Two critical legal concepts all freelancers have to know to be safe

Life would be so much easier if all we had to focus on was dropping creative awesomeness on the world, wouldn’t it? Alas, such is the life of a freelance designer…the wearer of many hats.

Today’s hat is boring. You’re going to want to gloss over it, skim it briefly and hope the next Millo post is more entertaining.

But you really, REALLY, shouldn’t, because today’s post could save you a huge headache.

Check out our most recent podcast episode:

I’m talking brain-splitting migraine – failing to adhere to legal standards could result in serious troubles like lawsuits and hefty fines for you and your clients.

So to help you understand the nuances of the US copyright laws, I’ve demystified two must-know legal concepts. (Sorry, international readers. Please let us know in the comments how these laws and regulations apply in your country.)

Fair Use

A limitation and exception to the exclusive right granted by copyright law to the author of a creative work, based on four factors:

  1. The purpose and character of the use, including whether such use is of a commercial nature or is for nonprofit educational purposes;
  2. the nature of the copyrighted work;
  3. the amount and substantiality of the portion used in relation to the copyrighted work as a whole; and
  4. the effect of the use upon the potential market for or value of the copyrighted work.(17 U.S.C. § 107)

In layman’s terms: The use of copyrighted work in a legal manner, based on four factors:

  1. The reason you’re using the copyrighted work, especially if you’ll profit from it;
  2. the copyrighted work itself;
  3. how much of the copyrighted work you use; and
  4. if your use of the copyrighted work may devalue it.

Generally accepted uses of fair use include criticizing or commenting on a particular work, a news report, non-profit educational tools and research, and parodies.

Famous Example: Everybody remembers the Obama “Hope” poster, right?

💔 Falling out of love with your clients? Trade some of your worst clients for the best companies in the world with SolidGigs, our premium weekly freelance job list & course library. Love your business again. Learn more »

Quick recap: The poster designer used an AP copyrighted photograph as a basis for the illustration and a lawsuit ensued (mostly because the poster made a lot of money).

Eventually, they settled out of court, but it’s important to know that the court suggested the AP would win the case.

For a more in-depth discussion on fair use, check out these sources:

Work (Made) for Hire

Often abbreviated WFH, a work created by an employee as part of his or her job, or a work created on behalf of a client where all parties agree in writing to the WFH designation. If a work is made for hire, the employer – not the creator – is the legal author of the work.

The US law designates work for hire as:

  1. a work prepared by an employee within the scope of his or her employment; or
  2. a work specially ordered or commissioned for use as a contribution to a collective work, as a part of a motion picture or other audiovisual work, as a translation, as a supplementary work, as a compilation, as an instructional text, as a test, as answer material for a test, or as an atlas, if the parties expressly agree in a written instrument signed by them that the work shall be considered a work made for hire.(17 U.S.C. § 101)

In layman’s terms: As an employee, your employer is the legal author of all of your work. As a freelancer, your client is the legal author of your work IF the following conditions are met:

  1. the work must come within one of the nine limited categories of works listed in the definition above, namely (1) a contribution to a collective work, (2) a part of a motion picture or other audiovisual work, (3) a translation, (4) a supplementary work, (5) a compilation, (6) an instructional text, (7) a test, (8) answer material for a test, (9) an atlas;
  2. the work must be specially ordered or commissioned;
  3. there must be a written agreement between the parties specifying that the work is a work made for hire. Note that a mutual agreement isn’t enough…it has to specifically be written that the work you’re going to do is “work for hire” or “work made for hire” in the contract. You DO have a contract, right?!

Example: Who owns the artwork and files you, as a freelance designer, used to create a brochure for your client? Under US copyright law, you own the files and artwork while the client owns the finished product (the brochure).

So what if your client asks for the design files? That’s a stickier situation, and should cost them more than just the final product as a whole if you choose to relinquish them.

For more information on work made for hire, read these great articles:

Enough legalese for one day!

There’s really a ton more to cover in regards to legal terms freelancers should know, but just these two are enough to digest for one post.

What other legal terms should we cover here at Millo?

