Step 3: Scope and negotiate the clearances

Having identified the pre-existing and new materials to be used as part of the project, a company should then consider the scope of rights it needs to complete the project and the steps it must take to clear those rights.

In these guidelines, copyright "clearance" means obtaining rights in relation to copyright material by way of assignment or licence.

3.1 No clearance necessary

In a number of circumstances, an agreement to clear copyright will not be necessary. This will be the case in the following circumstances:

a) Automatic Ownership or Prior Ownership

The company already owns copyright or will automatically own copyright on creation of the material. For example, where the material is created by employees of the company as part of their employment.

		Arena Theatre's automatic ownership as an employer : Like many small to medium sized companies Arena Theatre only employ a small staff which includes the Artistic Director and General Manager. Arena commissions and contracts creative and production staff on a project by project basis. The work practices of the company are collaborative. The Artistic Director's input in the script for the live production and the documentary film means the copyright in these materials is equally shared with the Artistic Director, scriptwriters and the filmmaker. As the Artistic Director's employer the company would usually automatically own this share of copyright in the script and film. However, in this instance a special agreement was made by the Board to recognise Artistic Director's interest and a share of copyright was assigned to her from the company.
		Case Study: Arena Theatre

b) The material is in the public domain

The material is in the public domain. For example, old published material or classical music for which all copyright has expired (eg where the writer or composer died over 50 years ago).

		NYID use of public domain material : Performers in the NYID documentary sang the theme songs of the Hawthorn and the Liverpool Football clubs. As the composers of the respective theme songs had died over 50 years ago no copyright applied. Had the company used a recording of this music further rights would have been required.
		Case Study: NYID

		The MSO use of public domain material : The composition '90 minutes Circling the Earthis a six-minute work based on the journey of a space shuttle (90 minutes being the time taken for a shuttle to orbit the earth). The multimedia developer and video producer sourced public domain footage of the NASA space shuttle, which was intercut into the video recording of the composition.
		Case Study: MSO

c) Insubstantial Part

Only an insubstantial part of the material will be used. Note that even a very small proportion of a work can be considered substantial if the part used is an important or qualitatively significant part of the work. It is extremely difficult, however, to give clear quantitative guidelines. If in doubt, it is safest to assume that the part used is a substantial part for which copyright clearance is required.

d) Fair Dealing

The fair dealing defence or some other exception applies to the use in question. The most likely application of fair dealing to a multimedia recording project will be fair dealing for the purpose of criticism or review. The defence only applies, however, where the dealing is 'fair' in all the circumstances, a sufficient acknowledgment of the work is made, and the purpose of the dealing is to criticise or review that work or some other work. This defence should be relied on with caution. Note that the "10% rule" does not necessarily apply to this category of fair dealing.

If a company chooses not to clear some rights because it considers that only an insubstantial part has been used or because it considers that fair dealing applies, the company should be mindful that the copyright owner may choose to bring an action for infringement. Unless the company is prepared to accept the risks and costs associated with defending such a claim, it should clear the rights.

3.2 Clearance by assignment or licence

In any other circumstances, a company will need to clear copyright by way of:

In deciding between these options, a company must weigh the relative benefits of owning or licensing copyright (exclusively or non-exclusively) against the associated costs.

a) Ownership by Assignment

Ownership of copyright confers a high degree of control over the use and commercialisation of a work. A copyright owner does not simply have a right to use a work, but also the right to decide who else uses the work, in what circumstances and subject to what conditions. Anyone else wishing to use the work must obtain a licence directly or indirectly from the owner. Accordingly, ownership is most important where a person wishes to have broad control over the many different ways a work might be used.

		The MSO assignments : The MSO required maximum control over its current Website for future and ongoing development. The company sought assignment on all components of the site including composition and software design.
		Case Study: MSO

It must be remembered that while it may seem easier to obtain assignment on all work commissioned from artists, it can be extremely costly. Given the opportunities that exist for companies to exploit work for promotional and economic benefit you must pay for all future applications of the work. Assignments work well for promotional material such as photographs or poster designs that can be so specific to a product or production that it would be hard to imagine what the artists would use it for in future works. However the cost of assigning rights on a script may be prohibitively high where the author could re-sell the rights to the lucrative film market.

b) Exclusive Licence

An exclusive licence of copyright confers a relatively high degree of control over the use of a work, but only during and to the extent set out in the licence. Unlike a copyright owner, an exclusive licensee does not necessarily have complete control over who can use the work or in what circumstances that use can take place. Nonetheless, within the agreed area of exclusivity, an exclusive licensee can prevent others from using the work. Exclusive licences are thus most appropriate in circumstances where a company is concerned about controlling the use of a work within a particular field of activity, but is prepared to relinquish control in other areas.

