Protecting Your Dreams

Eternity is a Long Time: License Terms in Comics Contracts

Added on by Gamal Hennessy.
Western society is focused on the present. In business and in life, most of us are concerned with what's happening right now. Little thought is given to long term implications and outcomes. This can be a mistake, especially when it concerns your original stories and characters. A prudent creator will consider the length of time that their property is tied up when considering any deal.

How Long Is This Going to Take?
In the language of contracts, the Term is the length of time that a contract will be in effect. So if you license the publishing rights to the Greatest Comic Ever (GCE) for three years from the execution of the agreement, and the contract is signed on January 1, 2014, then the rights revert back to you on January 1, 2017.

In some cases, the starting and ending dates can be manipulated so that three years isn't really for three years. For example, if you license GCE for three years from the date of first publication of the book, you're looking at a longer deal, since GCE might not come out months or years after the contract is signed.

Forever and Ever, Amen
There are two types of terms in comic book contracts, finite and infinite. A finite contract has a term that lasts for a certain amount of defined time. Like the example above, the term could be months or years, but sooner or later, the rights revert back to you.

With an infinite term, there is no practical end to the license. You could die, humanity could be destroyed in the zombie apocalypse and the earth could be eaten by the sun, but as long as there are lawyers around the contract is still in effect. You can tell a license is infinite if the term contains words like perpetual or in perpetuity. Also, if you can't calculate when the term ends, there is a good chance that it never will.

There are also modifiers to standard term language that can make an infinite term look like a finite term. An in use license could be written so that as long as the licensee is actively using the license, then the license is still in effect. This is part of the difference between the X-Men and Daredevil movie franchises. Fox keeps actively making films with the X-Men universe, allowing it to keep the license. Daredevil reverted back to Marvel because Fox made no use of the license after the 2003 film.

An automatic renewal clause can be placed in term language so that the original term continues to restart as long as certain conditions are met. For example, I have seen publisher's contracts where the license term was valid as long as the book was in print. In today's world of internet comics, a book will always be in print if the book can still be downloaded, making a finite license infinite for that purpose.

Also, a license can convert from an exclusive license to a non-exclusive license (See Addition by Division: Separation of Licensing Rights for Creator Owned Deals) after the initial term ends. This can provide some protection for both parties upfront, but creates complications later on.

Think About the Future
Publishers have an inherent interest in holding rights for as long as possible for several reasons. First, it might take a considerable period of time before a property reaches its height of popularity. Wolverine has been a benchmark of popularity for the past ten years, but its celebrity status in comics has been solid for the past twenty years and it languished in relative obscurity for years after his first appearance in 1974. Second, IP assets, like characters are not perishable and they don't take up space. They are mental concepts that can be stockpiled at little cost. Finally, characters can prove to be powerful assets to whoever holds them whether the rights are resold as movies or games, or if the characters themselves used as assets to generate investment income.

The risk that a creator runs into in this scenario is signing away the rights to a Property for too long. What too long means will differ from one person to the next, but it is generally a mistake to sign away rights forever if the benefit you receive doesn't match what you're giving away (See Get What You Give: Rights and Revenue for Creators)

Not every Property is going to be as popular as Superman seventy five years after it is created. Your personal situation might prevent you from making demands about the length of your contract term (See David vs. Goliath: Negotiating Power in Comic Book Contracts). But anyone getting involved in a creator owned deal or some other type of licensing agreement should consider the length of the term in their contract term and strive to maintain some control of the property in the long run.

Have fun.
Gamal

PLEASE NOTE: THIS BLOG POST IS NOT A SUBSTITUTE FOR LEGAL ADVICE. IF YOU HAVE A LICENSEING OR INTELLECTUAL PROPERTY ISSUE, DISCUSS IT WITH YOUR LEGAL ADVISOR OR CONTACT C3 at gamalhennessy@gmail.com FOR A FREE CONSULTATION.