“Own The Rights:” Say What Now?

“We need to own the rights.”

That phrase gets thrown around a LOT in the creative industries. And it gets misused quite a bit of the time. What does it mean to “own” rights? What is it worth? Why is it necessary?

A personal story:

I used to be a photographer. I was pretty good, too. One day a friend of mine tells me his daughter’s boyfriend is managing a model, and she needs some portfolio pics, and could I do it? I said, “Sure.” So I go and take some pictures and everybody’s happy. Then Daughter’s Boyfriend calls me and says, “Hey, I manage a new band, they needs some album and promo pics, can you help me out?

I said, “Sure. What are you looking for, and what are you looking to spend?”

He says, “Well, I figured I’d pay you $200.00 and you’d just give me the film.”

Not pointing out that I shoot digital, I politely respond, “Yes, but what rights do you need?”

“Well I figured we’d own the pics and just pay you for your time.”

Fortunately, I know my friend doesn’t actually like Daughter’s Boyfriend, so I don’t have to be nice to him

I respond, “So you want to own the copyrights?”

“Yeah!”

“Then that will be $100.00… per image.” Which is still ridiculously cheap but I can’t imagine any band managed by this chucklehead will ever amount to much so get while the gettin’s good, thinks I.

Incoherent sputtering. “Why so much?”

“Because I’m selling you all the rights. The pictures won’t be mine any more. That’s what I charge for that.”

“Well, but if the band makes it big you could sell prints and stuff!”

“No, I can’t, because you will own all the rights.”

It will probably shock you to learn that the conversation really never went anywhere after that.

Anyway, chuckleheadedness aside, the story illustrates a very common lack of understanding what it means to have “the rights,” and what “the rights” are potentially worth. Kevin Eastman self-published a raw black-and-white comic, kept the rights, and now has an eight-figure net worth. Bob Kane created literally the most valuable comic book property in history, and died worth around what a good vice-president of sales for a small company who’d had the same length of career would probably have been. Similar examples in every creative industry are not difficult to find.

Obviously “the rights” is a complex topic. But in this post I am just going to talk about one specific question: what do we mean by “own the rights?”

Legally? Nothing. Nothing at all. If you tell me you “own the rights” to a property, I will not, legally speaking, know what you have. I will have some indication as to what you think you have, but even giving you the benefit of the doubt and assuming you actually have what you think you have, you haven’t told me what you have. Why? Because I don’t know if you are a creator, an assignee, or a licensee. And if you are a licensee, I have no idea what the terms of your license are.

Let me expand on that.

Arguably, “owning the rights” to a copyright, trademark or patent should mean that:

  1. If it’s a copyright, you are the holder of the actual copyright;
  2. If it’s a trademark, you are the registrant of a registered trademark and/or the producer of goods which are sold or distributed in association with that trademark;
  3. If it’s a patent, you are the owner of the issued patent.

If you use this definition of “own the rights,” there are two ways to be the “owner” of a piece of intellectual property: you can be the creator, who owns it by operation of law when it is created, or you can be an assignee. An assignee is a person who has the thing assigned to them by the current owner, be they the original creator or a prior assignee. “Assign” in this context means “to transfer ownership.” Assignments are, for purposes of this discussion, permanent (perpetual) and irreversible, worldwide, and exclusive. It’s like buying a house. The person who built the house owns it. They can sell it to somebody, and then it is the buyer’s house. The builder has no more rights in the house at all. They can only sell it to one buyer, and then it’s a done deal. That buyer can sell it to another single buyer, but then the first buyer is out. And so on.

However, here are other scenarios in which it is perfectly reasonable to say someone “owns the rights” to something:

  1. If it’s a copyright, they are the exclusive worldwide unlimited licensee of the copyright from the holder of the copyright;
  2. If it’s a trademark, they are the exclusive licensee of the trademark for a particular type of good or service;
  3. If it’s a patent, they are the exclusive licensee of the patentholder in a particular country.

