Terms In Multimedia Licenses
A comprehensive list of contract considerations is not possible without
knowing the peculiar requirements of each multimedia project. Legal
issues are unique to each work and are difficult to predict.
Nevertheless, there are issues that may be common to licensing all forms
of pre-existing material in multimedia, including the following:
What is the nature and extent of the rights being licensed?
The multimedia developer needs to know the type of rights that are being
conveyed and the licensor's authority to grant such rights. Frequently,
the licensor will grant rights to use the pre-existing works without
specifying which intellectual property rights are being granted. The
multimedia developer may thus unknowingly assume that he is receiving a
complete grant of every possible intellectual property right, or at
least all the rights he needs, without attempting to determine what
rights he is really getting in the license grant. The multimedia
developer needs to know the nature of these intellectual property
rights, but seldom asks specific questions. Does the licensor hold the
copyrights in the licensed material? Does the licensor or any third
party own the trademarks, service marks or trade dress rights on the
materials that will be used? Are these rights transferable and being
properly conveyed by the license? Does the licensor possess right of
publicity grants or waivers of right of privacy claims from any
individual whose image or performance is embodied in the licensed work?
Will the multimedia developer's alteration of the work violate any
artist's moral rights? Are there Guild or Union collective bargaining
agreements that will require the multimedia developer to become a
signatory before being granted the full rights to use the materials?
These types of questions are easily overlooked in the licensing
transaction which may appear deceptively straightforward, especially
when the agreement specifies the licensee's intended use.
Is the licensor the creator of the work or an owner by assignment?
The type and nature of the rights which the multimedia developer has
received from the licensor may be significantly impacted by the manner
in which the licensor makes its claim of ownership. The original creator
of pre-existing materials presents fewer problems to the licensee than
does a licensor who purchased the materials from some third party. The
wise multimedia developer, then, might look into the licensor's prior
business transactions to ensure that those business transactions have
been properly completed, or he should obtain sufficient warranties and
indemnifications as to their completeness, to be certain that he is not
simply acquiring materials which will be the subject of litigation at a
later date. For example, if the licensor is a copyright owner by
assignment, may the original creator take back the copyright ownership
under the Copyright Act, 17 U.S.C. § 203, thus terminating the
licensee's rights? Have the appropriate copyright transfers been
recorded with the copyright office? If not, a third party claiming
ownership by transfer, who is first to record his claims, may take
priority over the licensor, thus ending the multimedia developer's
license to use the materials. Corresponding issues exist with respect to
trademarks, service marks, and trade dress relative to transfers which
occur by contract without the assignment of the goodwill that is
associated with the assigned marks. Trademarks which are purportedly
conveyed without the conveyance of goodwill are void and may result in
the abandonment of the trademark.
Similarly, if the licensor did not
obtain the necessary releases or waivers of rights of publicity from any
actor, actress, or performer who appears in the film or video, it may be
necessary for a multimedia developer to ensure that all of the heirs of
that deceased celebrity have consented to the multimedia developer's use
of the film or video materials.
Thus, unless the licensor is the original creator of the pre-existing
work, has not previously licensed the work and has obtained the consent,
license or waiver from all the original participants, the multimedia
developer's risks are substantially increased, since the validity and
completeness of the licensor's earlier business transactions will impact
the legitimacy of the rights being transferred.
Is the license to be exclusive or non-exclusive?
The exclusiveness of the use will, of course, impact the cost of the
license and the multimedia developer's ability to sell or market his
product as the exclusive product containing the selected pre-existing
material. It would appear that most licensors will prefer to make
multimedia licenses non-exclusive in order to increase their opportunity
to exploit their library. By making licenses non-exclusive, the licensor
has the opportunity to continue to license the product as more clear
patterns for pricing pre-existing materials emerge. Thus, the licensor
will not have wasted his resources by licensing one user at an extremely
low rate when the market trend may be moving toward increased fees.
The multimedia developer, on the
other hand, may intentionally be seeking exclusivity in order to provide
his product with a marketing advantage. If the licenses are
non-exclusive, the multimedia developer may seek assurances from the
licensors that the licensing rate which they receive will be on a
most-favored-nations basis, i.e., the royalty rate that they pay will be
the most favorable rate that the licensor grants any other user.
