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May 3, 2018

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

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.

4 comments :

JOHN T. SHEA said...

Many thanks for this and all your sterling work. I'd avoid any publication that has such a contract, even if they are willing to change it.

Sue Bursztynski said...

I used to be on the committee for Andromeda Spaceways. Our contract was very simple. You agreed to let us have first rights, and sole rights for about three months after publication and you had a good idea when that would be. It may be more now as the thing has gone to solely ebook and it’s hard to take down the ebook after such a short time, but not much more. I’m not with them any more, so don’t know. We figured with what we we paying, it would be cheek to ask for more. And even then, if someone said, “They want to turn my short story into a film/put it into a Best Of anthology, do you mind?” (which they did sometimes)we’d say, “Hey, your story! But would you please put in where it was first published, the publicity would be nice.” Nobody ever said no.

I remember when digital was new and the Australian Society of Authors was warning us to hang on to our digital rights, a lot easier then than now.

Nancy G. West said...

Thanks for the excellent article. I'm also hearing some publishers try to obtain authors' rights to the Work(s) for the length of the copyright, i.e. the length of the author's life plus seventy years--which is close to forever. Why should writers ever grant that?

Victoria Strauss said...

Nancy,

Life-of-copyright contracts are standard for the Big 5 and other large houses. Smaller presses offer them too--though with a small press, you're really better off with a time-limited grant term, if only because small presses so often go bust.

Life-of-copyright isn't a problem _if_ there's a good reversion clause that guarantees you can request--and receive--termination once sales fall below a stated benchmark (for instance, fewer than 100 copies sold in the previous 12 consecutive months). This ensures that the publisher can't sit on your rights once your book stops selling well. Publishers like to hang on to rights--if they've got a large enough catalog, they can make money even from books that aren't selling many copies. At that point, though, it's more advantageous for you to be able to revert your rights and do something else with them.

I'd never advise an author to sign a life-of-copyright contract that doesn't include those provisions--that leaves terminating the contract entirely to the publisher's discretion, for instance, or includes vague "out of print" language. (Although if you do, copyright law lets you terminate after 35 years, if certain conditions are met.)

Again, for small presses, time-limited contracts are preferable (anywhere from 3 to 5 years; 7 may be OK in some circumstances but is not desirable, and 10 years is way too long). But as long as there's a good termination clause, you don't need to fear life-of-copyright contracts.

 
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