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Transferring, Licensing, and Registering Copyrights- Module 4 of 5

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Module 4-Transferring, Licensing, and Registering Copyrights

Copyright law initially grants all rights associated to copyrighted works to the creator of those works.  The copyright owner can publish the work, duplicate it, or distribute it. A copyright owner is also entirely free to transfer all or any portion of his copyright rights to other parties.[1]  The owner can even transfer elements of his overall copyright rights to multiple different parties at the same time. 

In this module, we discuss transferring copyright ownership rights, as well as copyright licensing and the process and benefits of copyright registration.

Transfer of Copyright Ownership

A copyright owner can transfer all ownership rights associated with the copyrighted work to another party.[2]  Transfer of copyright ownership is known as an assignment. Unlike a license, which grants another party the ability to exercise certain copyright rights and isn’t a complete transfer of ownership of any of the copyright rights, an assignment of a copyright is a full transfer of ownership of the copyright. An assignment transfers and conveys to the assignee all rights associated with the copyright. 

Sometimes, more than one party will own a copyright, specifically when more than one party created the work.  The multiple owners are referred to as joint owners of the copyright. A copyright’s joint owners are “tenants in common” with respect to the copyright, meaning that each owner has the right to license or make use of, the copyright, without prior approval from the other owner.  Each owner must also share earnings derived from the copyright with her fellow joint owners. 

A copyright’s owner or joint owners must follow numerous steps to successfully assign a copyright. First, an assignment of copyright ownership must be documented in a written, signed agreement between the copyright holder and the assignee.[3]  Under most circumstances, a court will not consider a transfer of copyright ownership valid unless it is memorialized in a fully executed written agreement.[4]  As is true with other contracts, a copyright assignment must include adequate consideration for the conveyance of ownership and it must be entered into freely and with full knowledge by the parties involved.  A copyright assignment agreement will only require the signature of the copyright owner and not the assignee’s signature. The parties can record an assignment agreement at the United States Copyright Office, thus providing a public record of the transfer of ownership.[5] Furthermore, the extra step of agreement notarization is good practice for transfer of copyright ownership because it helps to prove that the transfer of ownership is valid.

In the nine states that are community property states, such as Arizona and California, where all assets purchased or acquired by a couple during the course of their marriage are owned equally by both spouses, it is useful to have the spouse of the copyright owner sign the assignment too to indicate that he’s aware of the transfer of ownership and consents to the assignment and to eliminate any ownership rights the spouse may have in the copyrighted work. 

The concern over ownership arises when spouses are dividing property during divorce. In one California case, Frederick Worth authored two encyclopedias of trivia during his marriage. The property settlement agreed upon at divorce specified that Susan would receive a one-half share of all future royalties. After the divorce, Frederick sued the manufacturers of the popular board game Trivial Pursuit for copyright infringement and his ex-wife requested a court order to equally divide any infringement damages awarded. The superior court issued the order and a court of appeals affirmed reasoning that the the basic proposition of community property law, property acquired during a marriage is owned by both spouses, applies to intellectual property as well.[6]

Recapture of Rights

The Copyright Act of 1976 permits a creator of certain copyrighted works who transferred his rights in those works to other parties to reassert those rights.[7] The original owner of a copyright could want to reassert his rights to get royalties or other financial payments. If the original creator of the work is not alive at the time recapture rights vest, a surviving spouse, child or grandchild, or the estate of the deceased creator can reclaim the rights that were transferred.

 For a work first published on, or after, January 1, 1978, the creator of the work may recapture all rights assigned to other parties on a date 35 years after the work’s first publication.  For example, a music composer first published a song in 1978 and then transferred all rights to the song to a music recording company. By 2013, that composer could have reclaimed the rights to the song that were transferred in 1978, simply by notifying the recording company of his intent to reclaim the rights.

This ability to recapture doesn’t extend to works first published before January 1, 1978.  Additionally, if someone creates a work under the copyright laws of a country other than the United States, he cannot recapture his copyright rights. 

Licensing Copyrights

Licenses are agreements through which copyright owners authorize other parties to exercise some or all the rights granted by copyright law to the owner of a copyright protected work. 

There are two categories of copyright licenses: exclusive and non-exclusive. An exclusive license grants a single party the right to exercise a particular set of rights associated with the copyright for the work in question. The party granting the rights is the “licensor” and the party receiving the grant of rights is the “licensee.” For example, Elaine writes a book on improv comedy. She owns the book’s copyright, and she controls the rights to duplicate the book and to sell it. Additionally, she is the only person who has the right to convey all or part of those rights to other parties. 

After writing it, she agrees to grant Pendant Publishing, the licensee, the exclusive right to publish and sell her book in the United States.  The exclusive license granted to Pendant Publishing indicates that Elaine will not permit any other party to publish and sell the book in the United States during the term of Pendant’s exclusive license.  Elaine remains free, however, to authorize other parties to publish and sell the book in nations outside of the United States.

Not only should the exclusive license be written and signed by all parties to the licensing agreement, it’s recommended that the parties record an exclusive license at the United States Copyright Office.  By recording the exclusive license agreement, there is a stronger evidentiary basis to resolve future disputes.  Recording of the license also helps give other parties notice of the exclusive arrangement that has been granted to the licensee.

On the other hand, a non-exclusive license grants the licensee the right to make certain use of a copyrighted work, but that grant of rights is not unique to the licensee.  When a non-exclusive license is granted, the licensee must recognize that several other parties may be granted the same rights of use for the copyrighted work that the licensee has received. 

