Business Contracts Part 3 – Licensing and Releases

Since we’ve taken the time to go through some basics of contract law, let’s talk about another important business law topic, licensing and releases.

Licensing and releases are all about giving and receiving permission. First, a release is the legal concept of receiving permission from others to use their “product”. While licensing is the giving of permission to other people to use your “product”. I use the term “product” very generically because we’re really talking about a number of different possible items. It could be an actual product, or we could be talking about logos, sayings, images or likeness. For example, if you utilize another company’s product in your advertising, you are going to have to get a release from that company to utilize their product. Another example, if you are depicting a person who is readily identifiable, you need to get a release from that individual. 

I like to play the licensing and release game very, very conservatively. It’s best to approach the situation with professionalism and candor. Unfortunately, some people have the mistaken idea that because the location or product they use is getting free advertising, the owner won’t mind. That’s not always the case. Many of these companies don’t like to have their names or images on products that they are not involved with. You can run into myriad problems in that particular arena and it’s best to avoid it. So what do you do? The best thing to do is to ask permission of the owner ahead of time. The worst case scenario is that the owner will say “no” and you will have to figure out a different solution. But sometimes the owner will say yes. Many companies have divisions devoted and dedicated to product in an effort to get their products involved in productions. At the highest level, there are agents for products who try to get CocaCola, Pepsi, Mountain Dew, etc. placed into TV shows and movies. The best example I can think of is Reese’s Pieces and the movie E.T. M&M/Mars said it didn’t want to have anything to do with the production, but Reese’s wanted to promote its new product. Steven Spielberg used Reese’s Pieces in the movie and “boom!” ­they became a huge hit.

Here’s another example. Let’s say you’re crushing it with your new YouTube show and you want to show certain products, or logos, or use someone’s music during your presentation. Is it necessary to get permission to show the products? Yes, it is! By no means would I gamble on implied permission. You can’t assume that the company that created the product is going to agree with your belief that they are receiving free advertising or that you’re using a logo or music for a sweet kick ass YouTube video that has a ton of hits. I’ve heard so many people tell me that “yeah, but that’s fair use man.” Well, perhaps it is.  But it’s going to take a law suit against you to figure it out.  Remember, “fair use”, one of the affirmative defenses under the Copy Right Act, is a defense, not a permission slip! Why engage in such risky behavior when it takes one phone call or an exchange of letters to get permission for something like that. Heck, if music is so important to you, go purchase a license from BMI (www.bmi.com) or ASCAP (www.ascap.com) and avoid the trouble completely. That’s why they’re there.

What’s the difference between exclusive versus non-exclusive rights? You should probably understand this concept if you think there will might be more people in the world vying for your product.  Sinply put, if you give someone an exclusive license for something you created, you are simply selling that item to them for a fixed period of time to use for a particular purpose, and no one else gets to use it. This would include you. If you give an exclusive license to use or market your product, that gives you no ability to do it. If someone else has an exclusive license, then you cannot license it to anyone else. Conversely, with a non-exclusive license, you maintain the flexibility to have other people or companies utilizing your product. There is no limitation on where it can go or who you can license to use it. That becomes very beneficial to you if its your product. However, if you’re on the receiving end of that deal, you certainly don’t want to be paying a premium price for something that  others are free to be throwing around. In that instance, you might want to push for something more exclusive or less expensive.
 
Thank you for your continued interest in these topics. Please let me know if there is a business law topic you would like discussed.

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