Everyone knows now that good quality content is a valuable commodity on the Internet.
Content providers may create their own content, but may also license in other content and act as aggregators or electronic publishers. The challenge for content providers is to ensure that when they acquire content, they receive broad rights to enable them to deal with it in the future. When they license content out, they must be careful not to license more than they have and keep the door open for new deals later.
Here is a short-form set of licensing principles for acquiring content and licensing it out. Keep in mind that what you ask for depends on what hat you are wearing! (In the list "Provider" = Content Provider; "Owners" = third party owners; "Licensees" = those getting Provider content).
- License in broadly and license out narrowly.
In
- If possible, get irrevocable, exclusive, assignable rights, with the right to sublicense and the right to create compilations and combine with other products, on co-branded and additional sites.
Out
- Give limited term, nonexclusive, nonassignable rights and limit what Licensees can do, listing permitted technologies, users and web sites.
- Clearly identify content, media and sites through which content can be exploited, at all times, thinking about future technology.
In
- Cover all forms of technology "whether now existing or developed in the future" and define permitted access to and uses of content broadly.
Out
- Clearly specify what Licensee can do with the content, based on what technology exists now.
- Avoid licenses to "electronically distribute".
In
- It may not be clear what technology is included.
Out
- These terms may result in Licensees getting broader rights than intended, so be careful.
- 4. Perform due diligence.
In
- Identify the rights of the parties, in the form of the content and the data.
- Require the Owner to supply releases/waivers for content, images, sound and music.
Out
- Perform internal due diligence to ensure you have the rights to what is being licensed out.
- Make the term clear.
In
- The commencement date should be specific and not "x days after delivery" or "on site launch". State when it ends.
- Get the right to terminate for breach, failure to provide current content and corrections; and for warranty breach or infringement. The Owner can terminate for Provider's material breach.
- Can Provider continue with existing user agreements after termination until they expire?
Out
- Have specific start/end date.
- Provider to terminate without cause; on breach; and on sale of Licensee.
- On termination, Licensee must cease to market the content; or use Provider trade-marks and must return any subscriber list and purge content from all systems.
- Define obligations regarding content.
In
- What form must content be in?
- State obligations of the Owner for updating content, error notification and corrections.
Out
- Require Licensee to comply with all embargoes, hold for release and kill notices; copyright marking policies, digital watermarking, content placement, downloading restrictions and security measures.
- Limit liability for updates to reasonable efforts.
- Get appropriate warranties and indemnities.
In
- Obtain warranties regarding ownership and rights granted; updates; no viruses; no defamation or violation of rights of privacy or publicity, that the content is not obscene; and will not infringe.
Out
- Provider should limit liability for inaccuracies and disclaim liability regarding the use made of the content. The risk of use of the content should be on Licensees and users.
- Be clear as to how payments are calculated.
In
- Will payments be lump sum, monthly, or royalties based on a percentage of revenue?
- Are payments on revenue billed or received?
- How will revenue from combined sources be allocated?
Out
- Same as above plus:
- Are payments based on royalties, page views, subscriptions or pay per view?
- Get minimum revenue stream and payment in advance.
- Ensure the definition of revenue on which royalties are based includes all possible uses of the content.
- Implement procedures to track sources of your content; rights granted to you; and the rights granted to each Licensee.
- This helps minimize the risk that the Provider publishes content in a medium for which it is not licensed, or grants rights to a Licensee that the Provider does not have.
These rules are simplified for this article, but providers and owners should think about these concepts for each licensing deal to avoid problems later.
Contact Amy-Lynne Williams for additional information on licensing content.Disclaimer: This Newsletter is intended to provide readers with general information on legal developments in the areas of e-commerce, information technology and intellectual property. It is not intended to be a complete statement of the law, nor is it intended to provide legal advice. No person should act or rely upon the information contained in this newsletter without seeking legal advice.
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