Are there restrictions on the format and type of media in which the
pre-existing materials may be used?
Multimedia developers may find it advantageous to seek the right to use
the licensors' materials, not only in the multimedia product, but in all
associated, related or tie-in products that may later be developed. For
example, if pre-existing materials are licensed for use in a CD/ROM may
any portions of those materials also be used in the users' manual that
describes the use of the CD? May the same images be used on the exterior
packaging for the CD/ROM as part of the trade dress? The multimedia
developer of course may be well served by seeking the right to use the
licensed materials in any manner imaginable including perhaps even use
on toys, clothing, magazines and souvenir products. The licensor will
undoubtedly counter by limiting the license to specific categories of
use with a separate fee charged for each category. For example, use in
the CD/ROM is governed by a first schedule fee, use on the packaging or
cover art of the CD/ROM would incur a second fee, and use in a users'
manual would yield a third fee.
Will the Licensed Rights be Territorially Restricted?
Most multimedia creators will want to obtain worldwide rights. The
entertainment industry frequently uses terms such as "worldwide,"
"throughout the world," or even in some instances "throughout the
universe" to define the broadest geographic right to use possible. The
problem of territoriality, however, is frequently not just a question of
the scope of the rights which the multimedia developer seeks, but
instead, a question of the scope of the rights the licensor of the
pre-existing material has to grant. In multimedia as in other
businesses, a prospective licensee seeking worldwide use of material can
only obtain from the licensor the rights that the licensor possesses.
Thus, the multimedia user is restricted to the scope of rights that the
licensor originally obtained. This in turn raises the issue of whether a
multimedia developer should always ask to see the contracts which
purportedly give rise to the rights the licensor seeks to convey.
How Long is the Duration of the License and Each of the Rights Granted?
Intellectual property rights have different protectable lives. For
example, until the 1976 Copyright Act the copyright on a film only had a
total possible protectable life of just 56 years, while the rights of
publicity of a person domiciled in Tennessee who starred in such films
is potentially perpetual. Thus, if the multimedia developer wishes to
use film clips from Elvis Presley films of the 50's and 60's, it must
recognize that the life of the copyright in the film will not
necessarily coincide with the Presley estate's right of publicity. If
Elvis Presley did not assign his full right of publicity in the films he
acted in, the multimedia user will be faced with the task of obtaining
separate licenses from both the film companies and the Elvis Presley
estate. More importantly, even when the copyrights in the films have
ended the estate's right of publicity may continue and require the
multimedia developer to be licensed.
What is the Licensor's Control Over Quality of Licensed Products?
One of the most difficult areas presented in licensing considerations
involves the licensor's rights to continue to exert some control over
the way the licensed rights are used. While this is not frequently an
issue relating to copyrights, it is important where the right of
publicity is licensed, and in those instances where trademarks or
service marks are licensed. The fundamental consideration for such a
license is the licensor's right and obligation to assert control over
the quality of the products involved. Thus, licensing agreements should
address the issue of how the licensor will approve the proposed use, and
whether minor variations in the use are acceptable as long as the
multimedia licensee ensures that the altered use will be of the same or
similar quality to the approved use.
Does the Licensee have any Sublicensing Rights?
To date, it appears most of the multimedia licensing agreements have not
contemplated the right to sublicense. Nevertheless, as multimedia finds
new avenues of distribution, a licensee's right to sublicense will
become increasingly more important. For example, a multimedia developer
may want to acquire sufficiently broad rights in CD/ROM products to
allow the CD/ROM materials to be presented on cable or pay-per view
television. Thus, the licensee's ability to sublicense the broadcaster
may become an important consideration in the future development of the
industry and thus should be addressed in the present contract.
What is the Licensee's Ability to Obtain Independent Intellectual
Since the multimedia developer is using pre-existing materials to create
a new work, of fundamental importance is its right to obtain independent
intellectual property rights in the resulting product. In other words,
is the resulting multimedia product simply a derivative work, and if so,
will the copyright in the resulting multimedia product be impacted when
the copyrights on the original works expire? Can the multimedia
developer avoid such negative results by ensuring that its multimedia
product is entitled to its own copyright registration independent of any
original materials from which the multimedia project is derived? It
seems reasonable that contract language that specifically provides for
such a right should be included in multimedia contracts.
