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Money Matters: Selling and Licensing Part Two

At the time of authoring this article, Alison Patchett was a Solicitor at Arts Law.

To briefly recap on Part One of this article published in June, written contracts are very important to any arts business as they help to avoid disputes between the parties by providing clarity on what was agreed.

Sometimes there are circumstances where an agreement must be in writing and signed to be legally enforceable. Specifically, an assignment of copyright and an exclusive licence of copyright must in writing and signed.

In Tasmania and Western Australia when an artwork is sold for $20 or more and in the Northern Territory when artwork is sold for over $50 there are circumstances where the purchase agreement must in writing. But in any event, Arts Law recommends that all agreements on any subject matter be put in writing to avoid confusion and to provide some evidence about what was agreed.

Image Reproduction for Publication Licence

An Image Reproduction Licence is useful when an artist gives another person permission to make reproductions of their existing image. This discussion is limited to reproductions for use in a publication. There will be more issues to consider when a work is being reproduced for merchandising such as on a T-shirt or coffee mug.

The most common issues that parties to an image reproduction licence need to consider and agree on are:

The Scope of the Licence

A licence can be exclusive, sole, or non-exclusive. If an artist chooses an exclusive licence this means that only the other party may do the stated things with the work. So, for example, if an exclusive licence is given to a shop to reproduce artwork on a postcard, no one else can do this for the duration of the licence, including the artist.

A sole licence means that the person receiving this right as well as the artist may deal with the work in the stated way and a non-exclusive licence means that the other person may use the rights given to them but that the artist is free to give anyone else that permission as well. Obviously, a higher fee is usually paid for an exclusive licence.

It is usually a good idea for an artist to limit any licence over their work as it means further uses of an image must be negotiated and paid for separately. A licence can be limited by reference to any number of things, including the period of time reproduction is allowed for, the geographical area in which reproductions are allowed, the quantity of the print run, the kind of media in which the work can be reproduced and the permitted dimensions and colours of reproductions.

When a work is reproduced by placing it on the internet, there are additional considerations due to the ease of copying and increased potential to manipulate the image.

Artists should be wary of any licence agreement that contains the words 'assign', or  'transfer'. An assignment is not a licence, but a complete transfer of rights and means that the artist no longer retains a copyright interest in their work.

Moral Rights

As in a sale of artwork agreement, the parties should ensure that an artist’s moral rights are observed.

Artists have the right to be attributed, unless they consent to not being named or it is reasonable in the circumstances not to attribute them. If a form of attribution is not agreed, the law merely requires that a reasonable form of attribution be adopted.

If you are an artist, it is best to specify in the agreement how you want to be attributed including where your name will appear and even how large or what colour the attribution must be in if these things are important to you.

Artists also have the right of integrity, which is their right to object to material alterations, distortions or other derogatory treatments of their work that prejudice their honour or reputation. It is a good idea to include a provision preserving this right of integrity, to make it clear to the other party that they must obtain the artist’s written consent prior to altering the work, by doing things like cropping it or varying the colours.

Payment

There are various ways that an artist may be paid for giving a copyright licence, however most licences either contain a flat fee or royalties or both. The payment amount will vary depending on factors like the proposed use, the artist’s reputation and the number of reproductions.

If an ongoing royalty is payable by reference to the number of reproductions, it is important that the artist has a right in the agreement to inspect the other party’s accounts so they can monitor what payments are due to them.

Delivery of Image

The parties should consider when the artist must deliver the image to the other party for reproduction. It is a good idea to include the date that the work must be delivered by, the address it will be delivered to, as well as the format that the image should be in (eg, JPEG, TIFF), the material it should be on if this is important and the dimensions of the image.

Inspection of Proofs

The Artist will usually want the right to inspect the reproduction prior to its public release to ensure the quality of the reproduction is satisfactory. Including a provision to this effect, is a good way to minimise the chance of infringing the artist’s right of integrity (as discussed above).

Warranties

A licence agreement will often contain a promise from the artist that the work is their own and does not infringe the copyright of anyone else, coupled with an indemnity which means that the artist must cover any loss incurred by the other party if this promise is false. A provision like this is in the interests of the other party, not the artist.

Indigenous Cultural and Intellectual Property

Indigenous Cultural and Intellectual Property or ICIP is relevant if the artist creates a work that includes or refers to Indigenous objects, knowledge or works. An artist dealing in such works should have obtained consent from the traditional owners of the ICIP and consulted on how the community would be attributed and the community’s right of approval.

In some circumstances it will be appropriate to use a notice of custodial interest in connection with the art work. If it is important to the artist that the party reproducing the image adopt such a notice, an obligation to this effect should be included in the agreement.

Termination

It is a good idea in any agreement to consider when the arrangements may come to an end. That is, the parties should contemplate the circumstances in which they may want to end the relationship and include these in the written agreement.

For an image reproduction licence it would be usual for an artist to want the right to terminate if they are not paid in a timely manner and if the other party reproduces the work for purposes beyond those for which permission was granted.

The other party may want the right to end the agreement if the artist does not deliver the image to them in time, particularly if the reproduction was for a time critical publication.

Other issues

There are certain issues which should be addressed in all types of agreements. Two examples of these are called 'entire agreement' provisions and 'governing law' provisions. For more information on these, please refer to Part One of this article.

Don’t forget to sign the agreement, date it and keep an original signed copy so that you know what you agreed and can refer back to the agreement if things start going wrong.

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