Copyright Licensing

Under copyright law, authors of original works of authorship that are tangibly fixed in a medium have a bundle of rights. The bundle includes the six economic rights of reproduction, preparation of derivative works, distribution, public performance, public display, and digitally transmitting sound recordings. If the work of authorship is a work of fine art, the author also has moral rights.

When any of these rights are infringed, the holder of the rights may bring a copyright lawsuit to enforce those rights. For example, a musician might sue a film studio that used a copy of his song as part of the soundtrack for a movie. Or a painter might sue a graphic artist who built on his existing work on the grounds that the new work is actually a derivative work.

Under the first sale doctrine, an individual who purchases a copy of an original work of authorship can dispose of that particular copy by selling it or displaying it, irrespective of the exclusive rights of the copyright owner. However, the first sale doctrine does not protect an individual who makes unauthorized copies and distributes them, unless those copies are considered “fair use.” For example, a reviewer may quote from a book in order to criticize it, and the magazine may make copies of that review under the fair use doctrine. But a private individual who makes photocopies of an entire book that he purchased, and then sells the copies repackaged, infringes on the author’s copyright.

In many cases, an author of an original work may gain an economic or other benefit by granting another person or entity the authority to exercise one or more of these rights, or even part of one of the rights. A transfer of rights in a copyrighted work can be accomplished through a copyright license or an assignment. Generally, the difference between the two is that licenses allow a copyright owner to retain the rights while giving someone else a right to exercise some of them, whereas an assignment results in a copyright owner losing control over the work. Moral rights in a work of fine art can be waived, but they cannot be licensed or assigned.

Copyright Licensing Rules

If economic rights are transferred, the transfer must be in writing and signed by the copyright holder. However, if the right is transferred on a nonexclusive basis, no writing is needed. Copyright law does not require that payment or anything else be exchanged in order to grant someone a license, but often copyright holders do require payment, place restrictions on the license, or require the licensee to meet some other obligation.

The license will dictate all the terms of the transfer of rights. Usually, it will spell out which rights are being licensed, the number of uses, to what extent the work can be used, and the length of time until a license expires. It will also specify any requirements or obligations on the part of the licensee. For example, a copyright holder may license a work to be distributed only in a particular geographic region. If the licensee distributes the work in other geographic regions, the copyright holder can sue for infringement and obtain an injunction or damages.

Often, a third-party organization is authorized by the copyright holder to grant the permission on the holder’s behalf. For example, stock photo websites often grant licenses to individuals to use a photographer’s stock photo on their website or online magazine for a small fee under a license.

Under Section 203 of the Copyright Act, authors or those who inherit their rights are permitted to terminate grants of copyright licenses that are made on or after January 1978 if certain conditions are met, except in the case of works for hire. For example, when an author dies, those who own more than half of that author’s interest in the work can terminate the license. Termination can also happen within five years, starting at the end of 35 years from the execution of the license. When the license covers the right of publication, the license can be terminated 35 years from the date of publication of the work under the grant or at the end of 40 years from the date the license is executed, whichever is earlier.