Who is Entitled to Enforce Rights Against Infringers?
The development of the multimedia industry also brings with it many of
the same problems that are apparent in the film, television, and record
businesses. Pirating of multimedia products will undoubtedly occur.
Licensing considerations for enforcing rights against third-party
infringers will have growing significance. Will enforcement actions be
undertaken by the licensor or the multimedia developers? Who will bear
the cost and gain the economic benefit? What is the economic impact on
the value of the license when factoring in the cost of enforcement
What are the Licensee's Rights Upon Termination?
While it seems self-evident that the multimedia developer would like all
licensed rights to be perpetual in existence, licensors may very well
seek to limit the license. Licensors may limit the number of units which
a licensee may produce an unlimited number of, (for example, 10 million
CD/ROM units), or the licensor may limit the amount of time that the
licensee can produce those units, (for example, the licensee may produce
as many CD/ROM's as he can in a twelve month period).
What type of Royalty Structure Should be
A variety of royalty mechanisms are used in licensing intellectual
property rights. Royalty payments range in nature from one-time flat
fees, to royalties based upon gross sales with up-front minimum
guarantees. Because multimedia developers may be licensing from many
different licensors, licensees will prefer to have some standardization
in the fees paid and the methodology by which the calculations for those
fees are performed, in order to keep costs within budget.
Licensors, on the other hand, will
want to maximize the income potential from the license and, therefore,
may very well wish to avoid standardized contracts in order to allow as
much negotiation as possible. Because of the potential for diverse
ownership in the intellectual property rights multimedia producers may
wish to use, content royalty payments could easily escalate to the point
that profitability of any multimedia project is eliminated. Accordingly,
multimedia developers are likely to be reluctant to agree to any
financial arrangements other than a flat-fee license. Content licensors,
on the other hand, may very well wish to seek a minimum royalty
guarantee, with a participation percentage based upon the product's
profitability in the marketplace.
What type of Warranties and Indemnifications Should the Licensee Seek?
Multimedia developers frequently will look to the licensor for
warranties and indemnifications concerning the licensed rights.
Specifically, the licensee will seek written assurances that the
licensor owns or has transferable right in the rights which are being
conveyed, and a commitment that in the event the licensee is sued for
infringement by virtue of the use of any licensed products, the licensor
will defend and indemnify the licensee and hold him harmless.
Licensors, on the other hand, are
typically inclined not to indemnify or make warranties to the licensee.
Indeed, the licensor frequently seeks to take a simple "consent"
approach, conveying whatever rights it possesses without making any
representation as to the nature, quality, or the extent of those rights.
The conflict between the licensor's
desire to avoid liability and the licensee's need for assurance that the
licensed materials will not violate the rights of any third party
creates a dramatic tension between the prospective licensor and the
multimedia developer which may very well lead to one of the most highly
contested issues of multimedia licensing. If the licensor will not or
can not warrant the rights it purports to have the right to convey, the
multimedia developer must decide whether to use the materials
nevertheless and accept the risk and the responsibility for
independently clearing those rights
Rights In Pre-Existing Works
If the licensor can not or will not make warranties or representations
relative to the rights that are being conveyed to the licensee, and the
licensee nevertheless, wants to use pre-existing materials in his
multimedia work, the developer will be faced with the daunting task of
clearing those rights itself. Even when the licensor is willing to make
warranties and representations, licensees may yet wish to verify the
rights that they are acquiring. Accordingly, multimedia developers or
their counsel should know how to clear such rights.
Precisely the Extent of Rights Held By The Licensor
The best source of information concerning the licensor's rights, in most
cases, will be the licensor. Even licensors who are reluctant to make
warranties or to grant indemnification must expect to make certain
fundamental representations about the scope and nature of the rights
they hold, if they intend to license them. The licensee thus may fairly
ask the licensor to specify the precise rights which the licensor claims
it may convey. The licensee must then compare the claimed rights to all
rights which could possibly be asserted against it by virtue of its
intended use. Through comparing all the possible rights that may be
asserted in the "work" which the licensee intends to use versus the
rights which the licensor claims, the licensee should be able to
identify areas of deficiency which need to be addressed.
