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Clearing Rights for Multimedia Works
INTRODUCTION
The ground-breaking aspects of undertaking to create a multimedia work are more than just technological; much as the technology is growing by leaps and bounds in response to the needs of creators and consumers, so also must the methods and techniques for transferring from owners to new creators the rights to utilize existing works. As this industry began to take on form and vision, much excited speculation and wonder quickly turned to disbelief, if not outright horror, as creators began to understand what a labyrinth "clearing rights" would be.
Multimedia
... is ... a lawyer's ultimate nightmare. 1
There are many exciting innovations on the horizon, especially as more and more works will be created electronically from the start; information can be contained electronically within works indicating permitted uses and even prices; payments may be made on-line; the process will become more like buying building materials at a hardware store than it could ever be in the print environment. But, until that day comes, the process remains so rigorous as to discourage many who would otherwise utilize existing works. For many, the only reasonable choice is to create new materials; however, even this avenue requires that the creator carefully address issues of intellectual property ownership (work-for-hire issues), rights of publicity and privacy, artists' guilds and a myriad other concerns with which computer professionals, to say nothing of university faculty members, are in many cases not so familiar.
During this presentation, I will address only the issues that arise if the creator decides to utilize pre-existing materials, as this is a very common starting point for many undertakings. The creator will find, however, that acquiring rights in existing works and protecting one's own works involve the same issues. In summary, the areas of concern will be:
-
Acquiring intellectual property rights
- copyrights
- patents
- trademarks and tradenames
- trade secrets
- titles and characters
-
Protecting against personal injury lawsuits
- rights of publicity
- rights of privacy
- defamation
- unfair competition
-
Developing appropriate license agreements
- text
- motion pictures
- still images
- music/audio
- computer software
-
Negotiating with Artists' Guilds 2
If this list sounds daunting, that is because the task is daunting. I will not be able in this presentation to effectively illustrate the depth of energy, time and commitment that is required to properly secure all the necessary rights, and I recommend that anyone undertaking such a project seek expert advice for details. I would also recommend Michael Scott's volume, as cited elsewhere in these materials, for its careful attention to details, contacts, resources and sample forms developed specifically for multimedia.
There are several reasons that the identification and acquisition of rights is so difficult at this time. The manner and means of locating copyright owners is still for the most part tied to print traditions. "Permissions" have never been, until very recently, a money-making proposition for print publishers. Most would say that it costs more to have a permissions department than the department could ever generate for the publisher. Digital technologies will probably change this equation drastically, but not quite yet.
Most copyright owners and their publishers are just as new at this as creators; no one knows how much snippets and clips and samplings are worth. So, even after successfully locating a copyright owner, a creator may be quite disappointed with the asking price. As Scott points out, however, this reluctance to bargain has the tendency to create a robust market for those willing to create works specifically for the multimedia client at a price that is affordable. Owners of preexisting works are likely to be left out unless they begin to better understand the economics.
Another problem is the lack of standard license provisions. There are novel issues in this undertaking that only experience with actual acquisitions will reveal. There are few individuals who have acquired enough experience to pass it on. Most are learning as they go.
Finally, there is a generalized reticence on the part of owners to allow their works to be digitized because they fear a loss of control over their work. This too will contribute to the development of a market for those willing to create works specifically for multimedia producers. The gap left by those unwilling to bargain will be filled; it is up to owners of preexisting works to decide whether they will benefit from the digital revolution.
Advice that some day this will be easier may not be of much comfort to the multimedia creator in 1994. In fact there's little comfort for the multimedia creator in 1994, except to say that the field is wide open and growing dramatically, so there are apparent rewards for those willing to blaze the trail.
Now, down to the business of clearing rights. I will discuss identifying and clearing the intellectual property rights that are necessary for a multimedia work, license terms that will get the creator started with the negotiations to acquire the necessary rights, and recognizing circumstances that involve rights of publicity. I will use text materials as an example because it is the area with which I am most familiar. The other media share some of the same problems, but each medium has its own peculiar difficulties.
Again, I must emphasize that this is just the tip of the iceberg, and offered more as an illustration of the magnitude of the undertaking rather than as a do-it-yourself guide to creating a legally sound work. For detailed guidance, I recommend Scott, as referenced earlier.
