The Do's and Don'ts of Art Licensing:

How to License Your Art and
Protect Your Rights at the Same Time

by Lance J. Klass
President, Porterfield's Fine Art Licensing

   Congratulations! You've just received a letter back from a company you've contacted that's very interested in licensing your art to use on their products. At last you feel you're on your way to financial success doing something you've always wanted to do.

   But there's a long licensing agreement enclosed with their letter and every time you read it you come upon more and more things you either don't understand or aren't sure of. Yet you don't want to take a long time getting back to them and you may be afraid that if you ask too many questions, they might just change their mind and go with some other artist instead.

   So what do you do?

   Do you sign the agreement just the way it's written, follow their instructions and hope for the best? Do you get an expensive lawyer to decipher it all? Or do you try to puzzle it out by yourself, hoping everything will work out OK?

   Well, if you're like most artists, you've probably never seen a real licensing agreement. In fact, you probably know next to nothing about what should be in an art licensing agreement, and what shouldn't. After all, you're an artist, not a lawyer. So what do you do? The answer many artists choose is to go ahead and sign the agreement, hoping for the best and putting their trust in this wonderful company that loves their art. And that can lead to serious trouble.

   Over the years I've spent as a licensing agent I've spoken with many artists who have unknowingly signed away full reproduction rights to their art, never gotten paid for the use of their art or made next to nothing out of a license, lost their original artistic works to companies who demanded them but never returned them -- the list of horrors goes on and on. And each one is completely avoidable if you understand a few basic things about licensing art, and know what to watch out for in any license.

BASICS YOU NEED TO KNOW

   The word "license" means the "freedom to do something." So when you give a company a license to use your art, that means you're giving them the freedom or ability to use your art in a certain way, on a certain type of product, for a certain period of time, and with certain restrictions on usage.

   Another key concept has to do with the difference between "copyrights" and "reproduction rights." While you own the copyright to your art for 75 or 90 years from the time you created it -- whether or not you've registered that copyright with the U.S. Copyright Office -- you also own the reproduction rights to your art. That means that no one can reproduce your art without your OK.

   When you sign a license with a company, you're selling them the right to reproduce your art in a very narrow, specific way and for a very limited period of time, generally several years.
 
  Here are some key guidelines that will save you some heartache:

ALWAYS MAKE SURE YOUR LICENSE INCLUDES, AT MINIMUM:

- the names of the specific works of art you're licensing;

- what specific types of products the art will be reproduced on;

- the producer's or publisher's written agreement to put your copyright notice on every product sold and on every advertisement or brochure for any such product which bears your art;

- the countries in which the products will be sold;

- a period of time (six months or a year) during which time the company has to bring to market (produce and sell) products with your art, or else give up their right to use your art;

- a termination date for the agreement, generally two or three years after signature;

- an "indemnification clause" which says that the company will protect you from any lawsuits that might arise from any of their business activities which in any way relate to products carrying your art (so that you're protected if, say, a child swallows a product with your art on it and the parents sue).

- a statement saying you can cancel the agreement if they don't abide by its terms or if they go bankrupt;

- a specific statement of any non-refundable advance payment to be made to you against future royalties, the specific royalty percentage to be paid to you on a quarterly basis, and the requirement that each royalty check be accompanied by a clear statement of how they came up with the royalty amount;

- your right to have their books audited at your own expense to make certain they have paid you what is due to you.

NEVER, EVER ALLOW THEM TO:

- gain the copyright for any of your pieces of art;

- gain full and complete reproduction rights to any of your art;

- gain the right to sublicense your art to other companies without your having to approve and sign each specific sublicensing agreement;

- gain ownership of your original works of art as part of the licensing agreement.

   Remember that companies seek art because they must have it to sell their products, make money, and keep their companies alive. While there are many disreputable companies that will try to take advantage of your lack of knowledge and pay you as little as possible for as much as they can get, most companies will try to give you a fair deal because that's the way they do business and because they may want more art from you down the road if they're successful with the art covered by your license.

   Of course, one clear option is for you to seek professional representation from an experienced licensing agent or agency. Look for one that's a member of the International Licensing and Manufacturing Association (L.I.M.A.), the official trade group for the licensing industry. LIMA members are supposed to uphold certain ethical standards in representing artists and could potentially risk losing their membership in LIMA if they abuse artist's rights.

   Whether you go with a reputable agent, or decide to go it alone, use the do's and don'ts in this article as your guideline in protecting your rights.
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Lance J. Klass is President of Porterfield's Fine Art Licensing, with many years of experience in the licensing field and expertise in protecting the rights of artists throughout the licensing process. This article originally appeared in the Artists and Graphic Design Market Annual.

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