 2nd

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paragraph that acknowledges

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that you're bringing your

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own materials to the table

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and that they simply get a

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license to it.

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But let's look at this

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license.

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in the middle of the 2nd

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paragraph, it says contractor

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hereby grants a client

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a limited worldwide

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perpetual irrevocable

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royalty free, fully paid up

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transferable right and

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license to use, execute,

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reproduce sub license,

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display, perform,

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distribute, maintain,

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create derivative

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works and make modifications

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and improvements to

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the contractor materials.

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This is very.

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Common starter language, you

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know, standard language that

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you'll get from your client.

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And so what is wrong

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with this?

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you know, we didn't start

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from the basics of what the

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bundle of copyrights

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that you get as a copyright

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owner, but I'll tell

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you what they are because

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they're all right here in

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this license.

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the exclusive rights you get

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as a copyright owner is that

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you get the exclusive right

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to reproduce, sub license,

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display, perform,

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distribute, create

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derivatives, and make

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improvements.

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Those are your exclusive

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rights as a copyright

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owner.

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And so when you have a

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license is this broad, even

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though you have a retaining

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ownership of that work, you

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have granted a license to your

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client that is so broad

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that they can do anything.

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Everything that you can do as

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a copyright owner without

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coming back to you so they can

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sub license it.

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They can create derivatives.

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They can reproduce it

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and distribute it without

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paying you another dime

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because you have granted

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them that broad of a license.

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So, what do we want to do?

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We want to make sure that we

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are limiting that license

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And so just, you know,

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I probably should do my,

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disclaimer here.

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Of course, this is information,

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legal advice.

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If you have specific

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questions about your

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agreements, talk to a

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lawyer, but, this is pretty

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good advice, information.

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so there are a couple of

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things that we want to do.

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First of all, we want to

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make sure that the grant of

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license is subject to

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them paying your fee.

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What's the difference?

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So if The grant of license is

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not subject to paying

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your fee.

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You have granted the

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license so they have the right

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to do whatever they want

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to with it.

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you can do all the things and

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if they haven't paid you,

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well, they've breached their

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contract and you have a

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contract claim against them.

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So, they're supposed

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to pay you.

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10, 000 and they don't

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pay it.

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Well, then you can sue

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them for the 10, 000.

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If the grant of the license

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is subject to payment of your

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fee and they haven't paid

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it, that means they don't

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have a license, which means if

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they use that deliverable

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without a license,

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what is that?

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That is a copyright

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infringement.

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And so then you not only have

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a, contract breach, you

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also have all the statutory

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damages that you get under

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intellectual property law,

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because they have infringed

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your copyright if they haven't

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paid your compensation.

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So we want to always

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have that.

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this should never be

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Controversial, when you're

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asking for this,

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Typically, they will not agree

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to it, with respect to the

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work for hire the assignment,

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you can try it, there should

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be no objection to it with

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respect to the license of your

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intellectual property,

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clarifying that it's not

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exclusive.

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Frankly, you know, if it

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doesn't say exclusive, it

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is by default non exclusive,

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but, let's be clear.

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So there's no misunderstanding.

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Nobody thinks they have

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an exclusive license.

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And then we've just cleaned

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up to make sure that

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the license that you

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have granted them in your

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preexisting material is

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only, for their use and their

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use alone.

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They can't transfer it.

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They can't sub license it.

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They can't create

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derivatives and it is for their

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internal use.

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And, you know, I'm making

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the assumption that the

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deliverables for their

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internal use most of the

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things that we do for

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clients is, to help them

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inside their businesses it's

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not something that they're

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reselling and so make that

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very clear in the license

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so that if they want to

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do something else with it,

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they want to use it with,

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an affiliate, or they want

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to somehow incorporated

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in something that they're

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going to sell.

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You want to make sure that

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your fee is consistent with

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the breadth of the use

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that they're looking for.

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these are all very reasonable

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requests.

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people often ask me, I don't

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know if I'm allowed to ask

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for changes.

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You are allowed to ask

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for changes.

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=, they just need to be

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reasonable and to be very

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clear that you're simply

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trying to protect your

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intellectual property, but

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you do want to make sure that

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they have the rights to do

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what they need to do with your

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deliverables.

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And so, with that, that's

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what I wanted to talk to

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you guys about with that.

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I am happy to take your

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questions and you can

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pop them in the chat.

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and also, you can always

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find me if you have any follow

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up questions, on LinkedIn,

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please feel free to connect

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with me there and then the

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recording will also

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be available there as well.

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So I'll hang around for a

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minute to see if you have

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any questions.

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Otherwise, I thank you for

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joining me.

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All right, guys.

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Well, thank you again.

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And if anything comes up, you

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know where to find me and I

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look forward to next time.

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Don't forget, the last

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Wednesday of every month, at

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noon Eastern.

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And I do take requests.

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So if there's ever a topic

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that you want me to address,

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on a live, just shoot it

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over to me and I'd be happy

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to do that.

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Thanks.

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And then that's, where

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you can find me as well.

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I'm online.

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All right.

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Thanks guys.

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See you next month.

About the Podcast

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Hourly to Exit

About your host

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Erin Austin

Meet Erin Austin, a Harvard Law alum with over 25 years of copyright and contracts experience. As the go-to advisor for professionals with corporate clients, Erin empowers entrepreneurs to be their own advocates, standing out for her commitment to transforming expertise into empires through the creation, protection and leveraging of intellectual property assets. Explore her blend of legal expertise and entrepreneurial insight on ThinkBeyondIP.com and the "Hourly to Exit" podcast. Off the clock, you'll find Erin in the great outdoors or connecting with business coaches to elevate 6-figure consultants into 7-figure powerhouses.