It might be helpful to examine the
steps a multimedia developer would take to obtain a license to use clips
from motion pictures. In order to determine what legal issues are going
to be raised, the licensee must know the precise portions of the film or
video they wish to use. That material must then be carefully reviewed to
determine the following facts:
A) Are the film or audio
visual materials works of fiction, a documentary, or news clips?
Fictional films generally give rise to a greater number of issues than
do documentaries. At the other end of the spectrum, news clips generally
represent newsworthy events that fall within the public domain or are of
public interest and present the fewest ownership issues.
B) The licensee should
ascertain the ownership of the underlying source materials upon which
the film is based. The licensee will also want to be assured that the
film company obtained a full assignment of the actor's or actress's
right of publicity through the talent agreements. This may well prove to
be one of the most difficult tasks the licensee faces. Many film
companies have been reluctant to provide potential licensees with copies
of their stars' contracts.
C) If the particular clip
involves filming in public places or extensive use of "extras," the
licensee may well need to consult collective bargaining or guild
contracts that were in effect at the time the film was made to ascertain
the rights, if any, non-principal performers may hold.
D) Additionally, the music
that is synchronized with the film images creates the unified
audio/visual work. However, if the musical accompaniment is licensed for
the film, and is not owned as an original score for the motion picture,
the film company's license from the music publisher will determine the
extent of rights, if any, the film company has to use of the music
outside of the theatrical context.
E) The licensor will want to
determine if the clip includes product sponsorship shots that depict
trademarks or whether trademarks or service marks of the company are
ever visually depicted or audibly reproduced. If so, does the film
company's contract or license from the mark owner give the film company
the right for subsequent relicensing to third party users?
F) Documentaries and news
clips can themselves present unique issues regarding defamation or
invasion of the right of privacy. For example, a film clip of the United
States Senate's 1950's McCarthy Communist hearings might well prove
defamatory if such documentary materials were taken out of context or
not properly identified as to date, time, place and purpose. The
multimedia developer must of course be concerned that his use of
preexisting materials, if not properly presented, might also give rise
to defamation claims as well.
In addition to the foregoing, the
multimedia developer may also have to be concerned about the chain of
title to the intellectual property rights. In recent years, significant
corporate mergers, acquisitions, and film library sales have occurred
involving both U.S. companies and foreign companies. In some instances,
film libraries have been sold with restrictions placed on the film
purchaser's rights or with the original seller reserving certain of the
rights that flow from the films.
Secondary Sources of Information Regarding Ownership Rights
In addition to seeking information regarding the ownership of underlying
rights directly from the licensor, certain third parties or institutions
may prove valuable sources of information.
Copyright ownership and information regarding assignments can frequently
be found through Copyright Office searches. In addition to producing
certificates of registration, the copyright office files and records
assignments, transfers, name changes, liens, and judicial orders which
affect the ownership of such rights. In addition to searches conducted
by the copyright office itself, searches can also be done by private
search organizations or firms.
Trademarks, Service Marks and Trade Dress
Trademark, service mark and trade dress ownership information may be
more complicated in that there is not a single repository of
registrations. While federal trademark, service mark and trade dress
registrations can be obtained through the United States Patent and
Trademark office, each state has its own trademark registration process.
In addition to state and federal registrations, trademark rights are
acquired through simple adoption and use of a word, mark, symbol or
design. Thus, common law rights which may impact the licensee's use may
only be found through common law searches conducted by private search
C) Right of
The right of publicity has developed under common law and become a well
defined legal principle in just the last 30 years. Under the bulk of
common law cases that have addressed the subject, the right of
publicity, like its cousin the right of privacy, does not survive the
owner's death. However, in the past decade, almost a dozen states have
created post mortem rights through legislative enactment.
Of importance to multimedia
developers is the fact that rights of publicity are recognized in the
four states that have the most significant entertainment industries,
California, New York, Nevada, and Tennessee.
