So people who know me, know that I love video games. So I was excited when I saw Disney’s movie trailer for Wreck-it Ralph, an animated story about a villain who gets tired of being a villain.  In the trailer, one of the signature scenes is the main character attends an AA-style meeting with fellow video games. The amazing thing about this is the sheer amount of characters from different video game companies that appear in this film.
I know many of you reading this may be like, why is that a big deal? It is a big deal because generally the process to secure licensing rights to use copyrighted material or a trademark is expensive and can be extremely time-consuming. However, this article by, a site that focuses on mostly video games and other entertainment, interviewed the creators of Wreck-it Ralph. Be aware that characters in video games, cartoons, comic books, etc . . . sometimes have been both registered trademarked and copyrighted, as a strategy to create multiple layers of intellectual property (IP) protection.

I think there is a valuable lesson for business owners who do advertising, graphic design and content creation, and social media marketing in this quote:

But as the film started taking shape, rights issues eventually became a factor. “We went out and met with people in person, which I think is the key,” said Spencer. “When people came in for E3, we would actually meet with all of the companies and talk about the movie. From the very beginning we said, ‘We want to be authentic to your character. What we would like to do is put in an approval process where you look at our animation and you say that we’re being true to the character.'” As the creators noted, most companies were all for it.

Now, later in the article the creators do note there were some arduous processes, like double-checking with Nintendo if it’s characters were being represented accurately, but the lesson is clear ASK and TALK to the IP owner about what you want to do. This is the art of the sale and business deal, and I think authenticity goes a long way.

I have noticed recently many people are flocking to Slideshare to put up their presentations. I wonder, as I look through these well put together presentations, whether or not the people got the IP owner’s permission to use their images, logos, etc . . . . Did you talk to them? I realize it is easier to COPY and PASTE, but I will let you in on a little secret it is also easy to COPY and PASTE a CEASE and DESIST letter with a demand for damages.

So two weeks ago I discussed a marketing agreement (aka reseller agreement).  This was where you would allow someone to (re)sell your product or service for a fee.  The benefit of such an agreement should be clear to those who can produce a lot, but lack distribution channels.   As I said, I will be for several weeks charting some of the type of agreements you will come across as a business.

Licensing Agreements: Tool to Allow Usage, but Not Grant Ownership

Today I will focus on another type of contract that you might consider making, a licensing agreement.  Instead of selling your product or service to another, a licensing agreement allows another person to use your product or service.  The key word here is “use”, as with a licensing agreement the person who may be utilizing the product or service has no ownership.  In today’s electronic productive world, there is something that you should realize by now.  Most of your software (if not all) is not yours.  Why?  You have been granted a right to use the software through a licensing agreement., which means you cannot reproduce copies of your software and give those copies to friends.  It is a violation of a the licensing agreement.  This is why the term End-User License Agreement (EULA) pops up as you install a game, office suite, or some other type of software.

What the EULA says, more often than not, as you scroll to the bottom of the long document to click “I Agree” is you are the end-user, thus you get a license, and you understand you don’t own the software, nor will you copy and resale in en masse.

Now what does that mean for you small businesses with a strong brand or startups that are producing the next awesome software for everyone to use.  You can use a licenses to parse rights outs, the best example I can think of the art of licensing is you have a pie and you can choose to cut it up in any way you see fit (barring restrictions from the law).

Licensing Out IP: Factors to Consider

Let’s take a copyright license for a comic book.  You own the right to copy (which includes derivative works).  So let’s say you give the rights to “copy” to a movie company to produce a theatrical release, you give another license to a publishing company to do a novelization, then another to a Broadway producer to make a musical, finally you grant another license to a troop of interpretative dancers to perform the story on the street and open-air fairs.  These are all licensing agreements to use your right to copy a derivative work off of that one original comic.

Even what’s better for you as the licensor (the one granting the license) is you can change the terms of the agreement for each licensee (the one receiving the right to use).  Here are some things you want to consider in a licensing agreement:

  • Exclusivity – is the licensee the only one who gets the right to use? In one region?
  • Payment – does the licensee pay a one-time usage fee or do you make periodic payments?
  • Time – is the license forever? Is it finite? Does it end if a certain event happens?
  • Control – does the licensor have a right to dictate the quality, delivery, etc . . . of the product or service?
  • Indemnification – will the licensor move to defend the licensee if they get sued for using the product or service from a third party?

