by Thomas Maddrey, Maddrey PLLC
Every creative client knows about “copyright” as a general idea, but too many are unfamiliar with their rights when licensing their work. A creative client includes, but is not limited to, any commercial artist, designer, photographer, writer, musician, or other fine artist. Depending on the type of creative, you will need to consider different licensing schemes based on usage of the work. For example, a graphic designer may create a work for a single use, whereas a fine artist or photographer may want to license a single work multiple times.
The Licensing Stage
A common pitfall for a creative is transferring their copyright either through a “work-for-hire” agreement, or a basic transfer clause in a previous agreement. Often, the creative community feels pressure to sign these sorts of agreements, and are unaware they have signed away their rights to the work. When creating the granting language in a license, it is important to retain the copyright with the creative, and only license the usage, reproduction, and derivative rights. Selling or granting the underlying copyright should only be done as a last resort.
Drafting the License
The complexity and length of copyright licenses vary significantly depending on many factors, including the type of work, the permitted uses, the parties’ relationship, and the licensing arrangement’s value and duration.
The license grant is the heart of the agreement that determines what is being licensed, the licensee’s usage rights, time and geographical limitations, etc. Usage should be limited to the art actually licensed (identifiable with a Copyright Registration Number). In addition to the usage rights, the license should specify whether that usage is to the exclusive benefit of the licensee, or whether the creative-licensor retains the right to license the work to others (non-exclusive).
No matter how you lay out your granting clause, it is important to be as specific and clear as possible. Failing to spell out the terms of the grant, or using improper language may lead to over-granting or under-granting usage rights. For example, should a creative grant an exclusive right, the creative will be prevented from advertising his own work on his website absent further provisions.
The client may state other reservation of rights, such as the right to approve all uses by a licensee (such as for future expansion of digital and social media), and the right to approve the quality of the product at various stages of manufacture or display. In the growing age of digital media and social media, the future usage of the work must be considered. Again, by being as specific as possible in the granting clause, a newly created app or social media outlet will not accidentally fall within the boundaries set by the license.
Determining & Enforcing Payment Terms
Considering which usage rights the creative has granted can help set the licensing price, but there are other factors to evaluate. Specifically defining the usage rights allows the attorney to get specific with setting the price-point for the license. For example, programs, such as fotoQuote® Pro, provide ranges of photographic industry pricing based on specific usages. By providing specifics, such as the media type, the quantity, sizes and placements of where an image may be placed, and the distribution format, etc., the usage fee can be estimated, and the limitations in usage set by the creative becomes clear. This price may also include a creative fee, based upon reputation of the author of the work, rarity of the work, and the media in which the work was created.
Depending on the media usage, payment methods may differ, but immediate payment on acceptance of the licensing agreement is best. It also may be beneficial to include a provision charging interest for late payment to encourage on-time payment (even if your client does not wish to enforce the clause to remain in their clients’ good faith). The creative should avoid agreements that allow for payment “upon publication”—this puts no obligation on the licensee to use the art, and will limit the creative’s ability to use and license the art to others.
Remember that contract law governs the licensing process—all agreements must be two-sided, and a battle of the forms may come into play if inconsistent language is used. Discussing how your creative-client wants to structure the deal, and what he/she wants out of the license will help provide the framework in best representing your creative.
Thomas Maddrey is the founding partner and lead attorney at Maddrey PLLC. He can be reached at firstname.lastname@example.org.