Accordingly, pre-existing works
which originate or are created out of those jurisdictions are likely to
recognize rights of publicity in performers who may appear in the
Clearing the right of publicity
claims may be the most difficult intellectual property right to clear at
present, because of its recent development. Fortunately, several states
that have enacted right of publicity statutes have also developed the
registration scheme which allows for the registration of rights of
In those states with registration
mechanisms, multimedia developers can search for registered rights.
However, since the bulk of all states will rely upon common law rights
rather than statutory registrations, the multimedia developer will
inevitably have to rely on other clearance techniques. The recently
formed Rights of Publicity Clearance [RPC] organization may prove to be
the most useful tool available to multimedia developers through its
inclusion of common law rights of publicity references which
cross-reference celebrity agent, management and public relations firms
which represent living as well as deceased celebrities.
Another valuable source of rights clearances for multimedia developers
are existing registration organizations. For example, books, film
scripts, plays, tele-plays, television treatments and related writings
which often form the basis for later audio/visual works are frequently
registered with the Writers Guild or Writers Guild West. Similarly,
synchronization rights are frequently licensed through organizations
such as the Harry Fox Agency and small performance rights through
licensing organizations such as ASCAP, BMI and SESAC.
Acknowledgment and Consent Letters
In light of the vast potential number of intellectual property rights
which a multimedia developer may need to clear the task might be
overwhelming if a separate license were to be negotiated for each right.
A wiser strategy may be for the developer simply to attempt to ensure
against liability and avoid litigation.
This may be accomplished by the use
of simple consent forms which multimedia developers require the licensor
to obtain from third parties on the licensee's behalf.
For example, if the licensed work
involves a photograph of a baseball park, containing the advertising
signs of team's sponsors, should the multimedia developer reproduce
those signs without the advertiser's consent? A better alternative
undoubtedly is to ask the licensor to obtain the written consent from
each of the advertisers to the reproduction of the advertisers'
trademarks and sign copy in the context of the new multimedia work. The
licensee might condition payment to the licensor upon the licensor
obtaining such consents. There is, of course, an additional benefit
derived from requiring such consent letters. At the minimum through
investigating the extent of the rights which the licensor purports to
grant and seeking to identify potential third parties who may have
claims, the multimedia developer is demonstrating due diligence. In most
areas of intellectual property, innocent infringers are at significantly
lower risk of having large damage awards imposed against them.87 Thus,
the multimedia developers' attempt to identify potential third party
owners and to seek their consent of the multimedia developers use
through the licensor would seem to be a wise implementation strategy.
In those instances where the
licensor purports to have all of the intellectual property rights that
are necessary for the multimedia developers license, the licensee must
still determine whether it has sufficient information either in the form
of a license agreement or from the disclosures or representations which
the licensor has made concerning the origin and ownership of the rights
it intends to license to determine if the licensor has that which it
claims to convey. Thus, the multimedia developer or its counsel must be
sufficiently conversant with the elements of creation and ownership of
individual intellectual property rights to determine that they are in
fact obtaining the rights that they are paying for.
Intellectual Property Rights Contract Checklist For Licensing
In order to ensure that multimedia developers are securing all of the
intellectual property rights they require to avoid third party
liability, it would be helpful for them to ensure that the licensing
agreement or the supporting information from the licensor answers basic
questions regarding the creation and current status of rights that are
being conveyed. The multimedia developer or its counsel should consider
the following questions in each of the separate intellectual property
1. Is the licensed material an original work of authorship?
2. Is it in a tangible form which is capable of being copyrighted?
3. Was the work created by one or multiple authors?
4. Is the author(s) living or deceased?
5. Does the contract convey all author's rights?
6. Were the author's employees working within the scope of their
employment when they created the work?
7. Were the authors independent contractors? If so, had they executed
8. Was ownership of the copyright obtained through assignment or
9. If ownership was obtained by transfer, was the transfer recorded in
the Copyright Office?
10. Is the material a derivative work?
11. Does the licensor own the copyright on the original work?
12. Does the work bear a copyright notice?
13. Is the copyright notice accurate?
14. Was the work published?
15. Was a copyright registration obtained on the work?
16. Was the registration obtained within five years of the date of first
17. If registrations have been filed before January 1, 1978, has a
renewal on the copyright been obtained? Is one available? When must it
18. Does the copyright registration reflect that the work is a
19. Have all pre-existing materials from which the work was derived been
listed on the registration application?