For example, a company may wish to make an interactive multimedia recording of a particular play or musical for commercialisation as a CD ROM in the educational and training market. However, to justify its investment in making the recording, the company may determine that it requires exclusive rights to that play or musical for a period of at least 5 years. In these circumstances, the company could seek a five-year exclusive licence of the copyright for that particular market. By securing these rights, no other person would be able to produce the same product for the same market during that period of time.

		Arena Theatre Company exclusive licences : The Arena Theatre Company secured exclusive licences for most of the work commissioned for the original production of PANACEA. For example the script was licensed exclusively to the company for five years, but limited to theatrical performances only. This gives the company the exclusive right for five years to perform the play in future theatrical seasons without requiring additional clearances. A further 5 year exclusive licence was granted for the use of the PANACEA script and other materials to record products for the PAML Pilot Project.
		Case Study: Arena Theatre

c) Non-Exclusive Licence

Non-exclusive licences simply give the licensee the right to use the material in question. They do not permit the licensee to restrict the use of that material by anyone else. Thus, when a company simply wishes to use a work, but does not mind whether or not others can also use that work, a non-exclusive licence will meet its needs.

For many materials used in a multimedia project, particularly pre-existing materials (eg photographs, music, film clips and extracts of text), a non-exclusive licence will be quite sufficient. Although strong, exclusive rights will always be desirable, those rights also tend to attract a higher price. Thus, if a non-exclusive licence gives a company the rights it needs at low cost, the extra costs associated with obtaining ownership or an exclusive licence may be difficult to justify.

		Chunky Move non-exclusive licences : Chunky Move sought a non-exclusive licence for the use of the musical composition in the CD ROM. This will limit Chunky Move's ability to use the composition for purposes other than the CD ROM and allows the composer to re-record and use the music for his own purposes.
		Case Study: Chunky Move

3.3 Other limits on the scope of rights

A company must also decide how broad or narrow an assignment or licence it requires for the purposes of its project. Questions to consider include:

a) In which territories does the company require rights?

An assignment or licence of copyright can apply on a worldwide basis, or can be limited to one or more specified territories or countries. A company will only need to secure rights for those territories in which it expects to use or commercialise the material. Thus, if a company is sure that it will only ever use or commercialise the work in Australia, Australian rights should adequately meet its needs. However, if a company plans to commercialise its work on the Internet, it will need to obtain worldwide rights.

		Territory clearances for the PAML Pilot Project : As all the participating companies expected to distribute the products over a range of delivery mechanisms including the world wide web the companies required worldwide rights.

b) Over what period of time does the company require rights?

It is possible to limit the duration of an assignment or licence of copyright. If a product is expected to have only a limited commercial life, a fixed term licence (eg five years) may satisfy the company's needs. If there is a chance that the product will be used and commercialised over a longer period, a perpetual licence should be considered. Otherwise, on expiry of the fixed-term licence, a company would need to stop commercialising the product until extended rights can be re-negotiated with all relevant rightsholders. Depending on the number of years that have passed since completion of the product, this may prove to be a difficult task.

		Duration of contracts in the PAML Pilot Project : The case studies demonstrated that obtaining a perpetual licence can be difficult. Some of the stakeholders were very wary of their work being commercially exploited in unforeseen media, and hence opted for a limited term for the commercialisation and promotion of the products based on information available at the point of contracting. In relation to archiving, a perpetual licence was granted to allow the digital products to be stored and viewed in a Performing Arts Multimedia Library. Limitations were placed on the archival agreements, which specified the restricted ways in which material can be accessed. Technological developments such as electronic copyright management systems (eg SWIFT Digital Media Service) can allow for ongoing monitoring and gives the rightsholder the power to vary licence terms over time. This kind of flexibility reduces the risks previously associated with granting a perpetual licence.

c) Will the company's rights be limited to particular media or a particular platform?