These are only a sliver of things to consider when using licenses.  As always while you may have your own basic ideas of what the objectives of your deal is it is best to go to an attorney to reduce your intentions to writing, especially when it comes to licensing intellectual property, land-use, and agreements that are to last beyond a year.

See you next week!

*Disclaimer:  This post discusses general legal issues, but does not constitute legal advice in any respect.  No reader should act or refrain from acting based on information contained herein without seeking the advice of counsel in the relevant jurisdiction.  Ryan K. Hew, Attorney At Law, LLLC expressly disclaims all liability in respect to any actions taken or not taken based on the contents of this post.

Today’s Draw the Law is a special one, done as a shout-out to all my photographer friends. In particular, this post is for Dallas Nagata White and her great assistant/husband Ed White and their support from the local photographer community. Thus, I will be delving into a narrow subset of contract law with IP tossed in for good measure to create a montage post of rights of publicity, copyright, model releases, and licensing agreements to help out photographers and models sort through the law so they can go back to doing their art and furthering their careers.

The Context

Before getting to the law, let’s set-up the context for all these concepts. It is a typical scenario: photographer is hired to do a shoot, selects a model, takes pictures, then posts or publishes those pictures. In those simple steps, without written documentation, there can arise a lot of problems. Then we get into the fight between photographer, model, and possibly third parties that use those pictures.

Copyright: The Photographer is the Author

Without delving too deeply into copyright law (because a) it is apart of my talks and b) I will be returning to it at a later date) understand that the photographer is the copyright holder because they authored the picture. Specifically, a copyright is given to anyone who creates “original works of authorship.” Therefore, as soon the photographer takes pictures of guys in cartoonish outfits the photographer is the copyright holder of the photographs. Copyright, is as it sounds, the right to copy. Therefore, a photographer usually assigns or licenses that right to make copies to companies who then use those images for marketing campaigns and the like.

Rights of Publicity: What about the Models?

Here comes the fun part of the situation, while the photographer is the copyright holder of the photograph the model has right to their face, likeness, even images of their body and the sound of their voice. This is known as rights of publicity; Hawaii law states that, “every individual or personality has a property right in the use of the individual’s or personality’s name, voice, signature, and likeness.” (HRS 482P) Therefore, it is typical for models to sign a model release to allow their image to be used in a manner the photographer sees fit.

Model Release vs. Licensing Agreement: Power Struggle

While both rights of publicity and copyright can be licensed, assigned, etc . . . for simplicity sake for this post I am going to separate them into model release and licensing agreement. Typically, a photographer will want to get a model to sign off on as many things as they can in a model release. The model release works by releasing the models claims to the ability to enforce their rights of publicity claim as to their image. In the case of a famous model and/or photographer, their goal is to try to limit the use of their likeness/image and/or photos by others because they can get more money. A famous actor/model will read through a model release or may even have their own agreement to force a photographer to either pay a lot for a lot of usage out of their likeness or pay minimal for say a one-time use whereas an upcoming model will probably sign away a lot of rights to a famous photographer due to the chance of becoming noticed. At the end of the day it all boils down to negotiation or sometimes going with what is the standard practice of the industry.

Third-Parties and Our Digital World: Letting the Images Out into Cyberspace

This last part is what we see on a daily basis on the web, but typically it is where people also get confused. So what happens now that we have the Internet, social media, and smartphones? We share images, we edit them, change them, see something we like and snap a shot of them, then share them. So let’s say that photographer takes a picture of model, and then posts the image to a sharing site. A company sees the picture and likes it, takes it, then slaps it on its merchandise to sell them. Let’s say the sharing site has a Creative Commons licensing agreement. Therefore, photographer actually licenses the right to copy to the site, which in turn gives that right to other users. Thus the copyright holder (photographer) has licensed the right (to use the photo) to third parties (the company) through the sharing site (due to Creative Commons licensing agreement). However, do you see the hang up? The model has NOT given up their rights of publicity to the company. They have every right to control their image, especially in terms of commercial use. Thus, while the company may have licensed the copyright for the photograph it has not gotten the right to use the model’s image/likeness in conjunction with its goods.