Have you ever had any legal issues stemming from fair use or work made for hire?

Leave a comment and join the discussion!

tweet share share pin email

Keep the conversation going...

Have a question or something to add?

Over 5,000 of us are having daily conversations over in our free Facebook group—and we'd love to see you there. Join us!

About April Greer

April is the Director of Projects at Reliable PSD, a design-to-code company for designers, by designers. She’s the glue keeping everything together, organized, and right on time, and giving everyone a fantastic experience while she does it.



  1. Great post today. You broke down all the “legal-speak” so well. These are very important issues for us, especially today in the times of digital files, intellectual property, etc.

    • Thanks, Douglas! I’m glad you found this post so useful!


    • If I pinch “some info” off Wikipedia (which I believe isn’t technically owned by anyone as it has been sent in by various contributors) and publish an eBook and sell it… am I fringing any copyight???

      • Perhaps not infringing… but you’ll likely lose credibility.

        But you’ll likely be infringing by plagiarizing someone’s work, since Wikipedia requires facts and such to have a reference of some sort.

  2. Thanks for clarifying these murky waters. I was always told in art school that you could use a copyrighted piece in your own work if you altered it 60%. I wonder what you think of that in relation to this article?

    • Rhianna,

      I was surprised that the courts indicated that the artist would’ve lost, too, as I would’ve said that his rendition was markedly different than the actual photo – Obama is in the same pose, but that’s about it.

      Unfortunately, regardless of what school may teach, we have to know and abide by how the legal system will rule (like it/agree with it or not).

      Thanks for sharing!

      • Unfortunately, Shepard Fairey did not alter the Obama image enough to avoid any copyright problems with the AP. The image was still recognizable as the photo taken by an AP photographer. Artist walk a very thin line when the borrow material from other artists.
        Another famous example is Andy Worhol’s Campbell’s soup can painting. I don’t recall where I read it, but Campbell’s considered suing Mr. Warhol for creating and selling the painting. They eventually decided the publicity from the painting was better PR for the company than suing a famous artist. They eventually embraced the piece and used it in at least one ad campaign. In this instance, the artist was lucky.

  3. In Australia, Fair Use is much more restrictive than in the US and in my reading (I’m not a lawyer) you generally can’t claim fair use for most graphic design situations. There’s more information here:

    In regards to WFH, Australia has the same situation where generally the rights to all work by an employee is owned by the employer (this is a common clause in employment contracts). I don’t *think* the other considerations you list here apply in Australia, but here is a general fact sheet with more information:

    …as you can see, the Australian copyright council is a great general source of information! They also provide limited legal advice: and help you work out where to go for if you need further advice.

    • Rachel,

      Thanks for all of the Australian fair use and work for hire information! I’m sure that all of our Aussie readers will appreciate your comment!


    • I was very surprised re the Obama poster. The artwork is certainly not a Photo (as was the original) – it had been re-coloured, rendered and extensively worked on. I remember some clause from many years ago that stated at least 20% of an image must be altered before it becomes legal. Surely this would fit with this case (?)

  4. I agree with the concept of the client owning the “copyright” but this is only after receiving full payment. What happens if the client only “part pays”? Surely the designer still retains copyright until the Invoice is paid in full (?). This is what I state on all my Invoices.

  5. Great post April and a view on the ‘ugly’ side of being a self employed creative. I personally paid a Lawyer quite a good sum of money to write me a set of terms and conditions that a client has to sign on commissioning me and also on the completion of a project that states they are now responsible for anything produced. It’s watertight, and makes me sleep easier (a bit – I’m a born worrier haha) at night. However the bill at the time made me weep but it protects me – and that’s more important than an amount of money and will pay for itself in no time at all.

    • Jim,

      I think you did a very wise thing, and I’m really considering the same move myself. Paying a lawyer, albeit expensive, is a lot less expensive than some of the problems that can arise from a poorly-drafted contract. Furthermore, lawyers have an extensive knowledge of how businesses burn each other, so they can add security you didn’t even know might be necessary.

      Thanks for sharing!