Licences and assignments of copyright are sometimes limited to a particular medium. For example, a rightsholder could license the use of a work for inclusion on a CD ROM, but not for any other medium of commercialisation. Alternatively, a rightsholder could grant a licence for broadcasting, subscription television, and all other current and future media. Ideally, a company creating a multimedia product should avoid licences that are limited to a particular medium, platform or technology. However, if certain rightsholders are unwilling to grant a licence for all media, the licence should cover at least those media by which the company plans to commercialise its product.

		NYID clearance limitations in relation to particular media : NYID's documentary included a number of pre-existing third-party materials used in the original season. Various clearances were required from rightsholders in these materials to allow their inclusion in a documentary film intended for broadcast, broadband delivery and inclusion in a multimedia library. Seeking these clearances was time consuming and costly. The acquisition of some material was abandoned because of the difficulty in obtaining clearances for digital delivery. Without the appropriate clearances the material could not be distributed over the world wide Web, across broadband networks or archived in a digital performing arts multimedia library. These restrictions on media were too limiting for NYID.
		Case Study: NYID

d) Will the company's rights be limited to particular purposes?

It is also possible to limit an assignment or licence by reference to purpose. Thus, for example, if a company has no intention of making its product available outside an educational audience, it might simply obtain a licence limited to educational purposes. However, although a licence limited in this manner may allow the company to obtain rights at a discounted price, it will also prevent the product from being commercialised to a general audience.

e) Will any volume limits apply to the company's rights?

Licences can be limited by reference to a fixed volume of use. For example, a rightsholder may authorise the use of a work in a CD ROM, but only for a fixed production run of 50,000 copies. In these circumstances, if the company wished to make and sell copies in excess of that number, it would need to renegotiate a further licence with the rightsholder.

		Arena Theatre Company volume limits : In the Arena Theatre's CD ROM project the performers' consent for the commercialisation of the CD ROM was based on a fixed run of 2,000 CD ROMs. If the company wished to produce further runs of the product they would be required to renegotiate with the performers. The limit on volume was considered by the performers as a way to ensure the possibility of further negotiations should the products prove successful and require further runs. It also provided a process of limiting exposure of their performances. Although exposure is on the whole desirable for a performer, overexposure can be problematic.
		Case Study: Arena Theatre

f) Will the company's rights be limited in any other way?

For example, contracts can limit the inclusion of third-party material in a product, or limit third party material being attached to a work. In most circumstances stakeholders will require knowledge of all material that will be associated with their work in a particular product.

		Limits on the inclusion of third-party material : In the PAML Pilot Project the performer's agreement prohibited use of the recorded performance for unauthorised product/service endorsements or similar commercial tie-ins. However, in order for the participating companies to comply with their agreements with funding bodies and major sponsors, they needed to retain the freedom to use the recording for certain sponsorship/funding commitments. An exception was included in the performer's agreement to cover this. Without this exception, the companies would not have been able to include a credit for a major sponsor on any products without offending the prohibition on third-party promotion.

3.4 Be consistent

A company should aim to clear the rights it needs for a project as consistently as possible. It will only be able to commercialise the final product to the extent permitted by the narrowest and most restrictive rights clearance of material to be incorporated in that product. There is thus little to be gained by obtaining broad clearances for some materials if other materials cannot also be used to the same extent.

For example, if one film clip included in the product is only licensed for three years while all other content is licensed on a perpetual basis, commercialisation of the product will nonetheless need to cease at the end of the three-year licence or the product will require amendment to delete that film clip.

		Case study issues relating to being consistent : Although the companies were able to gain broad rights clearances for most of the copyright material, the rights clearances negotiated for performers were generally more limited. Had the companies paid a major premium for these broad rights, that premium may have been wasted as they may not have been able to ultilise those rights to their full extent. The companies could only commercialise the products to the extent of the most limited clearance.

3.5 Be forward looking

In negotiating the rights for a particular project, a company should always try to be forward looking and clear rights that permit it to take advantage of future (unexpected) commercialisation opportunities, even though those opportunities may not be anticipated at the start of the project. If rights are cleared on a restrictive or 'technology specific' basis, the company may in future find itself unable to take up an opportunity without going back to all relevant rightsholder and negotiating new clearances. Failure to locate a single rightsholder in these circumstances could mean that the whole product is unable to be used.

