How should I approach licensing digital media?


In essence licensing digital media is no different from licensing any other copyright work, but the form of licence differs from sector to sector and, for instance, a software licence will look very different from a licence to use video clips.


There are issues that merit particular attention in the context of digital media, not least what the licensee may and may not do with the licensed material.


All too often licensors reserve copyright to themselves, implicitly or even explicitly prohibit the licensee from making copies, but allow the licensee to "use" the content without saying how the licensee may use the content. 


The result is usually that the licence conditions are breached - the licensee can't use the content in any way unless he copies it, and the licensee is left wondering whether the content can be used only for private purposes or, in the absence of any explicit restriction, can it be used for any purpose he wishes? Even if use is restricted to private purposes, the licensee is left wondering whether that means it can be distributed to friends and family for their private use.


In the midst of this sort of confusion, even though ignorance of the law is no excuse, it is unreasonable to expect licensees to respect intellectual property rights. Few consumers or even business customers have a proper appreciation of what IP law allows them to do or not do and many will take the simple view that, having "bought" the content, they can do whatever they wish with it.


They key to a good licence is that its terms are clear and make sense in the circumstances. A typical example of nonsensical provision is a software licence that still prohibits the use of the software on a network or restricts use to a specified geographical address or computer identified by serial number when this is not how the world works nowadays.


The first broad but nevertheless important issues to tackle are:


a)                   What does my business want to achieve?


b)                   Will licensing assist me in achieving that objective?


c)                   Is there a better way of achieving my objective?


If the answer to b) is yes and the answer to c) is no, you need to start looking at the licence terms you should impose to help you to achieve that objective.


Before you attempt to prepare licence terms and conditions, or spend money asking anyone else to draw up a form of licence for you, you need to work out the answers to the following:


1.         What are you licensing?


This may be specific material/content or a specific edition or version. If it is you need to identify it.  Alternatively you may be allowing licensees to download a wide range of materials of their choosing from your website, or you may wish to restrict the number of downloads made from your website.


There may be other subsidiary material that you are licensing, for instance you may be allowing licensees to use your logo or trademark.  If you are, make that clear, and be clear about whether different terms apply to different material.



2.         Who may use your material?


At a very basic level this is about identifying the licensee. That is important because if you are limiting the "use" of your material to the licensee and wanting to prevent use of the material being shared, you need to start by identifying the person to whom you are granting the right to use the material.


A common mistake, especially where licence rights are granted online, is to confuse the individual who is sitting at the PC and downloads the material with his or her company. If you are engaged in B2B the odds are that you actually intend to allow the company to use your material and not an individual employee of the company.


Avoid using "you" without further indication of whether you mean the company or the individual. That is fudging the issue and will cause problems if: a) you ever want to try and enforce the terms of the licence; and b) you are ever on the receiving end of a claim in connection with the material.


If you are asking people to register online, make sure the registration form distinguishes between the company (licensee) and the individual contact at that company.


And if you are licensing a company make sure you have its registered number.  Companies change their names and addresses; their number never changes.


3.         How may your material be used?


Start from the (correct) premise that licensees can do very little with your copyright material unless you give them permission to do it.  Be specific about what they can do and, amongst other things think about:


a)                   Whether the licence is non-exclusive (there may be many licensees), exclusive (not even the licensor may use the work) or sole (the only licence granted although the licensor may use the work);

b)                   whether the licensee may copy the work in whole or in part (for instance by taking extracts from the work);

c)                   whether the licensee may incorporate the work (in whole or in part) into a collective work;

d)                   whether the licensee may use the work for personal/private use, for academic teaching/research, for commercial purposes or for non-profit making purposes;

e)                   whether the licensee may use the work to provide services to others;

f)                     whether the licensee may publish or distribute the work or share it with others (with or without a fee);

g)                   whether or not the licensee may distribute/publish in any form or media;

h)                   whether the licensee may publish the work or extracts from it on, for instance, a personal website, but not on a commercial site;

i)                     whether the licensee may use the work on a specific platform/device but on no other platform/device;

