LOOK BEFORE YOU SIGN:

RESTRICTIVE LICENSES

IVAN HOFFMAN, B.A., J.D.

 

It is the wary publisher and author who, when confronted with a licensing agreement for the use of copyrighted material, looks far down the road. Short term benefits, such as being able to use the material, must be weighed against possibly longer term and rather substantial problems that can arise by signing such agreements.

Many publishers issue licenses for the use of the material they control which are quite restrictive and can present extensive problems for the user. Let me offer some brief examples and the potential problems that can arise should these licenses be executed.

1. Fees. Needless to say, some publishers request a fee for the use of their copyrighted material. This brings up the issue of "fair use," (perhaps the subject of a subsequent article), in that such fees may not be due if the quoted material falls within this rather wide open, but fee free area. Of course, one never knows if the material quoted falls within the concept of "fair use" until it is finally determined by the courts and, as a result, it is often best to obtain permission before quoting.

But it is not the fee so much as the other restrictions about which you should be concerned. Some licenses are issued only for a limited number of copies of the book and then presumably if sales exceed that number, new licenses must be negotiated, entailing new fees. Moreover, some licenses containing these provisions require the using publisher to send accounting statements to the licensing publisher. Do you want your competitors knowing your sales?

2. Term of Years. Major doomsday scenario possible here. Examples: what if, at the time the term of the license expires, the original publisher who issued the license no longer controls the rights, such as if the work has gone out of print and reverted to the author? Or worse, the author's estate? Trying to locate the appropriate person may be very difficult. Or worse still, what if the subsequent person controlling the rights elects not to relicense those rights for who knows what reasons? And if you cannot obtain a new license, does that mean you have to take the material out? And at what cost? Equitable legal doctrines, such as estoppel, are only of value in a litigation, something to be avoided if possible.

3. Limited to specific editions of the work. This means that if the license is for cloth, when you go to paper you must obtain a new license, with potentially new fees. On a perhaps more esoteric level, sometimes licenses are limited to specific imprints of the work. What if the using publisher develops a special line down the road, say a low priced version, and wishes to issue it under a new imprint? New fees?

4. Licensor participates in ancillary rights. For example, some licenses give the licensing publisher the right to a percentage of book club sales.

5. Language and/or territorial restrictions. Some licenses are issued for English only versions, or only in certain markets, thereby requiring the using publisher/author to obtain separate licenses for each translation or territory. More fees. More paperwork.

When you request a clearance, you should seek worldwide rights for all editions in perpetuity free of fee.

But the fact that these licenses are so limiting is merely one aspect of the problem. If you have ever sought permissions, then you know that it can take months at times to secure the same, sometimes entailing multiple requests to overworked permissions departments. During the pendency of your request, the publisher that goes ahead and prints in an area not then currently licensed runs substantial risks of expending costs before knowing the future ground rules. And if the publisher waits until the license is executed, much valuable time can be wasted.

Finally, following the paper trail, keeping track of what licensed rights apply to what books, what versions of what books, is a nightmare that many small and perhaps some large publishers would soon enough avoid.

This is only a brief outline of potential pitfalls of which the publisher and author should be aware. Examine the license carefully and see it with a vision that extends beyond today and into tomorrow.

Accordingly, unless the particular material you wish to use is absolutely not replaceable with some other material, it would seem wise advice to not execute licenses that contain some or all of the foregoing restrictive provisions.

© 1996 Ivan Hoffman.  All rights reserved

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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.

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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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