Step 4: Finalise agreements for the rights clearances

Having identified and negotiated the rights the company must obtain by agreement, the terms of those agreements must be finalised. Those agreements will need to address:

4.1 Rights clearance terms

Set out below are several examples of possible rights clearance clauses, together with comments on those clauses.

a) Broad assignment

The Rightsholder assigns to the Company all current and future copyright in the Work throughout the world.

Comments

b) Exclusive licence

The Rightsholder grants to the Company [during the Term] an irrevocable, exclusive licence in the Territory to use, copy, adapt and commercialise the work and all current and future copyright in the Work in the Media.

Comments

c) Non-exclusive licence

The Rightsholder grants to the Company [during the Term] an irrevocable, non-exclusive licence in the Territory to use, copy, adapt and commercialise the work and all current and future copyright in the work for the purposes of the Project.

Comments

d) Underlying rights clearance

The [licence/assignment] given by the Rightsholder includes a licence of any underlying rights in any works or other materials incorporated in the work.

Comments

e) Performer's consent

Subject to the conditions of this [Agreement], the Performer irrevocably consents to the recording, broadcasting, transmission and any other use or commercialisation of the Performance and the copying, adaptation, broadcasting, transmission and any other use or commercialisation of the recording, including use as a sound track, for the purposes of the Project only.

Comments

Another example of a performer's consent is included in the Example Performers Agreement.

4.2 Warranties and indemnities

As owner of the copyright in a work, it is the Rightsholder's responsibility to assure the company that use of the work (as authorised) will not infringe any laws or third party rights. Any Rightsholder giving a copyright clearance should thus be required to support that clearance with warranties in relation to copyright ownership and non-infringement.

Example:

The Rightsholder warrants that:

A company may also seek an indemnity from the Rightsholder to give it a clear right to recover from that Rightsholder any losses suffered as a result of breach of warranty. For example, if the Work is found to have infringed the copyright of another person and that person claims damages from the company, the company will probably want to recover its costs and losses from the Rightsholder. An indemnity provides a clear right for such a claim. However, if the Rightsholder giving the indemnity has few assets or is difficult to bring proceedings against (eg based in another country), the indemnity will provide only limited comfort.

		PAML Pilot Project Intellectual Property and warranty examples : In the PAML Pilot Project many of the contracts with the artists included Intellectual Property Warranty and Indemnity as listed above. As the creator of a work protected by copyright an artist must confirm that he or she has created the work without copying from another person and without breaching some other law (eg defamation). To reinforce this point the artists were asked to indemnify the respective companies against any and all loss, damage, costs (including reasonable legal costs) and expenses sustained or incurred by the company as a result of any claim against the company arising from a breach of the warranty. No Intellectual Property Warranty and Indemnity was required in the performer's contract.

4.3 Payment terms

The payment terms for clearing different rights for a multimedia project appear to vary considerably. These variations arise from the different approaches to payment followed in different industries, as well as from the great diversity of multimedia projects.

Payment models followed in the film industry differ from those followed in the music industry, which in turn differ from those followed in the publishing and visual arts industries. Payment models also vary according to the commercialisation path. Clearance fees for products commercialised by way of product sales (e.g., CD ROM sales) will be calculated differently from clearance fees for products commercialised on a pay-per-use basis (e.g., licence fees for broadcasting or use on Internet sites and video-on-demand systems).

Given these variations, it is difficult to identify a simple, preferred payment model that can be applied to all rights clearances.

a) Fixed-fee or upfront loadings

A fixed-fee model involves payment of a fixed amount for the clearance of rights. This amount is usually paid up-front, but can also be structured as a series of payments over an agreed period of time. It is not uncommon for fixed fee payments to apply where the rights are subject to time or volume limits. Any use in excess of those limits would thus require separate clearance and payment of a further fixed fee.

