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Contract Red Flag Alert: Perpetual License for Derivative Rights
Posted by Victoria Strauss for Writer Beware
SFWA's Contracts Committee has recently been seeing a proliferation of contracts from small magazines, and a very few established markets, that license all derivative rights in perpetuity.
This is a red flag for a number of reasons, even if these rights are licensed non-exclusively. A derivative work is defined by copyright law as "a work based upon one or more preexisting works, such as a translation, musical arrangement, dramatization, fictionalization, motion picture version, sound recording, art reproduction, abridgment, condensation, or any other form in which a work may be recast, transformed, or adapted." This sort of rights grab is by no means normal; magazines generally only take very limited first publication and archival rights for a limited time. Licensing the right to create derivative works can and mostly likely will interfere with the author's right to exploit their right to create or license derivative works to others.
The risks of signing such contracts can be serious. To give examples of some of the negative impact of these rights grabs.
1) Dramatic rights are compromised, limiting the author's ability to sell works for TV and film use because the author can no longer offer exclusive rights to the story, which means movie or TV producers who want exclusive dramatic rights are not likely to be interested in the work. The best case scenario is that the author may end up having to give the publisher of the magazine a cut of any income.
2) Marketing rights are compromised, in that any marketing deal could be undercut by the publisher, who would also have the ability to market those rights.
3) The ability of the author to publish sequels is compromised. The Publisher could commission sequels to the work from another writer, in competition with the author. Even if the Publisher were required pay a fee to the author for a sequel written by another writer, the existence of such competitive sequels would likely seriously hurt the author's own sequels.
4) The author would have a de facto business partner for the rest of the author's life and beyond for the life of copyright. Whether or not a clueless publisher would even realize what they've acquired or have any idea how to exploit it, the specter would hover over the author's further use of any elements in the original story. In addition, if the publisher files for bankruptcy, any rights the publisher held would likely become part of its assets sold during the bankruptcy process. The author would then end up with a completely unknown business partner.
5) Even with a perfectly drafted contract, which seems unlikely with a publisher who would propose such a contract in the first place, it could easily take years of legal action to unscramble the competing rights.
To the beginning writer, it may seem far-fetched that these rights would ever be worth anything, but a perpetual rights grab can extend far into a writer's career. It literally doesn't end until the copyright on the work expires, and for the US, that is life plus 70 years. Writers should be wary of any perpetual licensing deal, much less one that doesn't limit itself to specific derivative rights. The only rights that a writer should even consider licensing to a publisher are those rights that the publisher has a better chance of exploiting than the author, and only then when the income split is in the author's favor.
Whether these rights grabs stem from ignorance of the business or from greed, we believe they are unconscionable and indefensible. We urge writers to ask that such clauses be removed from contracts before they sign them and to avoid signing contracts with this language.
SFWA Contracts Committee
contracts@SFWA.org
4) The author would have a de facto business partner for the rest of the author's life and beyond for the life of copyright. Whether or not a clueless publisher would even realize what they've acquired or have any idea how to exploit it, the specter would hover over the author's further use of any elements in the original story. In addition, if the publisher files for bankruptcy, any rights the publisher held would likely become part of its assets sold during the bankruptcy process. The author would then end up with a completely unknown business partner.
5) Even with a perfectly drafted contract, which seems unlikely with a publisher who would propose such a contract in the first place, it could easily take years of legal action to unscramble the competing rights.
To the beginning writer, it may seem far-fetched that these rights would ever be worth anything, but a perpetual rights grab can extend far into a writer's career. It literally doesn't end until the copyright on the work expires, and for the US, that is life plus 70 years. Writers should be wary of any perpetual licensing deal, much less one that doesn't limit itself to specific derivative rights. The only rights that a writer should even consider licensing to a publisher are those rights that the publisher has a better chance of exploiting than the author, and only then when the income split is in the author's favor.
Whether these rights grabs stem from ignorance of the business or from greed, we believe they are unconscionable and indefensible. We urge writers to ask that such clauses be removed from contracts before they sign them and to avoid signing contracts with this language.
SFWA Contracts Committee
contracts@SFWA.org
Legal Disclaimer: This contract alert should not be understood to be legal advice. The issues presented by aggressive rights grabs are complex, and if you are concerned about use of your material, you should consult a competent attorney familiar with the business of publishing as well as the law of the applicable jurisdiction for legal advice.
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