CLEARING RIGHTS IN TEXT
Acquiring intellectual property rights
Copyrights
The requirement to clear rights in a preexisting textual work will be triggered whenever the multimedia creator wants to use a preexisting work in a manner that would be in the exclusive domain of the copyright holder. The exclusive rights of the copyright owner include: 3
Section 106. Exclusive rights in copyrighted works
Subject to sections 107 through 120, the owner of copyright under this title has the exclusive rights to do and to authorize any of the following:
(1) to reproduce the copyrighted work in copies or phonorecords;
(2) to prepare derivative works based upon the copyrighted work;
(3) to distribute copies or phonorecords 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; and
(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.
There is a large body of works in the public domain that can be freely used by anyone for any purpose. Works formerly became public domain if the author failed to adhere rather strictly to the formalities required by the law for using the copyright notice (prior to March 1, 1989); if she failed to timely renew her copyright at the end of the 28 year term; at the end of the 47 year renewal term; if the work were published abroad without notice (notice not being required in many countries for at least the last 100 years) and also published here without notice; if the book were not manufactured in the United States, and on and on. Today, one must affirmatively state that a work is to be public domain in order for it to get there before fifty years after the author's death, or 100 years after the work's creation (or 75 years after its publication, whichever comes first) if the author is not a natural person. Public domain used to be the default; now protection is the default. It has become quite difficult (read: expensive) to determine when works go into the public domain; one cannot tell much from the face of the work but must be a good detective to even begin the search, and many information providers are quick to point out that you cannot depend on such information with respect to liability issues. For example, without performing a copyright search for a specific work, one can only say with certainty that works published before 1918 in the United States are in the public domain. There may not be much demand for such works for inclusion in multi-media creations. But works with later dates may or may not have been timely renewed, may or may not have the proper notice in the proper spot, and may fall under the 1909 Act or the 1976 Act which each treat the term differently. Further, consider works without notice. If one determines in some other way when they were published, he may be able to distinguish those published before March 1, 1989 without notice and therefore in the public domain from those published after that date and protected despite the absence of notice. Then one must determine, in the case of works by persons, when the author dies; in the case of entities other than persons, one needs a publication date as reference point. This nightmare makes the public domain a poor source of material. There are resources for determining the status of works, as discussed later, but absent a reliable search, it is best to assume that all works are protected practically forever.
In some cases, authors might be able to rely upon fair use to avoid liability for infringement of the copyright owner's exclusive rights. For example, authors of works that would be considered critical, news reports, parodies, or commentary have some flexibility to incorporate modest parts of other works, so long as the four fair use factors, when weighed and balanced, tend to favor the conclusion that the use would be fair. This is not likely to cover very many uses and, in general, is not a viable way to clear rights in most situations. 4
Many people believe that if they change a preexisting work enough to make it unrecognizable, there is no liability for infringement, but this is not true. The creation of such a new work would infringe two of the exclusive rights of the copyright owner, the right to make copies and the right to prepare derivative works, and one or two more by its publication or distribution. Practically speaking, the more one changes an existing work, the less likely the original owner will be to ever become aware that the new creator used his work. Further, if he were to become aware, there are some interesting issues associated with the interpretation of "substantial similarity" in the derivative work context - especially where the derivative is so changed that the kernel of the original is hardly recognizable. Nonetheless, it is not a risk-free proposition.
It is more likely to be the case that all or some part of the original work will be incorporated into the new creation and be quite recognizable. Thus, the new creator will make copies, create a derivative work, and probably distribute and publish it. Further, in the electronic environment, the work will routinely be displayed as well. As one can see, the creator will need an extensive license to use most preexisting works in a new creation. Unfortunately, as indicated above, the transaction costs and license fees associated with acquiring rights can be prohibitive.
Transaction costs include all the time, money and effort it costs to accurately determine who holds what rights in the works, locate him, her, it or them, establish a contact with the rights holder(s) and in the case of an entity other than a natural person, identify someone who is authorized to grant the rights needed, obtain permission for the use, negotiate an agreeable price, document the agreement and obtain the authorized signature. Transaction costs often exceed license fees by many orders of magnitude; on the other hand, sometimes license fees are exorbitant!