  6. Good post. I did know about these terms but never really did any reading on their details. But I wonder when a designer decides to leave the agency and start his own freelance business, what does he use to construct his/her portfolio.

    • Saadullah,

      I would cover that sooner rather than later. Ask your company if you can use your work as portfolio pieces while you still have a great relationship with them (you never know how your exit will pan out).

      Chances are, they’ll have no problem with it, other than the possible concern that you might be leaving. Just mention that you’re really proud of your work and that you want to have the right to display it publicly.

      • Do you need to have some kind of written agreement with your company that says you have permission to display your work for portfolio purposes?

        • Tara,

          Unless your work is confidential, proprietary, or something that the general public cannot freely see, you’ll run into little resistance from most companies for displaying work you did as an employee (unless you specifically signed paperwork saying otherwise). If you really want to CYA, then email your supervisor and ask if you can add your work to your portfolio (because you’re proud of it or they might think you’re leaving) and save that yes response.

          However, in most cases this isn’t necessary. (I don’t have any written agreements from my past employers – they simply wished me well and hoped that my work there propelled my career forward.)

  7. Thanks for the great post April. I too agree that this info is so very important. I have a section in my contract that I review with clients (before a project commences) on both Usage of Artwork and Copyright. Ironically enough I woke up this morning thinking I needed to make a few tweaks to my “Copyright” section and then I read your post. I love life’s little synchronicities!!

    • Barbara,

      Smart woman! This stuff can seem silly until that 1 chance in 100 that something goes horribly astray and all of sudden you’re in a big mess.

      Thanks for sharing!

  8. One area I still am not 100% clear on is the use of art for portfolios and samples. I have an electronic portfolio published on a website and I also have a brochure I use for promo, which shows samples of work I’ve done for clients. Are these Fair Use?

  9. Wolf Buchner says:

    Aa an aside: What is the difference between a one-person business and a freelancer? Isn’t the former a more formal approach, whether working from business premises or from home? i.e. business name, logo, a more structured approach to doing business? In my case for example I have a (one-person) company, with a more informal style, but being definitely businesslike in dealing with clients. Except that I rarely do formal contracts, unless a) it is a new client and/or b) it involves larger expenditures on sub-contractors. My approach is the old-fashioned “your word/handshake seals the deal” Extremely seldom I got disappointed. But it needs good judgement of character and a judicious approach to accepting assignments. Also, I work in the business-to-business field of graphic design. Re copyright: If a client wants i.e. the electronic file of an originally printed brochure to post on his website, I forward a PDF copy at minimal cost for his use, but keep the original. Re logo design: It is usually understood that the client will own the artwork (wouldn’t you want to if you were the client?). Price it accordingly. And send him all versions – for Mac, Windows, website – both as Illustrator .eps files and as Photoshop derived tiff, gif etc. files.

    • Wolf,

      For tax purposes, there’s no difference between a one-person business or a freelancer – they’re both sole proprietorships. Be very careful – you have to report this income or face severe tax penalties if you get caught not reporting it. See this Millo post about freelancers vs entrepreneurs in regards to a more human approach:

      Freelancer to freelancer: you’re playing with fire and sooner or later you’re going to get burnt. I don’t want to sound preachy or offensive, but working without a contract is dangerous. I lost nearly $2000 as a subcontractor who worked with a design company, neither of us who had proper contracts. It was all fast and loose, and that’s a lot of money for me to not receive for services rendered.

      Contracts might seem like a headache, but they’re 100% worth it. An ounce of prevention is worth a pound of cure.

