Licensing: Why does it Matter?

Many creative industries have to deal with the question of owning the rights to their creations, and giving up some or all of those rights for certain reasons. What does the rights owner need to do?

They need to license their work! What does licensing mean?

A license is permission to use the current owner’s work.

In order to license a work, you need to be the owner of the work, and/or have the respective rights to the work in order to license it.

Licenses can be permanent or temporary, exclusive or non-exclusive, worldwide or restricted. License agreements can take all kinds of forms. For example, one license could have a high royalty payments and a low flat fee, and another license could have low royalty payments, and may only be used in a certain region. Good examples of licenses are crossovers with another company, such as the Marvel vs. Capcom video game series, or a limited time clothing promotion with a clothing store.

As an owner or rights holder, you can also give away your rights. Giving away or transferring all of your rights is called an assignment. Giving away or transferring some of your rights is a license.

Renting an apartment follows a similar set up. Giving away all of your rights to the current lease is an assignment. Giving away only some of your rights to the lease is a sublet.

A master lease agreement may be between Omar (Owner) and Terry (Tenant). This master lease agreement is for 12 months, and allows Terry to assign or sublet his lease should Terry need to. 6 months into renting the apartment, Terry assigns the lease to Andrew. In this case, Terry gives up the remaining portion of lease that he did not use (the other 6 months), and Andrew will now have a 6 month lease (the portion not used by Terry). This works similarly as an assignment for intellectual property. Terry had the rights to the creative work for some time and used it. Then he gave the rights away to Andrew. Andrew can now do what he wants with the work that has been assigned to him.

6 months in, if Terry wants to sublet the apartment to Sally for 3 months, then he can sub-lease the apartment for 3 months. This gives temporary permission for Sally to use the apartment for the specified 3 months. In this case, Terry has used 6 months, then gives Sally 3 months (for a total of 9) and Terry can use the apartment for the remaining 3 months after Sally leaves. This would be akin to a license, where Sally can only use what is given within the specified 3 months.

One last note: If you do not have permission to use the owner’s work, you risk infringing. (With a few exceptions)

I hope this clears up some of the confusion surrounding licenses. Of course, it gets more complicated than what I have written. These can take different forms for copyrights and trademarks, so you will need to know which one you own.

Thank you for reading! Questions are welcome!

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