License fees are currently in somewhat of a limbo because of the newness of multimedia. No one really knows what these "inclusions" are worth. Some contracts set a percentage royalty that would have been reasonable in the print environment and divide it among all the contributors based upon their respective portions of the entire body of contributions. This method of allocating values is not without its disadvantages though. The premise that the same percentages that were standards in the industry for print media should apply to multimedia is hotly contested. There may be certain works that will not be made available for the seemingly paltry fees that such percentages may represent when divided among all contributors. Some contributions may be worth much more than others (there may be a qualitative element not reflected in a quantitative scale). Further, a work that might have been worth a certain amount by itself will certainly be worth less when it is only one of several thousand on a CD-ROM and may or may not be accessed by buyers of the end product. These issues and a host of others make pricing the use of preexisting works very difficult at this time.
As noted earlier, this difficulty has led to the creation of a market for "made-to-order" contributions and rights clearing houses. The multimedia creator should be prepared to take advantage of whatever collective rights organizations are available for the kind of materials needed. Even then, one is likely to encounter high prices, so considerable haggling over the price may be necessary, if the owner is amenable to negotiation at all. License agreements are discussed infra.
Titles and characters
A multimedia creator may use another author's title without fear of infringing the copyright, since the Copyright Law does not protect short phrases, including titles, as original works. The issue is more likely to be whether such use under circumstances where the title has achieved secondary meaning is likely to cause confusion among consumers. If the original title has not achieved secondary meaning, that is, where there is no general association of a particular work with the title, there is little to worry about. Further, it is possible that a title, even if once widely known, might be abandoned by lack of use. Even if a title has achieved secondary meaning and has not been abandoned, it can be freely used by others once the work enters the public domain, so long as the new author includes a disclaimer to prevent confusion. Characters enjoy the same kind of protection described above for titles, but additionally are protected by the Copyright Law to the extent they are original creations. Unfortunately, even when creating original titles and characters, the multimedia creator can inadvertently create liability if he is not careful to perform title and character searches. This liability results from the trademark nature of the protection that these properties acquire (i.e., copying is not the issue; use is). Such searches are similar to those one would perform before beginning to use a new trademark. Thomson & Thomson, among others, can perform such a search. 5
Protecting against tort lawsuits
Individuals have many rights in their personae; rights of publicity in those who are famous, rights of privacy in those who are not. For all persons, false statements that damage character or reputation are actionable. The multimedia creator must be careful to avoid using (or creating) text that describes identifiable individuals without their permission or describes individuals in ways that could be libelous. These torts involve rights of publicity and unfair competition (trademark) and so can be very complicated. Further, some states protect some of these rights statutorily; others rely upon common law; still others do not recognize certain of these rights at all. 6 The difficulty of clearing rights of publicity will be considerably more difficult with images, but even with text, one must be careful. The creator will need to obtain a release regardless of the copyright status of the work to be used.
There are certain defenses that the creator may be able to utilize to avoid tort liability. The use may be incidental and minor (briefly mentioning someone), related to a matter of public interest (especially if it took place in a public place), or a news report or parody. Authors of fictionalized accounts of events in the lives of famous persons and documentaries enjoy considerable latitude because of the weight of our First Amendment rights. 7 One must be careful, however, not to tread over the line of fictional account into falsehood. It should be clear that the account is fiction.
Generally though, if the author is using language that names or identifies well-known individuals and is commercially exploiting the link between his work and the famous person, he should obtain permission. If the celebrity refuses, or charges a fee that the author cannot afford, it is probably better to revise the language than to risk a lawsuit. In those contexts where unfair competition laws would apply, having asked permission and been denied can weigh against the author.
Developing appropriate license agreements
Presently, requests to publishers for rights to use their works in multimedia creations probably represent an insignificant portion of all requests. Many publishers do not have settled policies, forms of permission or license agreements. The development of standards is a long way off; the pace of change in this area is so fast that what we may think is reasonable today will seem outrageous a year from now. These circumstances contribute to a sense of caution among rights holders. Even publishers who are enthusiastic about the advent of the electronic era will naturally be reluctant to make long-term arrangements that they may regret in a short period of time.
There is a dearth of guidance for the multimedia creator today. The following is garnered from Scott and from my own experience, which is not extensive:
- The creator must be sure
of who owns what. In some circumstances a publisher may not have the
right to authorize the desired use. Ask for warranties and indemnities
to be on the safe side.