  10. I had a real estate client for whom I created a monthly magazine showing available properties (mostly million dollar homes). She wanted a new design for the magazine, but instead of asking me to come up with something, she gave me a mockup of a design that looked very nice. I asked her where she got it and she said another designer made it for her. I told her I couldn’t copy it exactly because that would be infringing on his rights as the artist. She said “I’ve known him for a long time, it won’t be a problem.” Still I protested but she insisted I use it. I produced the piece anyway and it hit all those racks you see in stores full of real estate magazines. Soon after, the client called and said the original designer saw the piece and wanted $3,000 for the use of his artwork. I couldn’t blame him, I would have done the same thing. But here’s the kicker . . . the client wanted me to foot half the bill! I was enraged! I reminded her that I’d warned her of this in the beginning, but my protests fell on deaf ears. She pretty much said that if I didn’t pay $1,500 for “my” half, that I would lose her as a client. Normally, I would have dumped her as a client. But I had a better plan. I was also starting an unrelated project for her husband. He wanted a piece just for him and the money was coming out of his pocket, not the real estate company. So I gave the real estate client her $1,500. Overcharged the husband by $1,500. Everybody was happy and I continued to do work for her for another year. I’m one of those handshake freelancers and have never had a contract with a client. But even if I’d had one with her, I don’t think I would have thought to put in a clause about “don’t ask me to steal another artist’s work”.

    • Brenda,

      Wow – sticky situation! Glad it all worked out well in the end. I think we can all learn from this.

      So what might we be able to do to prevent this in the future? I think one possible solution could be to at the point of “use this, it’s not a problem” that your protest is in writing. Furthermore, I’d get release from the client that they are fully responsible for the use of the artwork (and that they agree to it) prior to creating it. This way the client can’t claim you owe anything.

      Thanks for sharing!

  11. This is so helpful! I recently made the jump into being a self-employed designer and I have spent hours pouring over legal writings to try to make sure I don’t find myself in a sticky situation down the road, but this article explains these concepts more clearly than anything I’ve read. Thank you!

  12. Alan Whitaker says:

    Dear April, your advice looks and sounds great, but I guess that it is unreasonable to expect you to create a similar document regarding copyright law in the UK – especially as, by your examples, you obviously operate out of the USA.
    I feel sure that UK copyright law is a rather more “grey” area than it is in the US, especially where mapping is concerned. Nevertheless I feel sure that at least some of your advice should be valid on this side of the Atlantic, even if it isn’t!
    In any case, thanks anyway.

    • Alan,

      Unfortunately I know very little about UK copyright law as I haven’t yet had to concern myself with it. I would use this as a guide for what you need to look up to understand your own laws.


  13. Hi, April.

    I am a salesman for a Ford dealership in Canada. I do graphic design on the side for customers I sell vehicles to. My employer, seeing I was good at it, had me design some graphics for their parts truck and shuttle vehicle. A local decal shop put the graphics on and my employer was very happy with the end result. I showed them a design I had created for a F150 truck and they really liked it and wanted me to have the graphics put on a few of their vehicles that were for sale. I agreed to do it as long as I was paid for every truck that was sold with my graphics on it. They agreed. However, now they have gone back on their word and are not paying me. Have I lost my rights to my design now that I have put it on their vehicles.

    • Eli,

      Do you have a contract or written proof that this was the agreement and how much you’d receive? If not, I fear you’re out of luck.

      If you do, it’s possible that you could take legal action. However, I’m not a lawyer, I’m not Canadian, and there are neither in my family, so I don’t know for sure how Canadian law works.

      I would suggest you contact a lawyer – most here in the US would probably tell you what you need to have a case for free.

      Sorry I can’t be of more help!

  14. If your an Australian designer you need to read up about this!

    This post is probably old and someone may have said something about it but I’m a huge nerd and love reading about laws and such.

    There’s a few documents and they are only about 20 pages or less and you’ll be surprised what you find.

    Also, never assign copyright over to the client. This gives them full rights to manipulate and recreate your work wherever they like! It could also mean you are unable to claim ownership of the work and are therefore unable to promote your services using the piece (you can’t have it in your portfolio).

    Copyright is always automatically protected. There are no formal procedures to protect your artistic work. This is why contracts are so important. You should never assume they will respect your rights…or even know what your rights are.

    Also, copyright protection lasts for 70 years after the creators death.

  15. If you are hired by a company as a contractor instead of a full time employee, who owns the files that you created while there?

    If I use the files for my portfolio, do I have to give credit to the business?

    Thank you.


Need more clients?

Download our free guide:
25 Top Freelance Job Sites for Real Clients with Big Budgets