DERIVATIVE RIGHTS AND WEB SITES 

IVAN HOFFMAN, B.A., J.D. 



In "Who Owns the Copyright in Your Web Site?" I wrote that today's web site can be tomorrow's feature length motion picture. The right to turn copyrighted material from one form of expression to another, referred to as creating a derivative work, is one of the exclusive rights granted to the original copyright proprietor for most forms of copyrights.

Someone owns the rights to create those derivative works for all protected material and that someone is in a position to capitalize upon those rights. There is the potential for large sums of money to be gained by the ownership and licensing of these derivative rights. If you are the owner of those rights, rights in a book or a photograph or other such material that someone wants to put up on a site, the Internet presents copyright proprietors with opportunities for exploitation of their protected assets. But in order to know how to exploit those assets, it seems important to first know they exist and who owns the rights therein.

The original creator of the work, be it author, artist, sculptor, song writer or other such creator, is most often the copyright proprietor of the work. The premise under the United States' Copyright Act is that such creator is the owner of all rights in that creation (unless it is made under a work made for hire arrangement, which is not the subject of this article. You may read an article by that name on my site. Click on "Helpful Articles for Writers and Publishers.") That proprietor may exploit her or his creation in other media and forms of expression directly or may license the right to create these derivative works to others.

However, there is a cautionary note here: since the original creator may have entered into one or more contracts regarding the exploitation of his or her work, such as with a book publisher for example, the contract or contracts must be examined to make certain these rights have not been given away to that other party.

There are two sets of relationships that should be explored in determining which party has the rights to create these works and in turn make money from them.

AS BETWEEN CREATOR AND LICENSEE

This is the primary relationship. The creator may either not be in a marketing position to create certain derivative works or may not desire to and may instead license these rights to a third party. The terms of that license must be extremely clear and unmistakable if the parties are to avoid any confusion about who can do what and who has to pay what as a result of the exploitation. If there is any vagary about the provisions and the scope of the license, a cloud on the title and the rights may result and that may cause not only litigation but a reduced right of further exploitation.

These are some but certainly not all of the issues that should be covered in the license, which license must be in writing and signed by the parties:

What is the exact nature of the copyrighted material to be licensed? Is it a photograph, a piece of text, some graphics, software, or something else? This should be spelled out.

What kind of rights are being granted? Is it for use on a web site only? Does the licensee have the right to make other uses, other derivative works, from the derivative work so created? Section 103 of the United States Copyright Act of 1976 states, in part:

(b) The copyright in a compilation or derivative work extends only to the material contributed by the author of such work, as distinguished from the preexisting material employed in the work, and does not imply any exclusive right in the preexisting material. The copyright in such work is independent of, and does not affect or enlarge the scope, duration, ownership, or subsistence of, any copyright protection in the preexisting material.

This part of the statute means that the licensed creator of a derivative work owns the copyright in that part of the work that he or she has added to the original copyright and gains no rights to the underlying copyrighted work. However, the parties may also bargain for the right to own the derivative work as well and this must be spelled out in the license agreement.

Of great importance is the right of the licensee to further license the licensed work as well as the derivative work created under the license. This means that even if the original copyright proprietor has licensed the use of a protected work on a web site, the license must clearly spell out whether that licensee has the right to license others on the Web or otherwise to use either the underlying copyright or even the derivative work created under that license. This is quite important because the marketing of the licensed work and the derivative work to other sites and in other media may impact upon the marketability of the underlying copyright.

What is the duration of the license? Is it for a fixed term of years? Are there options and if so, are there conditions to the exercise of those options and if so, by whom may those conditions be determined? Is it worldwide? Is it in all languages?

What is the license fee to be? Is it a flat fee? Does the licensor get a percentage of the income, if any, derived from the derivative use of the work? If so, for how long do these rights go on? How is income defined? Is it gross or net, and if net, how is that defined?

AS BETWEEN SITE OWNER AND WEB SITE DESIGNER

Certainly, the web designer is a creator in her or his own right and so the previous discussion applies to the relationship between the designer and the site owner as well. However, there are some issues the parties to the web design agreement should face in addition to the foregoing ones.

In the web site design agreement, which must be in writing and signed by the parties, the rights to the designer's creativity must be clearly spelled out. If the site owner is to gain rights to these creations, the license must be clear as to what rights are being transferred.

Is the designer transferring all rights to her or his creations? Is this a blanket transfer for all media, in perpetuity, throughout the world, in all languages? On the other hand, is the license of the designer's creativity for use only on the Web and only for this web site? Or may the owner further license the creativity elsewhere, whether on the Web or in other media?

Are there other conditions for the right to use the licensed material set forth? For example, suppose that the site owner brings in another designer at some subsequent time to make revisions or modifications to the site. Does the site owner continue to enjoy the right to use the original licensed material? What about the designer's rights to maintain some artistic control over her or his licensed material?

How or in what media if any may the web site owner use the underlying copyrighted material outside of the web site? And how or in what media may the designer use the web site and her or his creations on it in other media?

There are many, many other issues that may arise and should be covered in the agreement between designer and site owner and the foregoing are certainly not intended to be exhaustive of those issues.

CONCLUSION

These are but a few of the many issues that arise when copyrighted material is licensed, whether for the Web or otherwise. That I have chosen to focus on web sites is but one example. Licensing of protected material can take many forms and in many other media. For other examples, you might want to read "The Use of Protected Materials in Multimedia Projects."

Certainly the web site itself may be the original copyrighted work and so the site owner and the owner of the rights to that web site may then in turn be the licensor instead of the licensee.

The parties, both creator as well as licensee, should pay careful attention to the terms of the license so that both parties know their rights and duties.

Someone is going to be in a position to exploit the rights of some protected material and the agreement between the parties should make it as clear as possible which party that is and what the scope of that party's rights are.

© 1997 Ivan Hoffman

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This article is not intended as a substitute for legal advice. The specific facts that apply to your matter may make the outcome different than would be anticipated by you. You should consult with an attorney familiar with the issues and the laws.

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No portion of this article may be copied, retransmitted, reposted, duplicated or otherwise used without the express written approval of the author.


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