Licensing in one form or another is the source of the majority of the income derived from copyright; consequently, it is crucial that creators and copyright holders understand the stakes involved in licensing their works, and the terms on which licenses are granted. Careful writing and negotiation is the key to ensuring that copyright owners and users can get the most benefit and the least risk from a licensing transaction, at an appropriate fee.
Briefly, a license is a contract giving a user (the “licensee”) permission given to use a copyrighted work in certain specified ways. A license is not a sale of the work, although a license with very broad parameters can be almost the same as a sale. There are several major parameters that define how broadly or narrowly a license is drawn:
- Exclusivity: Will the copyright owner be committed to licensing the work only to this particular licensee (at least with respect to that licensee’s particular type of use), or will the copyright owner be able to license several potentially competing users at the same time? Keep in mind that the competing users may include the copyright holder itself: an exclusive license normally excludes competing use even by the copyright holder.
- Territory: Where will the licensee use the work? This can be “everywhere” (usually phrased as “the world” or “the universe”), or it can be limited to particular areas (usually countries – i.e., “the United States” – or regions – i.e., “North America”). Defining territory can be tricky, and customary meanings differ between licensing organizations and between media, and are not always the same as the layman may expect. In motion picture distribution, for example, territories are frequently conceived of not as physical geography but as linguistic and cultural zones. This is chiefly because films must be translated (with dubbing or subtitles) into local languages, so that a license nominally covering “France” will often be defined as covering, in effect, many – but usually not all – territories where French is spoken: Tahiti and Haiti, for example, but rarely Quebec, which is usually covered by a “North American” or “Canadian” license, despite the language difference. Since there are often several different exclusive regional licensees, it is very important to make sure their territories don’t overlap.
- Media: In which media will the licensee use the work? Increasingly, it is common to license in “all media” or “all media, including media not yet developed or discovered.” These broad licenses allow, for example, filmmakers to use licensed music in their films without fear that a distribution medium not yet existing, or existing but not yet widely used, will require a new round of licensing from all the licensors. This has been a significant problem in the past, and certain films, even landmark films, languish because the cost of a new round of licensing is thought to be prohibitively expensive. Nevertheless, many licenses are still written with limited media scope, usually to keep costs low for the licensee, or to prevent conflicts with existing licenses.
- Term: For how long is the licensee permitted to use the work? Terms can be quite short, especially where the use is for something transitory, such as licensing music or photographs for use in an advertisement; or quite long, as for the use of music or television clips in a film, in order to allow the film to be exploited for a long time without the need to re-license. Often, particularly for use in television programs, licenses are for a short term but with renewal options for a longer term; this allows the licensee some flexibility to keep costs low at the outset, but to continue use for an agreed cost if a television series is picked up or takes on a later life in syndication or another form of distribution. Sometimes, the “term” variable is replaced with or accompanied by a limit on a certain number of units distributed: a limited printing of a book which includes licensed photographs or poetry, for example, may dispense with a term in place of a unit limit.
- Portion Used: How much of the licensed work is the licensee permitted to use? Sometimes licenses cover an entire work – reproducing a photograph in a book, for example. In other cases, only fragments are used: a license to a filmmaker to use 30 seconds of an episode of an old television show, to be watched by the characters in a new film. Auxiliary variables can include whether the use of the work is in the foreground or background, or whether – as with music in a television show – the music is in the soundtrack only, or is visibly performed by musicians on screen.
- Sublicensing / Assignment: Can the licensee delegate, sell or give away his right to use the licensed work to someone else? Copyright owners and artists are often very selective about who they will accept as licensees. Unless the license agreement is carefully worded, courts will often find that a licensee can transfer its rights to others without the approval of the copyright owner or author. Sometimes this is not a problem – for example, a film production company who wants to be able to transfer or sublicense its rights to use licensed music to a subsidiary or affiliated company for tax, legal or organizational reasons; at other times, it can be highly problematic – for example, a licensee of music who sublicenses the music’s use in a political advertisement.
All of these parameters, and several others, come into play when calculating the fee for a license. Usual market practice is helpful in setting a price, but as with any deal, in the end the price for a particular license will be determined by how much and how badly the licensee wants the particular work, and how eager the copyright owner is to license it.
As a law firm focused on copyright in a global marketplace, the Law Offices of Joshua Graubart, P.C. can help you determine whether use of a given work requires a license from the copyright holder, and if so, help you to issue or obtain the necessary licenses, whether in the United States or abroad.