20. If the copyright has been transferred, does the registration bear
the signature of the author or his appropriate agent or representative?
21. Has a copyright registration been filed in the original or
22. Has any transfer been terminated?
23. Has notice of termination been filed in the Copyright Office and
with the appropriate parties?
24. Does the licensed material contain the name, photograph, likeness,
voice or signature of a real person, living or deceased?
25. If the person is a living individual, does the intended use involve
a commercial benefit to the multimedia producer?
26. Was the use of the name, photograph, voice, signature, or image ever
approved or licensed by the person?
27. Was a general release or a license signed by the person possessing
28. Is the license or release unrestricted and perpetual in existence?
29. Has the person licensed or authorized other similarly situated third
parties to make use of the same or similar rights?
30. If the person is deceased, is he an historic figure?
31. Is he a public figure or a private person?
32. Where was his state of domicile when he died?
33. Does that state have a right of publicity statute?
34. Was a probate or an estate filed?
35. Does the deceased person have living heirs?
36. Has the person been deceased for longer than the state mandated
rights of publicity?
37. Has the estate secured an agent or licensing representative?
38. Has the estate or licensing representative licensed third parties to
use other aspects to the rights of publicity?
39. Is the anticipated use in the form of a news event, parody or a
matter of public interest?
40. Have the estate's heirs filed registrations in the state of domicile
or in those states that have statutory rights of publicity statutes?
41. Will the distribution of the multimedia product include states that
provide for statutory or common law protection of the right of
42. Will the multimedia product contain visual images, pictorial,
photographic, sculptural, or print works?
43. Will the intended use by the multimedia developer distort, abridge,
alter, mutilate, or modify the artistic work?
44. Does the distortion, mutilation, or other modification of the work
prejudice the artist's honor or reputation?
45. Is the author a living person?
46. Was the work created before or after the 1990 passage of the Visual
Artist's Rights Act?
Service Marks and Trade Dress
47. Has the mark been registered?
(a) With the United States Patent & Trademark Office on the principal
(b) Has the mark been registered on the supplemental register of the
United States Patent & Trademark Office?
(c) In any state?
48. Is the mark currently used in commerce?
49. When was the first use of the mark in commerce?
50. Has the mark achieved secondary meaning through continuous use in
commerce for more than five years after registration on the supplemental
51. If the mark has been filed for more than five years, have necessary
affidavits of use been filed?
52. Has the mark become incontestible?
53. Has there been a discontinuation or interruption of use of the mark
for more than two years?
54. Has there been any overt expression of intent by the licensor to
abandon the mark?
55. Has the mark been licensed previously?
56. If the mark has been licensed by writing does the license give the
licensor the right to control the quality of the goods or services
produced under the mark?
57. Has the licensor exercised quality control over licensee(s) to avoid
abandonment of the mark?
58. Have mark searches been conducted for similar marks by the licensor?
59. Are there any other users of similar marks in related fields?
60. If there are other users, are the other marks registered?
61. Have there been any court proceedings testing the validity of any
parties' rights in the mark?
62. How vigorously has the licensor defended its mark against
unauthorized third party users?
63. Are there multiple third party users of similar marks?
64. Is the material of an intimate, sexual, or offensive nature?
65. Was the material obtained by clandestine or illegal means?
66. Has there been previous disclosure of intimate, private or offensive
67. Would a disclosure of these materials be offensive to a reasonable
68. Is the material a newsworthy item or item of public interest?
69. Has there been publication of this fact from more than one source or
are these facts available in the public records?
70. Have the photographic images been altered in an offensive manner?
71. Have items and facts been omitted from the story so as to cause it
to be misleading, presenting a person in a false or negative light?
72. Was the image obtained in a public place?
As multimedia developers begin routinely negotiating licensing
agreements in the multimedia field, it should become obvious that
licensees will require a significant amount of information about the
origin, ownership and protection of the intellectual properties which
licensors intend to grant them. In the age of information, information
is power, and the more multimedia developers know about the underlying
rights in the pre-existing works, the more successfully they will be
able to incorporate such materials into their multimedia projects.
by Sidharth Chopra can be reached at :