12 Days of Contracts – Day 6- Rights Granted + Reversions

On the 6th day of Christmas, my client gave to me, 6 exclusive rights… (Mel’s Remix)

In honor of the holidays, I’d like to share a few tips with you to make sure you go into the new year with new knowledge. Instead of the 12 Days of Christmas, I present to you — The 12 Days of Contracts! Yes, I’m a legal nerd!

In these 12 days, I will share some contract basics, terminology, and other info so you can be more informed on what a proper contract needs to contain to make it valid and enforceable.

Prior 12 Days Posts:

IF YOU MISSED IT, SEE DAY 5 HERE | IF YOU MISSED IT, SEE DAY 4 HERE | IF YOU MISSED IT, SEE DAY 3 HERE | IF YOU MISSED IT, SEE DAY 2 HERE | IF YOU MISSED IT, SEE DAY 1 HERE

Creating a tangible work means you own a copyright, and copyright ownership comes with established rights. Make sure you understand the rights you are granting or being granted.

Melanie Rodriguez aka The Entertainment Esquire

The 6 Exclusive Rights in Copyright

Here’s a disclaimer: this is a very broad analysis of US copyright basics. If you are interested in learning more, visit the US Copyright Website .

Under Section 106 of the Copyright Act, a copyright owner has exclusive rights they can use or grant others to use:

1. Reproduction – to reproduce works or make copies or phonorecords;
2. Derivative Works – to create new works derived, or based on, the copyrighted work;
3. Distribution –  right to make a work available to the public by sale, rental, lease, or lending (and only applies to the “first sale”);
4. Public Performance – right to control when and where the work is publicly performed, either for a group of people, or on TV, motion picture, and radio;
5. Display – right to control when and where a work is publicly displayed;
6. Digital Performance/Transmission – the right to perform by means of digital transmission (i.e. streaming) and only applies to sound recordings.

The applicability of these rights depend on the type of work. For instance, digital performance rights do not apply to TV/Film.

There are often referred to as a “bundle of rights” meaning that you can grant all rights or divide out these rights. These rights can be divided in different ways, for different time periods (terms), in certain territories. Many contracts track these rights when you have grant of rights. Not all contracts have grant of rights, but they are most often used in entertainment industry contracts.

Here’s a caveat: These rights attach to copyright owners only. Just because you have a copy does not make you a copyright owner. If you engage in any of these rights not as the copyright owner, that constitutes infringement. Assuming there is a valid copyright, when a work has been infringed, the copyright owner can enforce their rights, most commonly in the form of a lawsuit.

Copyright ownership is a bundle of rights that can divided as the owner sees fit.

Reversion

Reversion occurs when the copyright returns to the original author. It is typically utilized most in the context of music and book authorship. US Copyright Law (depending on the creation date) allows you the opportunity to regain ownership of your transferred copyright after a set number of years (currently at 35 years if it meets special criteria). However, you may not even have to wait that long if you negotiate reversion into your contract at the outset. For example, some contracts have reversion rights as soon as 5 years or 10 years. Meaning that once this period expires, the rights granted automatically revert back to the original owner.

A reversion clause can be based on performance or a condition that need to be met. For example, the clause can provides if an event does not occur within a certain number of years, the rights automatically revert back to the original author. Maintaining the right of reversion should be something heavily negotiated, but will depend on the bargaining power and leverage of the parties.

If rights are granted in “perpetuity”, or if there is a work made for hire, it is unlikely there will be a reversion. Unless, you follow the procedures set forth under the Copyright Act to regain ownership. There are strict deadlines and meticulous notice requirements in this process. Every circumstance as it relates to contracts is unique and requires careful forethought and analysis.

Negotiating reversion up front can save many years of waiting.

Works Made for Hire

If you are an employee of a company, a work designated as a “work made for hire” is anything you create under the term of the employment agreement and in the scope of your employment automatically becomes the property of the company. If you are an independent contractor, a work made for hire is created if it falls under one of nine categories outlined in Section 101 of the Copyright Act.

If the work created falls under a work made for hire, the creator cannot take ownership, secure a copyright, or have any exclusive rights to the work. Additionally, there will also be no termination of rights and rights are unable to be recaptured. It is so important that parties to a contract examine the nature of their relationship prior to contract negotiations and make sure this is outlined in the contract. Sometimes a contract will be designated as work made for hire even when it does not meet the requirements of such.

Just because an agreement designates it as a work made for hire, does not mean it is enforceable as such.

Questions to ask:

• 1) What are the rights granted? There are 6 exclusive rights under the Copyright Act that are granted to copyright owners. Also known as a “bundle of sticks”, these rights can be granted in full or divided out. Check out my blog post at the link in my bio or the link in my stories to learn more about each right and why they are important.
• 2) Are any rights excluded? Copyright owners can decide to retain some exclusive rights, so make sure the contract clearly designates if any rights are specifically excluded.
• 3) Is there a right of reversion? Reversion means that the rights will return to you at some agreed time in the future. If there is no right to reversion, the contract will usually say the rights are in “perpetuity”, essentially forever. Rights can also be given for the life of copyright and then revert back. There’s also the ability to allow you to terminate rights and gain reversion under the Copyright Act, if certain conditions are met.
• 4) Is this a Work For Hire or have this specific language? Examine the nature of your working relationship. If you are an employee or independent contractor, this will be at issue.

If you have any questions related to an contract you signed or need guidance for constructing your contracts, please contact me.

*Disclaimer: This post is for informational purposes only and does not constitute legal advice. An attorney client relationship is not formed until there is a signed fee agreement*