You Can't Always Get What You Want (But Get What You Need)
By E. Scott Johnson

A wise attorney once asked, “Would you really rather beg for forgiveness than ask for permission?” That should be the touchstone for all those who use photographs, sound recordings, film or video clips, artwork or an actual person’s name or image in a website, print publication, product or advertising. Unauthorized use of such third party materials poses the risk of infringing intellectual property rights. Even when such materials are created by employees or vendors, intellectual property ownership and scope of use license issues can arise. The prevalent misunderstanding of “fair use” as an affirmative right, rather than what it really is – a defense to an infringement claim (a “right” that can be expensive to vindicate in litigation) – can lead to serious legal problems.

“Rights clearance” is the discipline of securing rights, permissions and licenses to incorporate intellectual property owned by others in new works. For example, to use a popular recording in a corporate video or on a website, rights must be secured from both the owner of the musical composition copyright (a “synchronization” license) and the owner of the sound recording copyright (a “master use” license). To use the photograph of an identifiable person in a print advertisement or on a website, one must secure a license from the photograph’s copyright owner. That could be the photographer or the photographer’s stock photo house, agent or publisher. One must also secure a model release from the person photographed or risk infringing that person’s privacy or publicity rights.

Rights clearance is both art and science. “Rate cards” are not always available, and licensors charge what the market will bear. License fees negotiated after use has commenced are generally higher than fees quoted for prospective uses, but not every use must be cleared. New productions should be evaluated early, so that rights, permissions and licenses can be secured before production costs are incurred. Developing a clearance process is important to insurers offering Errors and Omission or Media Perils coverage, insurance needed by companies that produce or distribute creative works.

Not all pre-existing materials must be cleared. For example, public domain works can be used without license. However, adaptations of public domain works (e.g., Disney’s animated film adaptation of Victor Hugo’s public domain Hunchback of Notre Dame) are often protected under a separate copyright that covers the material added to the public domain work. Unauthorized use of the later-added material would infringe the copyright in the adaptation.

Attention to the legal requirements for acquisition of copyright is especially important when dealing with independent contractors. Frequently misunderstood is the term of art “work-made-for-hire.” Under U.S. Copyright law, other than nine specific categories of works (a contribution to a collective work; part of an audiovisual work; a translation; a supplementary work; a compilation; an instructional text; a test; answer material for a test; or an atlas), work prepared by an independent contractor cannot be a work-made-for-hire. Unless expressly assigned in writing, the copyright for a commissioned work that is not in one of the nine statutory categories remains with the creator.

For works falling within the nine statutory categories, copyright can be acquired by assignment or as a work-made-for-hire, but express words of assignment (or words designating the commissioned work a work-made-for-hire) must appear in a signed writing. This aspect of the U.S. Copyright Act, which denies automatic acquisition of copyright in commissioned works and requires specific words of assignment (or work-made-for-hire designation for certain categories of works) can be counterintuitive and lead to significant problems. For example, a company that engages a freelance photographer may expect to own the copyright in (or at least the exclusive right to publish) the photographs for which it pays. But unless copyright is expressly assigned or exclusively licensed in writing, the photographer is generally free to publish and re-license or sell the photographs to others. The default rules under the Copyright Act, which apply when no written agreement expressly addresses copyright ownership or exclusive license rights, give specific and often unanticipated rights to the creators of commissioned works.

When intellectual property is created by employees, vendors or volunteers, the organization that expects to own or exclusively exploit the work product must ensure that intellectual property ownership and use issues are appropriately addressed in contracts. Even though U.S. copyright law provides that works created by employees within the scope of employment are automatically owned by the employer as works-made-for-hire, intellectual property provisions in employment contracts can be important in avoiding debates over “scope of employment.”

To avoid infringement, the best practice is to evaluate rights clearance issues early before significant production costs are incurred. Securing rights, permissions and licenses before production commences is almost always less costly than the alternative of responding to an infringement claim or negotiating a license from the position of infringer.