A fixed-fee payment model is often attractive to rightsholders because the fees are paid up front and the amount of those fees does not depend on the financial success of the product. Fixed fees are also easier to administer than royalties. For many companies, however, fixed fee payment has the disadvantage that a substantial investment in rights clearance fees is required, regardless of the commercial success or failure of the product.

b) Back-end payments/royalties

Royalties are a remunerative recognition of the ongoing use of a work. A royalty or 'back end' model generally involves regular, variable payments calculated according to the level of use or the income received from the use of a product. Royalties can be calculated in many ways, including:

		Arena Theatre Company back-end payment model : At Arena artists were paid for their contribution to the theatrical season. In addition artists were offered a percentage of total revenue as a back-end payment, for the use of the work in other products intended for commercialisation. Arena proposed that one-third of all revenue should be returned to the company to generate new work for artists and to cover expenses relating to marketing and administration of payments. The remaining two thirds would be divided equally amongst all participants, each receiving 3.5%. This equitable split reflected the collaborative nature of the company and was offered in the spirit of the pilot project. Should the CD ROM generate anticipated revenue then artists will receive more in a back end payment model devised by the companies than if they had received current upfront award loadings.
		Case Study: Arena Theatre

c) Combined fixed-fee and royalty or back-end

A combination payment model involves payment partly by way of fixed fees (up-front) and partly by way of royalties. The up-front fee can either be treated as a separate payment, or as an advance on royalties or back end payments.

		Chunky Move combined payment to performers : Prohibitive award loadings for CD ROMs prompted Chunky Move to negotiate a settlement with performers to pay an upfront loading during rehearsal and a back-end payment from the commercialisation of the products. The performers received a 20% loading on their weekly wage for a five-week period during which time the filming occurred. When combined with the back-end payments due on estimated income this was equivalent to or more than the award rate.
		Case Study: Chunky Move

		NYID combined payment to performers : NYID paid performers under the current film and television award for their part in the documentary. As recognition of their contribution in the documentary and original season the company offered royalties to all participating members in the documentary and theatrical show. As a collective the company generously divided total income amongst stakeholders through division of 'shares'. 'Shares' were then offered to individuals according to levels of input and responsibility.
		Case Study: NYID

4.4 Moral Rights

Issues of creative and artistic control, integrity and recognition are likely to be of great importance to many of the contributors to a multimedia project. Indeed, many responses to the PAML Pilot Project suggest that creative control issues are often more important to a creator or performer than payment issues. Thus, with moves to introduce moral rights protection into Australian law in the near future, there is a need to include an effective mechanism for managing moral rights issues.

The rationale for moral rights protection is that a creator's work is an extension of his or her reputation and personality and, as such, should remain subject to his or her control, at least to a limited extent, even after the copyright in that work (ie the exclusive economic rights) has been sold to another person.

Although the Copyright Act 1968 does not presently recognise moral rights, the Australian Government is currently planning amendments that will grant copyright owners and performers the moral rights of integrity and attribution.

The right of attribution demands that the creator be identified as the creator or performer of a work or performance. The right of integrity enables creators and performers to object to "any distortion, mutilation or other modification that would be prejudicial to their reputation or honour".

Several producer organisations have requested the ability for artists to waive moral rights particularly for broadcast purposes such as advertisements. The companies involved in the PAML Pilot Project did not seek a waiver and thus provided a test case for the management of moral rights in the performing arts.

The following aspects of a multimedia project can give rise to moral rights issues:

a) Attribution

Issues of creative attribution to address will include:

b) Integrity

Management of issues of creative integrity is likely to be a bigger challenge. Assuming that moral rights will soon exist, companies are faced with the following options:

If a middle-ground approach is taken (as it was in the PAML Pilot Project) the following techniques for managing moral rights could be used:

The companies in the PAML Pilot Project provided an industry test case of how moral rights can be managed within their organisations.

		PAML Pilot Project companies management of moral rights : The right of integrity has been more difficult to manage. In both Arena's and Chunky Move's participants were allowed to review screen rushes and the final products. This is a difficult task in non-ensemble companies where participants can be touring internationally upon completion of the project. The onus remains on the company to ensure that participants have viewed the product to ensure their rights have not been breached. Upon viewing artists were given seven days to inform management of any objections they have in relation to possible 'derogatory' treatment of their performance in the product. The screening of final products was particularly important for Chunky and Arena artists as they had agreed to a recording without a script or storyboard.
		Case Study: Arena Theatre

		PAML Pilot Project companies management of moral rights : The MSO regularly review recordings of its live performance through a delegated committee, which includes orchestra representation. The orchestra representative of this committee reviewed the Website and documentary on the behalf of the orchestra.
		Case Study: MSO

4.5 Other commercial issues

In agreements for the creation of new materials, there will also need to be clear obligations on the other parties to create the work, perform agreed services and deliver to the company any deliverables.

If an agreement is entered into with a software developer, the agreement should include terms that cover special issues relating to software such as:

The agreements should address what each party is required to do in the case of copyright infringement claims being made.

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