Last Words

Copyright law is federal, whereas Rights of Publicity is a state law, and not all states have Rights of Publicity on the books. Finally, you may wish to consider giving public notice of ownership of publicity rights, which you can file with the state of Hawaii’s Department of Commerce and Consumer Affairs. Chapter 482P permits an assignee or transferee of publicity rights to make a publicity rights trade name registration. For all the foregoing reasons that is why my photography and model friends you should consider documenting your agreement regarding photos.

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*Disclaimer:  This post discusses general legal issues, but does not constitute legal advice in any respect.  No reader should act or refrain from acting based on information contained herein without seeking the advice of counsel in the relevant jurisdiction.  Ryan K. Hew, Attorney At Law, LLLC expressly disclaims all liability in respect to any actions taken or not taken based on the contents of this post.

So last time I talked about Electronic Agreements I mentioned “clickwrap agreements.”  As you go cybershopping for the right gifts, and you invariably sign-up for new services or download new apps to play with on your iPad during the holidays you will come across the clickwrap (aka “clickthrough” or “clickwrap license”).  In particular, because of the Electronic Signatures in Global and international Commerce Act, these types of agreements have found legitimacy and therefore, commonplace usage.

What is a Clickwrap?

Before, we get to the clickwrap, you have to understand the shrinkwrap. The shrinkwrap agreement was how boxed software was sold. It basically state on the plastic wrapper that by tearing it open, you as the user, would agree to the terms of the software enclosed. Many people found this unfair that how could you agree to something you did not even see. However, courts upheld these agreements as enforceable (and I will get more into why later).

Thus, as the industry has shifted from boxed CD-ROMs for sell and moved to downloadable apps and packages online the shrinkwrap became the clickwrap. Usually, it is in the form that requires the end-user to manifest your acceptance through clicking a button that says “Ok” or “I Agree” after scrolling through that wall of text that you did not read. If you clicked, “Cancel” or the like, you would be unable to access the product or service. This take-it-or-leave-it approach is usually an adhesion contract, where one party lacks bargaining power and thus are forced to accept terms heavily in favor of the drafter.

Are these Enforceable?

Yes. Despite the imbalance in the bargaining power among the parties, Courts have upheld them. However, like all contracts any provisions that unconscionable, against public policy or law, will not be enforced. With that being said here are some of the grounds or various provisions that agreements have been upheld on:

  1. by clicking the clickwrap button after notice means consent has been given
  2. a clickwrap is simply “Money now, terms later”
  3. forum-selection clause
  4. arbitration clause*.

*Mandatory Arbitration is that Legal?

It depends. In a case between a user and the virtual world, Second Life, owner, the judge actually struck down a mandatory arbitration clause. The plaintiff argued that it had been “both procedurally and substantively unconscionable and is itself evidence of defendants’ scheme to deprive Plaintiff (and others) of both their money and their day in court.” The judge agreed and then struck down the arbitration clause. In general, the court went through a thorough analysis, but the main thing to takeaway was the arbitration would have made it more costly, rather than less costly for the plaintiff and for them to initiate the arbitration the plaintiff would require to advance fees and due to confidentiality no plaintiff would be able to learn from past disputes, thus the company would hold all the cards.

Why is it Referred to as a “License” sometimes?

As a I discuss in my IP Law talk for Small Businesses I discuss that software is actually copyrightable. Software is “written” and reduced to a “tangible medium” which makes it like literary works and sound recordings. Typically, with copyright, in your “bundle of rights” that come packaged with it you reserve the right to control the copying.  Thus notice that a famous series of books, the original copyright owner can license parts of the book out to studios for certain characters, duration of time, etc . . . because they own the “right to copy.”  Thus, there is no difference between software and their end-users, that the end-user is merely receiving a license to use the copyright owner’s software and is not given the ability to make copies as terms of the End-User License Agreement (EULA).

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*Disclaimer:  This post discusses general legal issues, but does not constitute legal advice in any respect.  No reader should act or refrain from acting based on information contained herein without seeking the advice of counsel in the relevant jurisdiction.  Ryan K. Hew, Attorney At Law, LLLC expressly disclaims all liability in respect to any actions taken or not taken based on the contents of this post.