In the first case, a worldwide exclusive license could be considered effectively owning the copyright: no one, including the holder of copyright, can use it without your permission, but you can use it for anything you want. That looks like ownership if you squint, and you don’t have to squint too hard. This by the way is not uncommon in the publishing industry. “Oh, you keep the copyright…” but you can’t actually do anything with it because you gave the publisher a (nearly) perpetual exclusive worldwide license.

In the second case, the master licensor “owns” the registration… but allows only a single licensee to use the mark in association with some particular type of goods. Typically, even the master licensor can’t use the mark in association with the licensed goods during the term of the license. Again, I can use it for whatever I want, nobody else can use it without my permission. Looks like ownership at a distance.

In the third case, the licensee effectively “owns” the right to practice the patented invention in that country. See prior observation. With respect to the licensed territory, looks like ownership.

There is only one way to be a licensee(1), and that is for the current owner (be they the creator or a later assignee) to give you a license, which makes them a licensor and you a licensee. Licenses, for purposes of this discussion, can be permanent or temporary, reversible or irreversible, exclusive or nonexclusive, worldwide or territorial. They can be diced, sliced, and turned into heaping mounds of delicious Julienne fries which can be shared amongst a nearly unlimited number of licensees. It’s like owning an apartment building. A builder can build an apartment building, and then lease the individual apartments to tenants. Each tenant could theoretically have a different lease – different rent, different terms, Sally can have pets because she negotiated a pet clause but Sam can’t because he didn’t, and on and on.

Master leases are usually exclusive between the lessor and the lessee – Sam will only lease the apartment to one person at a time, namely Sally. But Sally can sublet to Susie, who then has no lease from Sam, but has one from Sally, which means Susie can occupy the place (and Sally can’t) but Sam can evict Sally which means Susie has to get out, because Sally can only give Susie what she’s got, which is the right to occupy the apartment subject to Sally’s lease. If Susie gets evicted because Sally didn’t pay the rent, Susie can sue Sally for breach of her sublease but can’t directly fight the eviction because she hasn’t got a lease from Sam.

On the other hand, Sally could rent a three bedroom apartment from Sean, but then rent one bedroom to Susie and one to Sarah.(2) Sally has an “exclusive” lease to the whole apartment – she’s like someone who has an exclusive license. But because she’s allowed to sublet – in licensing, it’s literally called a sub-license, same exact idea – she can give Susie and Sarah exclusive “licenses” to their bedrooms and a non-exclusive “license” to the common areas of the apartment like the kitchen, the living room, and the bathroom (where Sally, Susie and Sarah jointly display their collection of seashells from the seashore.)

Or, to make things interesting, Sally, Susie, and Sarah could all sign the lease from Sam, which would make them co-tenants. In the licensing world, they’d be co-licensees, which is different from sub-licensees, just like being a sub-tenant is different from being a co-tenant. All three of them are allowed to use the apartment, and none of them can kick one of them out. Sam, however, can kick all of them out if one of them breaks the terms of the lease. So as you can see this has pros and cons, both in our metaphorical apartment lease and in the real world of licensing.

Interestingly, it’s not unheard of for me to tell a client that they don’t need to own the rights to something – they just need a license to do whatever it is they want to do, which might be cheaper, easier, have tax benefits, or in many other ways actually make more economic sense than trying to just buy the thing outright. Sometimes, renting an apartment makes moe economic sense than buying a house.

To apply this to my personal story, Daughter’s Boyfriend, if he’d had the sense God gave gravel, would have just said, “I want the rights to use the pics for promotion of the band and on merch. I’ll give you (some amount, either fixed or based on sales) for them.” He didn’t need to own the copyrights. To analogize, he didn’t know how long he was going to be in town or whether his new job was going to pan out: buying a house would have been stupid. He should have just rented an apartment.