		Case Study issues relating to being forward looking : Some of the rightsholders involved in the PAML Pilot Project had difficulty in offering a broad grant of rights because they were unable to place a value on the rights in relation to a new technology or market which may arise in the future. The stakeholders' preferred negotiation of such clearances when the opportunity arose.

3.6 Remember to clear underlying rights

When clearing rights for films, recorded music and other materials in which underlying copyrights exist, it is important to obtain a clearance that covers those underlying copyrights. A film clip, for example, will often contain an underlying script and background music. Where possible, at the time of clearing copyright in the film, the film owner should also be asked to confirm clearance of the underlying rights. However, if the film owner does not have authority to grant clearances in the underlying materials, it will be necessary to clear the underlying rights directly from the holder of those rights (eg the scriptwriter, composer, music publisher, etc).

		NYID clearance of underlying rights : NYID produced a docudrama, which incorporated pre-existing footage from their live production of The Making of the Austral/Asian Post Cartoon:Sports Edition. As the live production included pre-existing screen footage and music these were captured in the recording of the docudrama adding another layer of pre-existing material.
		Case Study: NYID

3.7 Clearing performers' rights

Unlike copyright, performers' rights are not property rights and thus cannot be assigned or licensed. Nonetheless, in order to make a recording of a live performance, it is necessary to obtain each performer's consent or authorisation. In giving his or her consent, however, a performer may attach conditions that restrict or limit the use of the recorded performance in much the same way as under a licence of copyright. Subject to any such contractual conditions, there are generally no further restrictions on the use of an authorised recording of a performance. The only exception applies to the use of an authorised sound recording in a sound-track. This use must be specifically authorised by the performer.

Given the wide range of possible uses of a performance recorded for a multimedia project, and the possibility that the inclusion of the recording in a multimedia product constitutes use as a sound track, it is advisable for a company to obtain a consent from each performer that covers:

This consent should be obtained from each performer whose performance will be recorded, including actors, dancers, musicians, singers and announcers. There is no need to obtain the consent of audience members who may participate in the performance.¹

In giving consent to the recording and use of their performances, performers may attach contractual conditions that place limits on the company's use of the recording, including territorial, time, purpose, volume and other limits. The company should ensure that any such limits are consistent with the scope of rights cleared in relation to the copyright material it will use.

3.8 Performers' rights issues in the PAML Pilot Project

As part of the PAML Pilot Project, each of the companies was required to obtain the consent of a variety of different performers whose performances were recorded. The scope of those consents, and the conditions imposed by the performers, were the subject of extensive discussions between the companies, the performers, the Media Entertainment and Arts Alliance (MEAA) and the project managers of the PAML Pilot Project.

During these discussions, particular attention was focused on the willingness of performers to grant broader, more open-ended clearances than traditionally occurs within the industry. The PAML Pilot Project provided an opportunity to consider whether performers would grant broad clearances for the use of their recorded performances, on the understanding that agreed 'back end' royalties would be paid and that the performers retained some control over any future use that might infringe their moral rights of integrity and attribution. The fact that products would be made available 'on demand' in a broadband delivery system with electronic copyright management capabilities (ie through Cinemedia's SWIFT Digital Media Services) was an important consideration in this context. If performers have confidence in the delivery system and its capacity to track usage and manage royalty payments, it is more likely they will consider a longer grant of rights for the use of material in that system.

After extensive discussions (particularly with the MEAA), most performers were reluctant to grant open-ended clearances for digital recording of their live performances for a number of reasons, including:

Although 'back end' payments were accepted in a number of the performers' agreements, many performers appeared not to expect these payments to be significant. In particular, performers did not want to sacrifice up-front payments in favour of back-end royalties in circumstances where the products would be used mostly for promotional purposes. It was also important to define carefully the formula for the calculation of royalties (eg if royalties were based on gross receipts, how would those gross receipts be defined). In addition to back-end royalties, performers were generally given some up-front payments or loadings based upon relevant awards.

1. Under S248(9) of the Copyright Act 1968, performance does not cover some categories lectures, news and information or sporting activities and audience participation. BACK

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