ABA-IPL 29th Intellectual Property Law Conference April 2-4, 2014

Characters And The Law:

TRANSACTIONAL ISSUES AND STRATEGIES

By Cydney A. Tune

Pillsbury Winthrop Shaw Pittman LLP

705140084

© 2014 Cydney A. Tune. All Rights Reserved.

1 |

In the “converged” world, characters move in many directions and onto a number of media platforms – further increasing the complexity

Possible sources include:

Books; comics; TV; motion pictures; games; advertisements; etc.

Possible media include:

Traditional media: such as TV, film, books, home video, console games

New media: such as social media, online streaming or downloading

2 |

There can be many contributors and the rights of each must be addressed.

• The artist, writer or other creator of the character• The producers of projects that will incorporate the

characters• Distributors• Creators of advertising and

promotions with the characters• Merchandise creators, producers

and distributors• Creators of derivative versions• Technology providers

A web of contracts is involved

3 |

KEY CONTRACT ISSUES AND TERMS

Carefully identify all of the content to be created or licensed.

What does the work entail? What character is involved? Are there multiple characters?

Be very specific

KEY CONTRACT ISSUES AND TERMS

4 |

RIGHTS OWNERSHIP

• Owner of character(s) needs to preserve rights

• Producer of project will want to own rightsin the Project

• Who will own newly-created characters?

• Who will own other newly-createdcontent?

• Who will own rights in merchandise that is created?

• Who will own rights in any spin offs?

• Specify credits

5 |

GRANT OF RIGHTS

Character owners should carefully consider all potential exploitations and develop a strategy for each

Best done at the outset

Consider potential target audiences and:

• distribution channels

• territories

• best platforms

• protection of “image”

6 |

GRANT OF RIGHTS

• Carefully delineate the limited rights being granted

• Carefully reserve all other rights to the owner

Producers typically seek: all forms of TV, home video interactive multimedia, advertising and promotions, soundtrack rights, merchandising and commercial tie-ins

Each party will want the right to use new characters owned by the other

7 |

TERM, TERMINATION AND REVERSION OF RIGHTS

What should the term be?

When can the agreement be terminated?

A lot of financial and other resourcesinvested by Licensee

vs.

Need of Licensor to protect its property and avoid wasting opportunities

When should rights revert?

What if Licensee is not exploiting continuously or tapping full potential?

8 |

9 |

CLEARANCES, REPRESENTATIONS AND WARRANTIES

Each party should “stand up for” their contributions

• Representations and warranties must be carefully crafted

• Each should indemnify the other for breach of representations and warranties and for material breach of any obligations

Clearances must be done carefully and diligently

• Responsibility should be clearly allocated

• Ownership and licenses are often complex but need to be sorted out

Owner(s) need to protect and enhance character’s image

• Include detailed approval processes; at various stages

• Include Quality Control provisions

• Avoid tarnishment by association

Address rights enforcement –specify obligations, costs and processes

10 |

APPROVALS AND CONTROL

11 |

FINANCIAL TERMS

Always hotly negotiated

• Usually royalty-based, but can be fixed fee (e.g., artwork).

• Amounts vary depending on type of use and leverage of the parties.

• Advances and recoupment insome circumstances.

• Be sure to define key terms,such as “net revenue.”

Include a well-crafted audit provision

ABA-IPL 29th Intellectual Property Law Conference April 2-4, 2014

Good luck!

Cydney A. Tune

Pillsbury Winthrop Shaw Pittman LLP

cydney.tune@pillsburylaw.com