Richard is a photographer who grants Michael’s design company a non-exclusive license to use one of his photographs on merchandise, like cards, refrigerator magnets, and clothing.  As the grant of rights is non-exclusive, Richard can grant other licensees exactly the same rights he granted Michael, so Richard could license Jerome’s design company the exact same merchandising rights for exactly the same photograph.

If there are multiple owners of a copyright, all must consent to any licensing agreement because each owner has independent rights to copy, distribute, and prepare derivative works or display the work. If each does not do so, then the assignment of a copyright isn’t valid. In Sybersound Records, Inc. v. UAV Corp., the plaintiff, a karaoke record retailer, sued several competitor companies that it believed were infringing on its “exclusive license” to use certain songs for karaoke use. The court found that Sybersound was a non-exclusive licensee because the co-owner of the copyright that granted Sybersound an exclusive license did so without the consent of the other co-owners and therefore, as a non-exclusive licensee, Sybersound did not have standing to sue for copyright infringement.[8]

Components of Copyright Licensing Agreements

Regardless of the license’s exclusivity, all copyright licensing agreements should include the following information. First, the licensing agreement should clearly define the full scope of the rights granted because only those rights expressly conveyed in the license agreement are granted to the licensee.  For example, if a licensee is to be authorized to sell copies of the copyrighted work in the United States, then the licensing agreement should expressly state that the licensee is granted the right to make copies of the work and to sell the work in the United States. 

A key aspect of the definition of scope for a copyright license is identification of the geographic region or market in which the licensee is authorized to exercise the licensed rights.  In the example above, the grant of rights was limited to exercise in the United States only.  Other key limitations are commonly built into copyright license scope.  For instance, a copyright license for a film may permit the licensee to present the film in theaters, but not on television.

Second, there must be a form of consideration provided by the licensee to the licensor.  Frequently, copyright licenses provide for compensation in two forms: fees and royalties.  A licensee will pay a licensor more for an exclusive license as opposed to a non-exclusive license. A fee is a payment of a specific amount by the licensee to the licensor as part of the consideration for the grant of the license.  For example, a license often includes provisions that a specific amount will be paid by the licensee to the licensor at the time of execution of the license.

A royalty is a payment that is defined as a percentage of some other amount.  For example, a copyright license frequently includes a requirement that a licensee pay the licensor a royalty equal to a specific percentage of either the gross or net revenues the licensee derived from exercise of its rights under the license.  For instance, assume a license agreement includes a requirement of royalty payments equal to one percent of the gross revenues received from the sale of the product that incorporates the licensed work.  If the licensee earns $100,000 from the sale of the product that incorporates the licensed work, then the required royalty payment to the licensor for the period in which those sales occurred would be $1,000.

Third, each license agreement should specify the duration of the license.  The licensor and licensee should also specify under which conditions the license may be terminated early, and the procedures to be applied when the license reaches the end of its term.

Another key component of a license agreement is a sub-license.  In some agreements, the licensor authorizes the licensee to grant all or part of the rights granted under the license to a third party.  Such a grant of rights under a license to a third party is a sub-license.  If a licensor authorizes a licensee to sell copies of a novel, for example, that licensing agreement may also include a grant of rights to the licensee authorizing the licensee to enter into sub-licenses with printers who are necessary to create the copies of the novel that are to be sold to consumers.

Not every licensee can enter into a sub-license. A license agreement should explicitly authorize the licensee to have this ability. A licensee can never grant rights in sub-license that the licensee has not been granted in the license agreement itself because a licensee can never sub-license rights to a third party that the licensee does not actually possess.

Copyright Registration

The United States Copyright Office manages registration of copyrighted works.[9]  Registration isn’t necessary to establish copyright rights; however, it is necessary to fully enforce those rights. A copyright owner who decides to register his copyright can do so at any time during the copyright’s lifetime.

The copyright registration process involves submission of copies of the copyrighted work, a provision detailing information regarding the work and its ownership, and payment of a fee.  Copyright registration requires submission of a completed application form appropriate for the particular type of work to be copyrighted, like a book, and all forms are available, with instructions, at the Copyright Office website.[10]  Registration can be conducted online or through submission of hard copy materials, with the electronic filing process being generally quicker.[11]  Information regarding appropriate fees associated with registration filings can be obtained directly from the Copyright Office.[12]  The Copyright Office’s website also provides continuous status updates on registration applications.[13] Copies of works submitted for copyright registration are publicly accessible at the United States Library of Congress, which oversees the Copyright Office.

The most important benefit of copyright registration is that it grants an author or work’s creator the ability to initiate an action in federal court to enforce the copyright through claims of copyright infringement.[14]  Upon registration of a work with the Copyright Office, the copyright owner receives a certificate of registration.  At the time of filing a copyright enforcement action, the court will expect to receive a copy of the certificate of registration for the work at issue in the infringement action. Parallel to this ability to sue for copyright infringement, copyright registration is necessary to obtain certain remedies, such as damages and attorney fees, in case an author can prove copyright infringement in federal court.[15]

Registration of a copyright creates a presumption that the work is copyrightable and that the party claiming ownership is, in fact, the owner of the copyright.[16]  So, registration provides the copyright’s owner with evidentiary value in the event of a dispute regarding the copyright arises.  Registration also provides the public notice of the existence of the copyright and of the identity of the copyright’s owner. 

In our last module, we will turn to enforcing copyrights.