But some other chucklehead told him he needed to “own the rights” at some point and his greedy, grasping little mind did the rest when a professional photographer asked him what he expected to get out of the shoot.(3) And by “did the rest,” I mean “made him look cheap, ignorant, or cheap and ignorant.”

However, what doesn’t happen is for me to tell a client that they don’t need a license with teeth. If you’re licensing content for a larger project, that license has to sustain the content through the entire estimated lifetime of the project. If I license an original theme song for five years, and put it in an RPG, which takes off and becomes a huge hit and gets its own animated series, and is still going strong five years later, having to pull that song out of the game could do huge amounts of damage to the property. And the creator will have just gobs of leverage to use against me at license renewal time.

And it might not even take that long. The song is super catchy. People sing it at cons when they cosplay. Streamers hum a few bars when the game gets intense. Podcasters quote it for emphasis.

And we need it for the anime or the main character won’t be able to power up!

But wait… your license is for video games. And also you have no sublicensing rights. The song can’t go in an anime and even if it could, you can’t license it to the animation studio. Nor can you use it in commercials for the limited-edition Battle Damage action figure of your main character. Should have gotten a better license. Or, in this case, as crucial as this is to your property as a whole, just gotten an assignment.

So here are a few things you should take away from this post:

  • If somebody says they “own the rights,” you need to pin them down.
  • Sometimes, you don’t need the rights assigned to you, you just need a solid license.
  • Other times, you really, really need to “own the rights” – get an assignment – because the risk of losing a license is just too high.
  • Never assume that because something is “just a license,” it couldn’t effectively be an assignment for a limited term (or forever) because an exclusive license can also exclude the owner, in which case the owner hasn’t got any more rights than anybody else, even if they still “own” the thing. If someone goes out of their way to say “of course, you still OWN [whatever,]” that is at least a yellow flag because it doesn’t matter what you own, it only matters what you can do with it.

As always, thanks for reading! Questions are welcome in the comments, on Twitter (look to the right for my Twitter feed) or by email.

M


(1) Licenses can also come into being by various operations of law: these are usually called “implied licenses.” How that happens is outside the scope of this post but even an implied license is just that – a license.

(2) In real life it might be illegal for her to do that and/or her lease might have a “no sublet” clause, but assume it’s okay in this context.

(3) He should have asked me to take a shoot fee and a license to use the pics for promotion and event merchandise, with an option to buy the copyrights if the band took off. I’d have done that for $200 just for the Hell of it.

2 comments

  • Is it generally advisable to contract for the rights to assets right from the get-go for media like games (I think “work for hire” would be the term)? That way, if the game takes off, you’re already good to hook. You pay more, but reduce the risk of not being able to use them.

    I don’t know where it shakes out for the creator. I could see taking a little bit more for assignment of rights at the end of the contract could pay off, because then all risk belongs to the client and their game. That is, you get a guaranteed amount more, but you will miss out if the game happens to take off.

    Or would it be best to contract for a limited license with a predefined larger amount to buy a full assignment, as you stated for the band manager? If I was a game creator, I’d sure not want to contract for a limited license on assets I’m directing somebody to create, then have them come back to wring every last drop out of me if it happens to take off-and frankly, there’s likely to be a lot more to making it take off than the art and music assets.

    I know you covered the various iterations of this in the post. I was really wondering what, from a “blank sheet of paper” view, is likely to make more sense for a creative endeavor like this. I’m an engineer who does civil works design work for the US Government, and a great deal of our acquisition strategy is geared around getting as much risk as possible from the Government to the Contractor. Of course, you’re limited by the fact that if you push too much risk, you’re going to pay a lot more, either because you have too few (or no!) bidders, or your bidders will demand to be compensated a lot. It’s interesting to see how different fields shake out in practice.

  • Nyaaaarg…that first sentence should be “Is it generally advisable to contract for an *assignment* to assets…”, nothing like making a mistake that makes it seem like you didn’t read the post.

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