Intellectual Property, Entertainment, & Publishing

Slicing & Dicing IP Licensing Rights: Multiplying Platforms & New Directions in Entertainment Law

Content and spin-offs of favorite shows are being presented in more different contexts and distributed from more platforms than ever before. Platforms built on new technologies, and funded by marketing and advertising dollars, have a tremendous appetite for the most desired new content. Accompanying derivative and ancillary rights are being licensed to creators of new programming being placed on expanding numbers of channels. The FCC is currently taking steps to remove restrictions imposed by cable companies to putting more television content online simultaneously rather than later. New media outlets are starting to put their own offerings onto television as well.

The current generation of smart-phones, tablets, lap-tops, and high definition, large-screen televisions and their still relatively new omnipresence in our lives has encouraged the intake of quantities of entertainment content far beyond any levels of similar consumption that have ever occurred before. Branded content, bringing corporate sponsors into more active production roles, is feeding this explosion of new media as well.

Content producers and platform and channel developers are striving to keep up with, and still further expand, this demand. As one marketing strategist observed, “Each platform no longer functions as a separate, discrete entity, but in fact reinforces the others and drives viewers to spend increasing amounts of time consuming media across all of them.” This surging wave of online entertainment can heavily reward high visibility successes, their stars and sometimes their off-shoots as well.

Splitting IP Rights Across Platforms

As viewing opportunities for both newly created and existing content continue to expand, there is a resulting “fractionating” of conveyances of IP rights in the most desirable entertainment properties. The formerly closely-held bundle of IP rights is now, in many instances, being pried apart and sub-divided to allow creation of widely variegated new offerings stemming from the same underlying source. Numerous spin-offs of a hit show or new works featuring a You-Tube celebrity may all find a place and attract an audience in the greatly expanded channels of 24/7/365 online and mobile entertainment. In response, content creators are often making their grants of rights as narrowly limited as possible.

Examples of such spin-offs include use of the same characters, but in a different series on a different channel or platform. Sequel and prequel rights can be sold to other production companies to be distributed via still other outlets. Re-runs can be streamed endlessly on additional platforms.  Distinct licenses are often allocated to different territories. Standardized, overly-broad boiler-plate agreements should be avoided if possible. A decade ago, or even less, there were far fewer choices for content distribution. Virtually all rights in a property were often acquired by one major purchaser. This is occurring, however, far less frequently today.

The derivative and ancillary rights held by an original creator and intrinsic to a single creative product include prequel, sequel, remake, animation, video game, feature film, television series, VR programming, commercial tie-in, merchandizing, application development, and the right to produce in a different medium or format, along with, potentially, those to the original content’s distinctly specific story-line, themes, dialogue, characters, and setting. Each of these permissions and elements can, in turn, be licensed to a different creator of subsequent productions or products derived from the original one.

Within these categories, rights held by the creator can also be even further sub-divided before being apportioned out. Each component of the rights “bundle” can be licensed to appear in a different format or medium and transmitted and presented via multiple types of media as well, potentially requiring an array of licenses. Rights to distribute the same content via alternative delivery methods may be granted to several different business partners.

In this ever more dense online entertainment environment, the particular elements being licensed, i.e. characters, plot elements, dialogue, specific scenes, video footage, stills, etc., should be clearly set out. Trademark rights being conveyed should be specified. Additional questions may need to be addressed as well. Are rights to music or songs being granted? Will licensor have approval authority over the completed licensed product? Should areas of creative “pre-approval” be incorporated into the license agreement? Will licensee have accompanying advertising and promotional obligations?

Other decisions may also need to be made, including the quantity of content that must be provided to a platform and the frequency with which it will be replenished. How will shows accessible via multiple platforms be retained for viewing in future and which entity will perform this function? What promotional products, derived from the originally licensed derivative production will or won’t be allowed? Agreements between MCN’s and content creators should address the MCN’s rights, if any, in such down-stream content distributed via their channels.

Sub-Licensing & Distribution Structure

Each license granted must address whether it encompasses the right of licensee to grant sub-licenses for the next below tier of creative works based on the originally licensed production, or the preceding derivative production, or whether such further permissions can only be given by the original licensor. Such further sub-licensing should be specifically permitted, precisely limited, or clearly barred.

