4As calls out statutory body for 'highly prejudicial' clause in creative tender

The Association of Accredited Advertising Agents Malaysia (4As) has called out the East Coast Economic Region Development Council (ECERDC) for an "unethical demand" to have automatic ownership and retention of agencies’ intellectual property. This comes as ECERDC issued a tender document which stated that copyright in all reports/documents, plans, designs drawings and works prepared by the agency participating in the pitch shall be the property of ECERDC and that ECERDC may use them in any manner ECERDC wishes. The tender document was for the appointment for a creative agency. 

According to its LinkedIn page, the ECERDC is a statutory body established to spearhead the socio-economic development of the east coast economic region. These regions cover Kelantan, Terengganu, Pahang and the district of Mersing in Johor. 

"The 4As views this clause as an unethical demand by ECERDC for the automatic ownership and retention of intellectual property described in an agency’s proposals regardless of whether the agency is selected or not. All ideas, concepts, strategies, trademarks, and materials that an advertising agency presents or provides to an advertiser in an invitation-to-bid or tender are provided for the sole purpose of allowing the advertiser to determine whether to engage the agency’s ongoing services," Khairudin Rahim (pictured), CEO of 4As, said.

According to Khairudin, the 4As has requested ECERDC remove the clause on three separate occasions: 3 March, 9 March, and 22 March. In a written response to the 4As, ECERDC’s tender secretary said the intent of the clause was for the work submitted by unsuccessful bidders to merely be kept by ECERDC for report and audit purposes. However, despite the clarification, there has been no confirmation that the offending clause will be removed as requested. 4As has again requested that ECERDC removes the clause to eliminate any misinterpretation or wrong perceptions of ECERDC’s goodwill and reputation.

"There is no room for imprecise documentation, and catch-all terminology, in any modern and fiscally responsible tender," Khairudin said. In light of the incident, 4As has advised agencies not to participate in tenders and pitches which contain similar clauses and recommends that agencies retain ownership of all ideas, plans, and work product unless the advertiser is prepared to pay the agency fairly for the rights.

The clause is oppressive and highly prejudicial to agencies that are unsuccessful as they would not in any future bid or project rely on their intellectual property rights. 

"This clause is not even remotely connected to the tender secretary’s stated intention of wanting to retain the unsuccessful bidders’ work for report and audit purposes only," Khairudin said. 

The inclusion of the clause by the ECERDC is "especially disappointing" given the 4As' repeated calls for advertisers including government-linked bodies to remove unfair and unethical intellectual property retention clauses from procurement documents. It is tantamount to a demand for free ideas, contradicting core business principles and global norms of business dealings, he added. 

This is not the first time 4As has spoken out against pitch clauses that demand the ownership of intellectual property. In 2019, the governing body said it received "disturbing reports" that certain advertisers, though not MAA members, still continue to include unethical demand clauses in their request for proposals (RFP) documents. This was despite "concerted efforts" in alliance with the Malaysian Advertisers Association to seek cooperation and understanding within the industry. Such clauses include “All materials submitted in response to this RFP become the sole property of the advertiser” and “All submissions for the RFP are not returnable and shall become the property of the client”, Khairudin said.

According to him, the 4As has been legally advised that these clauses are "impotent and ineffective" from a legal standpoint, as they do not offer a binding relationship between the agency and advertiser in a situation of a service being provided where no formal contract or letter of appointment has yet to be signed. "A pitch for all intents and purposes is an offer to provide a service to the advertiser or client. Unless the advertiser is acceptable to this offer with an agreed consideration to be passed, ownership of the IP remains with the advertising agency," Khairudin said.

Separately, 4As also called out Tenaga Nasional in the same year for being "unreasonable to demand" a non-refundable tender fee of RM5,000 per agency for its creative and media pitch, as part of its procurement requirement for all parties that wish to submit their credentials at the request for information (RFI) stage. In a statement to A+M then, Khairudin said the 4As found it odd that a tender fee be levied even for the preliminary RFI stage. It then wrote officially to Tenaga Nasional stating that this is an unfair requirement and appealed that the fee be waived, at least for the RFI stage.

Just this week, 4As reelected Andrew Lee, group MD of Havas Group Malaysia, as president for a third consecutive term. Meanwhile, Nizwani Shahar, chief executive of Ogilvy Malaysia, has been elected VP. Both will work jointly with other council members and Johnny Mun, MD of Oxygen Advertising and 4As senior advisor, as well as Khairudin to accomplish the association's objectives.

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