The Association of Accredited Advertising Agents Malaysia (4As) has ticked off brands for asking agencies to confer automatic intellectual property ownership transfer to them, after receiving reports of four different requests for proposals and pitch documents with these demands in June 2018 alone.
This contrasts with two reports a year at most previously, Khairudin Rahim, chief executive officer of 4As tells The Drum, which he said is alarming and needs to be halted before it escalates into a norm.
That is why 4As has released a strongly-worded statement that states such practices are ‘tantamount to clients demanding ideas without compensation’ and that the 4As considers this ‘unethical and unfair’, and called for this practice to cease immediately.
According to Khairudin, cases that come to the attention of the 4As, are happening across different industries and size of brands, and is not limited to one type of industry. He points out that the common factor is the RFPs are issued by the procurement departments of certain brands.
“The 4As cannot answer on behalf of these companies who have made it standard, the use of the unethical ownership condition. We can only speculate they are using the pitch process as a mechanism to generate a "bank" of ideas, and want to have the freedom to adapt as their need arises in future, without the risk of legal challenges,” says Khairudin.
“The 4As had previously learned about this same issue in pitches held amongst agencies in the United States. We proactively issued a by-law in 2006, applicable to all 4As Member Agencies where 'No member shall participate in any pitch where the advertiser requires that all or part of the pitch proposal becomes the advertiser's property at the pitching stage or if the pitch is unsuccessful'. “
Khairudin claims that as far as the 4As is aware, since 2006, none of its members has agreed to pitch whenever this unethical condition is introduced in the RFP and that none of the 4As member agencies invited have agreed to participate in the RFPs in June.
“We have written to the advertiser companies concerned highlighting the issue and asked for the removal of this condition from their future RFPs. However, to date, there has been no formal response from these companies,” he adds.
The exec urges agencies asked to give away intellectual property rights to strategy and ideas they present in a new business pitch is to simply say ‘No’, and if the agency encounters a brand that is concerned about potential confusion or legal dispute resulting from ideas, plans or work that was already in possession of the brand prior to submission by the agency, then the brand’s concerns can be carved out in an agreement between the brand and the agencies shortlisted to pitch.
“The 4As has issued on 2 July a best practice guide on "Ownership of Agency Ideas, Plans and Work Developed During the New Business Pitch". It contains illustrative ownership retention language that agencies should incorporate in all pitch materials/documents,” says Khairudin.
“The 4As guide provides an example of this carve out position. If an agency has an interest in selling its ideas, plans or work developed in the course of an agency search and if the advertiser is interested in buying the agency's ideas etc, then the parties should discuss when and how fair compensation can be established. There is a broad range of possible approaches to arrive at fair compensation.”
Even though the number of brands coming up with unethical RFPs are rising, Khairudin strongly believes the pitch process is not broken, as he reiterates that a clear majority of pitches involving 4As member agencies do not have this as a condition and that most brands respect the work done by agencies and value intellectual property fairly.
“The pitch process has not been broken - including the industry requirement (introduced since 2006) - for advertisers to fairly pay 4As member agencies pitch disbursements to partially offset some of the agency costs incurred,” he adds.