How income from each level of spin-offs will be allocated, or not allocated, between the original content creator, original licensee, and creators further down the licensing and sub-licensing chain must be determined. Will there be product placement obligations, arising from an agreement between sponsor and the original creator, in licensed derivative works? All licensees presenting branded content should be sure it complies with restrictions originally required by the sponsor. Sponsor permissions may be necessary.

Derivative Works & Copyright Law

Rights inherent in copyright ownership encompass the ability to legally reproduce, distribute, publicly perform, or publicly display the copyrighted work or to produce “derivative works”. The U.S. Copyright Act defines a “derivative work” as “one based upon one or more preexisting works, such as a translation, musical arrangement, dramatization, fictionalization, motion picture version, sound recording, art reproduction, abridgement, condensation, or any other form in which a work may be recast, transformed, or adopted.” Examples include re-expression of copyrighted content in a different medium or format. “Ancillary rights” that flow from copyright ownership include those to exploit, and monetize, the underlying copyrighted property in a variety of other ways, typically involving merchandizing, soundtrack recordings, and promotional and marketing tie-ins.

Most individual content elements are not themselves protected under copyright law. Their combined use, especially highly distinctive elements extremely close to those in the original work, can, however, result in claims of copyright violation, followed by a lawsuit and costly court battle. It is therefore safer for licensees to obtain as broad grants of rights as possible. Licensors, alternatively, should convey no more of them than are actually necessary for a specific spin-off project.

Avoiding Licensing Conflicts

The more licenses being granted, the more crucial it becomes as well to ensure they do not conflict with each other. It is important to understand what licenses will c0mplement each other and those overly generous grants of rights that could subsequently prove problematic. Content distribution technologies and “pipelines” must be clearly understood.  The platform(s) for which specified rights are being licensed should be precisely defined. Whether rights being granted are exclusive or non-exclusive is a key consideration.

The type and number of derivative works being licensed should be included, together with the extent to which licensees of derivative products can or cannot make fundamental changes to the original work. Hold-back periods before programs can be placed onto additional platforms should be closely examined and integrated with each other. Is licensee being granted syndication rights for the new content it develops and, if so, how broad are they? Can a technology platform modify the licensed material? If so, how extensive should this right be? Will a distribution platform be allowed to sub-license its distribution rights or does the content creator seek to bar such sub-licensing so creator can conclude its own distribution deals with multiple platforms?

As associated auxiliary content continues to swell, the parameters of exactly what derivative work is and isn’t being licensed needs to be well-defined. In each license and sub-license, revenue streams from accompanying online advertising, commercial tie-ins, product placement, and merchandising may be apportioned between the original content creator, original licensee, and sometimes sub-licensees as well. Placement of content on multiple platforms is also greatly expanding cross-promotional opportunities, which can be reflected in detailed cross-marketing provisions.

Web-lebrity Agreements & IP Licensing

The escalating status of new “weblebrities” from You-Tube channels has led, for some, to strong demand for their individual services in promoting an ever-growing spectrum of products. The line once separating entertainment and marketing has begun to disappear. These new stars are, at the same time, breaking down the “fourth wall” separating them from their viewers and closing the gap between their shows and honest, actual glimpses of reality. They have become, as a result, highly effective pitch-men and pitch-women, especially with younger audiences. We may soon be discussing not just the disclosure questions involved in native advertising and increase in “branded content”, but the continuing evolution of “advertainment” as well.

It is important to distinguish personal services agreements from licensing stemming from a show’s content and its connected derivative rights. Successful You-Tube channel personalities can be difficult to separate as individuals from the content they put online. Where is the line between a real-life You-Tube personality and the character they have created? Can their personal recounting be distinguished from a content narrative? As a result, agreements for their services and necessary copyright licensing arrangements may need to be spliced together. Here again, it is crucial to avoid licensing conflicts and overlaps.

We have advanced into an era of unprecedented, yet also highly competitive opportunities for content creators, and the channels and platforms that promulgate their work. For creators, these new licensing options can present a complex and at times intimidating landscape, described by one as resembling three-dimensional chess. With the fast increasing number licensing “partnerships” being generated in digital media, the role of counsel in shaping, fine-tuning, and optimizing all of the implementing legal agreements has become more essential than ever.

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