- It is best to perform a
copyright search to confirm the status of any work to be used. This
may be required if the creator will be seeking financing for the project;
most financial backers require a thoroughly documented search as a prerequisite
to their issuing errors and omissions insurance. Creators can perform
their own searches through the Copyright
Office. Circulars 22 and
23 provide information
about how to proceed. The Copyright Office will perform searches for
creators as well, for an hourly fee. The Copyright Office now supports
online searches as well, though like other searches, these do not provide
definitive results. Good results can be obtained from commercial sources
such as Thomson & Thomson. 8
- The creator must be careful
to insure that the grant of rights is broad enough to cover the rights
needed for the project. These should probably include the right to "use,
modify, adapt, reproduce and distribute" the work in a specific
format. Consider whether a nonexclusive grant will be sufficient for
the project. If the work is central to the project, the creator may
need an exclusive grant. Consider also the territory over which the
work will be distributed.
- While moral rights are rather
narrowly construed in the United States, they are quite broadly construed
elsewhere. It might be necessary to obtain a waiver of moral rights
from the author even if she is not the copyright holder.
- Strive for as long a term as possible, but given the uncertainty in the field at this time, be prepared for limitations. Many publishers are not willing to commit to long-term arrangements because of the pace of change in the field.
Publishers will expect to deal with the multimedia creator's publisher. Much of the information that will determine the fee charged and even the decision whether to grant a license is technical information that relates to production. Attached hereto is a sample Development and Distribution Agreement published by the Multimedia and Technology Licensing Law Report, volume 1, number 3, July 1994. The newsletter version contains annotations which are not included here. This newsletter is very new, but appears to offer good advice and has a focus on forms that will prove valuable. In any event, the creator, unless he plans to handle all aspects of development and publication, should establish this important relationship before beginning negotiations to obtain rights.
Attached also for convenience is a form of request for permission to initiate negotiations with publishers. Most will require a written request.
Finally, below is a form of text license adapted from one of Scott's licenses that may be helpful for negotiations. Scott has an extensive list of licensing agents at his Appendix 20-1 that will guide the creator's choice of whom to contact for the various rights that will be involved in the creation of a multimedia work.
Copyright Office Circulars 22 and 23
Development and Distribution Agreement
1 Michael D. Scott, Multimedia: Law & Practice 1-32, n.80 (1993), citing Sarnoff, Getting a Grip: A Practical Approach to Corporate Production of Multimedia, 6 Int'l. Computer L. Adviser, May 1992, at 4.4.
2 Scott, Multimedia: Law and Practice, pp. 1-32 to 1-34.
3 17 U.S.C. Section 106.
4 Section 107 of the Copyright Law provides:
Notwithstanding the provisions of section 106, the fair use of a copyrighted work, including such use by reproduction in copies or phonorecords or by any other means specified by that section, for purposes such as criticism, comment, news reporting, teaching (including multiple copies for classroom use), scholarship, or research, is not an infringement of copyright. In determining whether the use made of a work in any particular case is a fair use the factors to be considered shall include-
(1) the purpose and character of the use, including whether such use is of a commercial nature or is for nonprofit educational purposes;
(2) the nature of the copyrighted work;
(3) the amount and substantiality of the portio used in relation to the copyrighted work as a whole; and
(4) the effect of the use upon the potential market for or value of the copyrighted work.
The fact that a work is unpublished shall not itself bar a finding of fair use if such finding is made upon consideration of all the above factors.
An analysis of the fair use provision is beyond the scope of this presentation.
5 Scott reproduces two search results and opinions to illustrate the information that a search will reveal. Michael D. Scott, Multimedia: Law & Practice, AP-241 to AP-255. Thomson & Thomson has offices all over the country (and the world). Their Washington D.C. address is 500 E. Street SW Suite 970
6 Scott, Multimedia: Law & Practice 14-4, n. 6.
7 Guglielmi v. Spelling/Goldberg Productions, 25 Cal.3d 860, 160 Cal. Rptr. 352, 603 P.2d 454 (1979); Hicks v. Casablanca Records, 464 F. Supp. 426 (S.D.N.Y. 1978).
8 See supra, footnote 5.