j)                     whether the work may be published/used in certain parts of the world only (in the case of software some suppliers still try to restrict the physical location of the software);

k)                   whether number of users/copies is limited;

l)                     whether you want an acknowledgement/your copyright notice/logo on all copies of the work;

m)                 whether you reserve the right to have the licensee remove content from any website (if you have allowed website publication);

n)                   whether the licensee may translate, modify, adapt or remix the work or create derivative works from it;

o)                   whether the licensee may sub-license the use of the work;

p)                   whether there are any terms (such as attribution and limitations of liability) that must be carried through to any sub-licence; and

q)                   whether the licence is of limited duration or is indefinite - for the duration of copyright.


The more specific you can be the better.  For instance if you are licensing images or audio visual material you might restrict redistribution as templates, standalone backgrounds, stock elements or effects imagery, inclusion in other clip media, or in another library or collection. If the images are included in another work their use might be restricted to not more than a specified percentage of that other work.


Once you have been specific about the permitted uses of the material, you can reserve all other rights.


4.         What are the risks for you and how might you mitigate those risks


You need to look at risk when considering the issues in point 3 above. For instance, you may be absolutely confident that the material is your own original work and does not infringe any third party intellectual property.  If that is the case, you might be less worried about a licensee republishing the material. If, on the other hand, you are concerned that some of your employees may have used third party IP without permission, you will want to reduce your risk by prohibiting your licensee from republishing any material.


Most licences will contain clauses that limit the licensor's liability. Often those clauses are generic in nature - they seem to be legal boiler plate and are often complex and incomprehensible.  They don't always work, especially where you are engaged in B2C licensing and often the problem is that they are unspecific. 


While a general limitation or exclusion clause may help you, it is always useful to think about whether there are any specific risks that you do not want to take, or that you want the licensee to take. A typical one might be whether or not the licensor takes the risk if information is inaccurate and the licensee acts on that information, or whether the licensee should make its own checks before relying on any information.  For an example, please see the disclaimer at the end of this paper.


5.         Charges


Unless you are licensing material free of charge, you need to consider:


a)                   whether you are going to charge a one off fee;

b)                   whether you are going to charge a fee based on usage, such an amount per download (and how you are going to monitor that usage);

c)                   whether you are going to charge a periodic fee (e.g. a monthly, quarterly or annual fee);

d)                   whether you want to be able to increase any periodic or usage fees; and

e)                   how are you going to charge if your work is incorporated in and distributed as part of, another work.


How you charge will depend to a large extent on what the market is used to/will bear.


6.         The mechanics of entering into licences


The old fashioned way is that licensor and licensee both sign a hard copy licence agreement and, when they have signed the agreement it is dated and each party keeps a copy signed by the other (or by both parties).


If you are granting a licence online, you need to be sure that its terms are binding on the licensee.  They will not be binding unless they have been brought to the licensee's attention before the contract is concluded. It is therefore very important to know when a contract comes into being.  In general terms that is when one party has offered to enter into a contract and when the other has accepted that offer.


In an attempt to be able to show that the terms were brought to the licensee's attention, many websites insist that the licensee clicks on an "accept" or "agree" button before being able to proceed.


If the licensee doesn't take the trouble to read the terms of the licence that doesn't matter; the terms will still be enforceable so long as the licensee had the opportunity to read them before entering into the contract.


That means that you should draw the licensee's attention to the existence of the terms and conditions and provide an easy link to them as early as possible in the sequence of events. 


The e-Commerce Regulations 2002 oblige you to set out the mechanics of how the contract is formed so that it is clear to everyone, and the Distance Selling Regulations stipulate the information that must be provided to consumers customers at certain points in the process of selling online or by any other distance means.


Contact Details


If you would like further advice about any of the issues considered above please contact Christine Reid on 01865 864195 or email her at christine.reid@northwoodreid.com


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This article is not intended to be, and should not be taken as being, legal advice. The law often changes and it varies from jurisdiction to jurisdiction; the information in this article is generic in nature and specific legal advice should be taken before acting on any of it.


© Northwood Reid 2007. The use, copying and dissemination of this article are subject to our Terms of Use.