Here’s an issue I’ve occasionally pondered: What if you prepare a template for one client in a given industry, and then another company in the same industry asks you to prepare the same kind of template for them?
It’s not a matter of copyright. Here’s the relevant extract from my article Copyright and the Contract Drafter (here):
[T]he level of control that a law firm exerts in performing work for clients is, if you consider the factors listed in Community for Creative Non-Violence, that of an independent contractor rather than an employee.
And it follows that if a law firm that drafts a contract for a client is in that capacity acting as an independent contractor, it would, under 17 USC 201(a), own the copyright in that contract.
What does this mean for law firms and their clients? If a client asks a law firm to draft a form of agreement to be used by its businesspeople, it’s unlikely that the law firm would subsequently object that such copying violates its copyright, and it’s hard to imagine how it could plausibly do so.
Here’s a more likely scenario: A client asks its law firm to draft a form of agreement for a new kind of transaction. The client ends up paying the law firm plenty for their work, and the client’s personnel spend many hours helping the lawyers grasp the technical and business nuances that have to be addressed in the agreement. Subsequently the client finds that law firm has cheerfully been selling to other clients a substantially identical form of agreement. From a copyright perspective, the law firm is at liberty to do so, and it’s unlikely that a law firm would agree to forget that it had ever worked on a given agreement. Perhaps the best that the client could hope for is that the law firm would agree not to use that form of agreement in representing the client’s competitors.
Absent prior agreement with the first client, I think that a law firm can in good conscience prepare a template for one client and then use that template when preparing a template for another client, but only if that which it uses from the first template in preparing the second template reflects general commercial principles. The first client would have a legitimate complaint if the law firm imported into the second template business practices of the first client that aren’t widely known—in particular, that aren’t know to the second client.
What about disclosure? It would be prudent for the law firm to disclose to the second client its work for the first client. Presumably that would be a simple matter; the second client might be pleased to know that it’s getting a free ride.
It might be awkward for the law firm to disclose to the first client its work for the second client. But it would be better to have the first client learn of it from the law firm, ideally before it starts work for the second client. It could be more awkward if the first client were to find out for itself.
Am I missing anything?