Ivan Hoffman, B.A., J.D.
Suppose you are not the actual creator of a given work such as, just for some examples, a book, music, recording, film or work of art. And suppose that you wish to acquire some or all of the rights to the said work for use in another work. And suppose further, to make this simple, you want to acquire the rights to make a motion picture from a book. The same issues present themselves no matter what the existing work is, whether music, recordings or any other work, or what the proposed licensed use is to be. In this article, also for simplicity, I will assume a United States author and United States laws and will assume that “you” in this article is the party seeking to obtain such rights.
How do you go about it? With what party do you negotiate? What form of agreement or license will you need?
Is The Original Work Public Domain?
Under United States laws, works originally first published in the United States prior to 1923 are in the public domain. But that is not the end of it either since works that were published in the United States after 1923 but before January 1, 1964 had to be affirmatively renewed at the appropriate time in order to maintain copyright protection. Read “When Do Copyrights Expire?” on my site. (I leave out issues related to restoration of previously expired copyrights in other countries) But that is still not the end of it either since there may have been numerous other documents entered into that may affect the ownership rights in a particular work including mortgages and other encumbrances. And even if these intervening documents have not been recorded in the public record, they still may have an impact on the legal status of the work.
The bottom line is that you should have a thorough search done at the copyright office (not merely an online search) and have that search report reviewed by an attorney with copyright experience.
If the Work is Protected by United States Copyright
Initially, you need to determine who is the owner of the particular set of rights you need to license. Copyright is often referred to as a “bundle” of rights since ownership of copyright means owning the exclusive rights to exercise, or allow others to exercise, those rights. (17 U.S.C. section 106 et. seq.) As indicated above, making this determination is not as simple as just doing a copyright search as there may be documents not part of the public record, that have an impact on ownership rights. If the agreements or any abstracts thereof have not been filed in the copyright office, the task is then on to make this determination. For example only, if you were searching for rights to a book (movie rights or television rights etc.), merely locating a copyright in the name of the author of the book in the copyright office would not necessarily be determinative since if the book were published by another party publisher, the agreement between the author and the publisher would determine what rights the author gave to the publisher and what rights were retained. So even though this publishing agreement was not part of the public record that might be revealed by a search, the relationship between the parties (author and publisher) is governed by that agreement. (Read “Private Laws” on my site.)
Now let’s add dead parties to the list of issues. If the party with the appropriate rights was a natural person and is now deceased, you have to determine who is the proper party to deal with in that person’s stead. Not as easy as it seems. Initially, the deceased party may have left his or her rights via his or her will but that is not determinative since, under the copyright law, with regard to both renewal rights as well as termination of transfer rights, the author’s will or estate plan may be overridden by federal copyright law. (Read all the articles on my site dealing with these issues. Click on “Terminations of Transfers”) In other words, the party “left” the rights in a will or estate plan (or in even a more murky situation, if the author died intestate), may not be the party who has the rights. So the above copyright search might reveal termination of transfer notices that have significance.
Even more complex and arcane may be issues related to divorces, especially in community property states. (Read “Divorce and Copyright” on my site.)
What Kind of Agreement?
Let’s move on and assume that you have located what appears to be the proper party to be dealing with. What kind of agreement will you need?
First you have to decide if you are ready to actually exercise your licensed rights or whether you need time to do so. In other words, if you are seeking to raise money on the strength of your licensed rights, you first need to acquire such licensed rights so that you can raise the money. For that reason or for any number of other reasons, in such an instance, you would seek an option agreement to exercise the rights. This means that you would negotiate with the rights owner that you would have an option, exercisable under certain circumstances during a certain time parameter for a certain sum (fixed, percentage or any variation on those), for you to actually acquire the indicated rights. You would negotiate the exercise price as well as the option price and the many other terms that are needed. The agreement would have to contain all the necessary provisions about the nature of the rights, what you would acquire if you exercised them, time, territory, money, participation etc. even though you might not exercise those rights because you were merely acquiring an option to do so.
So whether you go with an option agreement or acquire the rights directly, among the many, many issues is that you have to decide if you need exclusive rights or non-exclusive rights. Then you need to decide the territory you need. Is it for the world or some lesser territory? What will be the term of your rights? What about translation rights? What kind of media are you seeking to exploit? Do you need the right to transfer and assign your rights to others? This last is very important since if you are seeking to acquire rights that require you to be able to allow others to use your resultant work (such as distributors, exhibitors, sellers, networks, merchandise parties, foreign parties etc.), then you must have the right to transfer and assign your rights and these rights must be spelled out in the agreement.
Moreover, if you are the acquiring party, you will want to have the licensing party make appropriate representations and warranties that the licensing party has the rights necessary and to indemnify you from claims of third parties if it does not. The scope of the warranties and the indemnities is always the subject of negotiation. Keep in mind that this is merely a contract provision in an agreement and merely gives you the right to sue the other party. You should consider obtaining appropriate insurance covering your acquired rights and your exploitation thereof.
What if the material you are seeking to license contains materials the rights to which are owned by other parties? For example, if you are acquiring rights to a book that contains quotes, photographs or other such materials, you must be able to examine the underlying licenses obtained by the author or other party to those materials to see if those licenses cover the rights you need and, importantly, if the license allows the licensee (your licensor) the right to transfer and assign those rights to you. My over 4 + decades of experiences tells me, however, that the more likely scenario is that frequently the initial user (the author for example) did not get any written permission to use that third party material or the permission was limited to the right to use that material “in your book” or similarly restrictive language. In that situation, you have the very unenviable task of seeking your own license from the third party. Some parties rely on “fair use” but this is a very uncertain and legally risky defense and arises once you have been sued. So you want to avoid being sued as much as you possibly can and thus it is always better to have a license. Read the many articles on my site under the general heading of “Fair Use.” Click on “Articles for Writers and Publishers.”
As indicated, although I have limited this article to acquiring rights to a book, similar and other issues arise no matter what the source material might be or the intended licensed use might be.
And if the “you” in this article is the licensor (the party doing the licensing),your issues are the flip side of these issues.
There are of course many, many other issues to be covered in this topic and in any negotiation. This article is only a brief summation. You (no matter who “you” are) should never proceed without representation by an attorney with experience in these matters.
Copyright © 2015 Ivan Hoffman. All Rights Reserved.
This article is not legal advice and is not intended as legal advice. This article is intended to provide only general, non-specific legal information. This article is not intended to cover all the issues related to the topic discussed. The specific facts that apply to your matter may make the outcome different than would be anticipated by you. This article is based on United States law. You should consult with an attorney familiar with the issues and the laws of your country. This article does not create any attorney client relationship and is not a solicitation.
No portion of this article may be copied, retransmitted, reposted, duplicated or otherwise used without the express written approval of the author.
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