I'd like the community's view on this issue.
I engaged with an Upwork Freelancer on a Fixed-Price Contract to design branding work for a third-party (my client). I needed to provide confidential information to the Freelancer, including the third-party’s name, their target market, and the growth plans for their brand.
The Freelancer developed the concept for the brand design work. They shared it with me through Upwork, but simultaneously shared it publicly on multiple websites that host the Freelancer’s personal portfolio, where others viewed and commented upon it. Making matters worse, the Freelancer published my name, the name of our company, the name of the third-party, the third-party's growth plans, and the fact that I hired them to complete the project. The Freelancer admits to publishing this information, but believes its insignificant, especially since they’ve removed it upon my request (though the posts can still be found indexed and cached on other websites and search engines).
This is a problem for several reasons. First, it's now publicly known that the company I work for has engaged a Freelancer to complete this project for the third-party. We can't claim the work as our own, which is what we thought we were buying. Second, the third-party company hadn’t planned the official market launch of their brand initiative for another 8 months. They won't be able to use this work product as it was released unofficially well before. Third, confidential information relating to their growth plans is now public, and can be seen by their competitors. I'm afraid of the consequences this will have on their business, and fear they'll hold me liable.
When I signed up to Upwork, it was my understanding that Freelancers will protect the secrecy of the confidential information disclosed to them for the purposes of the contract. It was also my understanding that the work produced by the Freelancer would be my sole and exclusive property, and that I would be deemed the author. I wouldn’t have used Upwork otherwise.
I'd imagine that now, since there was a material breach of contract, I'd be allowed to cancel the contract and have the funds in escrow returned to me. Afterall, no one can use the work the Freelancer has produced, plus I can’t continue to work with the freelancer given what’s happened. However, it seems that the only way I can have my funds returned to me is by paying $291 USD to an independent arbitrator. This is half the contract amount!
I'm confused as to why I now need to spend hundreds of dollars for an independent arbitrator to come to this conclusion. I'm also upset because this Freelancer may have cost the third-party huge sums in damages. I’d imagine some company secrets could, if released to competitors, spell the end of that company’s future. In any case, I don’t understand why Upwork wouldn’t terminate the Freelancer’s account and return me the amount in Escrow for their actions. Am I mistaken? Any suggestions would be appreciated.
For Reference - Upwork Policies
To the extent a Client or Freelancer provides Confidential Information to the other, the recipient will protect the secrecy of the discloser’s Confidential Information with the same degree of care as it uses to protect its own Confidential Information, but in no event with less than due care, and will: (a) not disclose or permit others to disclose another’s Confidential Information to anyone without first obtaining the express written consent of the owner of the Confidential Information; (b) not use or permit the use of another’s Confidential Information, except as necessary for the performance of Freelancer Services (including, without limitation, the storage or transmission of Confidential Information on or through the Site for use by Freelancer); and (c) limit access to another’s Confidential Information to its personnel who need to know such information for the performance of Freelancer Services.
Without limiting Section 7 (Confidentiality), Client and Freelancer will not publish, or cause to be published, any other party’s Confidential Information or Work Product, except as may be necessary for performance of Freelancer Services for a Services Contract.
6.4 OWNERSHIP OF WORK PRODUCT AND INTELLECTUAL PROPERTY
Upon Freelancer’s receipt of full payment from Client, the Work Product (except for any Background Technology), including without limitation all Intellectual Property Rights in the Work Product (except for any Background Technology), will be the sole and exclusive property of Client, and Client will be deemed to be the author thereof. If Freelancer has any Intellectual Property Rights to the Work Product that are not owned by Client upon Freelancer’s receipt of payment from Client, Freelancer hereby automatically irrevocably assigns to Client all right, title and interest worldwide in and to such Intellectual Property Rights. Except as set forth above, Freelancer retains no rights to use, and will not challenge the validity of Client’s ownership in, such Intellectual Property Rights. Freelancer hereby waives any moral rights, rights of paternity, integrity, disclosure and withdrawal or inalienable rights under applicable law in and to the Work Product. If payment is made only for partial delivery of Work Product, the assignment described herein applies only to the portion of Work Product delivered and paid for.
TERMINATION OF A SERVICE CONTRACT
Under Fixed-Price Contracts, once a Client’s Payment Method has been charged to fund the escrow account for the Engagement, absent a full refund to Client by Freelancer, the Service Contract does not terminate until the Freelancer Services are completed. However, either Client or Freelancer has the right to terminate a Fixed-Price Contract at any time with the consent of the other party or in the event of a material breach. If a Fixed-Price Contract is terminated, Client does not have the right to recover any payments already released to Freelancer from the escrow account for the Engagement.
re: "The Freelancer developed the concept for the brand design work. They shared it with me through Upwork, but simultaneously shared it publicly on multiple websites that host the Freelancer’s personal portfolio, where others viewed and commented upon it."
