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Reserving Rights When Agreeing to License

Publishers typically demand rights for the duration of copyright although the shelf life of the licensed work is likely to be measured in single digit years. Authors have a basked of exclusive rights set  out in Section 106 of the Copyright Act only some of which should be agreed to in book publishing contracts. Other rights such as the right to prepare derivative works should be reserved when agreeing to license. In reserving rights knowing which when agreeing to license begins with knowing what exclusive rights authors have. Section 106 reads:

[T]he owner of copyright under this title has the exclusive rights to do and to authorize any of the following(emphasis added):

(1) to reproduce the copyrighted work in copies …;

(2) to prepare derivative works based upon the copyrighted work;

(3) to distribute copies… of the copyrighted work to the public by sale or other transfer of ownership, or by rental, lease, or lending;

(4) in the case of literary, musical, dramatic, and choreographic works, pantomimes, and motion pictures and other audiovisual works, to perform the copyrighted work publicly;

(5) in the case of literary, musical, dramatic, and choreographic works, pantomimes, and pictorial, graphic, or sculptural works, including the individual images of a motion picture or other audiovisual work, to display the copyrighted work publicly….

As a rule of thumb an author should grant the publisher the rights necessary to successfully exploit her work in the medium in which they operate in consideration for which she will receive a fair return on her creative investment. Royalties are fairly uniform among publishers although it is possible to negotiate higher rates based on units sold and bonuses for weeks on bestseller lists. The rights that should be granted to publishers or through agents to specialized licensees depends on the nature of the work to be licensed. Terms that may be appropriate to genre inventions are not appropriate for textbooks productions.

A review of a number of recent publishing contracts from reputable mainstream publishers indicates an increasingly broader demand that the author transfer all of her discrete rights granted under the Copyright Law. Not only exclusive rights to “reproduce, publish, distribute and sell” the work which is “standard”, but exclusive rights to license the work for motion pictures, theatrical, dramatic, and radio and television broadcasting, digital and electronic media and adaptation, and merchandising and other rights for commercial use.

Should publishers get all that they request? If all these rights were granted and none retained the author would lose control of her property and potential economic benefits. Since many of these rights are ancillary to publishing they are more appropriately the province of licensees in the business of exploiting works in those different media. Rights typically transferred to a publisher include “subsidiary rights” – first serial (before) and second serial (after) publication – and translation rights. Income from subsidiary rights is typically divided between publisher and author. Merchandising and commercial rights are more logically granted to parties with expertise to exploit them. If these rights are granted they should be subject to reversion after a limited time and reverted if not exploited.

A troubling provision in contract from a major publisher deals with one of the author’s principal rights in a disguised way. It appears in a clause describing ownership of intellectual property. Under the Copyright Act an author has the exclusive right to “prepare derivative works based upon the copyrighted work.” One contract from a major publisher presumes to authorize the Publisher to “create or to authorize others to create [derivative works] … [that] will, at the Publisher’s option, be owned by the Publisher….” In agreeing to this provision the author would relinquish rights she could license for motion pictures, television and dramatic performances.

By all means be happy that a publisher is interested in your work, but be careful before you sign away more rights than a publisher or licensee can reasonably exploit or the author should reasonably be asked to give.

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