The freelancer you hired had no right to do that, unless you specifically told hem he could do so.
re: "Making matters worse, the Freelancer published my name, the name of our company, the name of the third-party, the third-party's growth plans, and the fact that I hired them to complete the project."
The freelancer had no right to do that.
re: "The Freelancer admits to publishing this information, but believes its insignificant"
I think the the freelancer was not lying when he said he believed this was insignificant.
The freelancer's opinion in this matter is wrong, however
re: "We can't claim the work as our own, which is what we thought we were buying."
You CAN claim that the work is your own, in the sense that you own the work.
You may have problems claiming that you yourself did the work, if the information about the fact that you did not do the work yourself is out there.
You are right about this being what you were buying.
The freelancer's actions are contrary to what a professional freelancer - behaving properly - would have done.
re: "When I signed up to Upwork, it was my understanding that Freelancers will protect the secrecy of the confidential information disclosed to them for the purposes of the contract."
Well, yes. That is how freelancers are supposed to act. But Upwork has no way of enforcing that. Upwork is a company that helps clients find freelancers. Unfortunately, not all freelancers follow the rules all the time or adhere to the highest standards of professionalism at all times. Nor do the people in your industry or any other industry.
re: "It was also my understanding that the work produced by the Freelancer would be my sole and exclusive property, and that I would be deemed the author."
You are correct in your understanding. This is explicitly stated in the default contract that is in force between Upwork clients and freelancers, unless they proactively create an alternative contract.
re: "I'd imagine that now, since there was a material breach of contract, I'd be allowed to cancel the contract and have the funds in escrow returned to me."
This does indeed come from your imagination. You are talking about a scenario which is NOT addressed specifically in writing in Upwork's ToS. You are proposing a set of facts and then drawing a conclusion from those facts. The conclusion may seem logical to you. But that does not mean everyone would arrive at the same conclusion.
re: "...the only way I can have my funds returned to me is by paying $291 USD to an independent arbitrator. This is half the contract amount!"
Wait a second... You took all that time to write this entire post about a contract that is worth less than $600?
If you don't want to use the freelancer's work, then just close the contract and hire someone else.
This is a waste of your time.
This is NOT worth going to arbitration for or raising a dispute over.
I have no way of knowing if you can use the freelancer's work or not.
I have no way of knowing if that is a valid conclusion or not.
If you want to try to claw back some of the money, just ask the freelancer to work with you on this. Maybe he'll refund the money if you just ask him. Or maybe you can agree to release half of the payment.
The WORST POSSIBLE scenario I can even imagine from this is that you can't use any of the freelancer's work at all and you pay him around $600 for that. I'm sorry if this has had an impact on your project's budget, but you also need to consider how much your time and energy are worth.
re: "It also seems to suggest that the work I'm paying for will become mine and mine alone, so when the Freelancer publicly displayed it on other websites, it ceased to become mine."
I don't know how you came to that conclusion. In point of fact: The freelancer was displaying something that wasn't his. Because you commissioned the work, the work belongs to you. His unauthorized display of that work anywhere does not erase your ownership of the work.
re: "Further, when the Freelancer claimed authorship of the work on their portfolios, they ceased to be able to give me that authorship."
This is not accurate. In fact, Upwork's default contract agreement very clearly states that the client who pays for work done by a freelancer obtains ownership of the work AND is considered the author of the work. Upwork's language states that commissioned work "...will be the sole and exclusive property of Client, and Client will be deemed to be the author thereof."
re: "In any case, I don’t understand why Upwork wouldn’t terminate the Freelancer’s account and return me the amount in Escrow for their actions. Am I mistaken?"
You are mistaken.
re: "Any suggestions would be appreciated."
Choose from these options:
a) Don't worry so much about the fact that the freelancer put things into his portfolio for a short time, etc. If you like the work he did, then just use it, as planned.
b) Don't use the work at all. But you still need to close the contract and move on. And the fastest, easiest way to close the contract is to simply release payment. (This does NOT mean you need to use the work.) If it is worth your time to do so, then you can try talking to the freelancer and asking him to refund the escrow payment, explaining that you can no longer use the work.
You're in a bind all right. If you had an NDA with the client, then you likely violated it by hiring a freelancer without their permission, and now they know it--and, it sounds like, will sustain damages because of it.
What the freelancer did was totally unacceptable and a breach of your agreement, but that $600 should be the least of your worries right now. If I were in your shoes, I'd be investing this time and energy in having an attorney review the contract with the end client to see just what you may be on the hook for.
I'm sorry to learn about your experience with this freelancer. I checked your account and can see that the team has been assisting you with your issue, and has responded to your requests.
I won't be able to share more details about your issue here in the Community, as this is a public forum, and would like to avoid misrepresenting the situation, but feel free to follow up about it directly with the team via the ticket.
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