license agreement primer: property & products

Okay! As we noted on Tuesday we’re going to be working our way through the parts of an art license agreement. As we’ve already mentioned, license agreements can come in a wide variety of forms. Some will be much more comprehensive than others, but the topics we’ll outline for you over the next several posts are the critical ones. The order in which these topics are presented may also vary from agreement to agreement, but they often come in roughly the same order we’ll be describing in this series.

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Like all agreements, an art license opens by naming the parties. In this case, that’ll be you, the artist, as the licensor and the company you’re licensing to as the licensee. This preamble simply states your intent to agree, before getting down to the nitty gritty of describing the terms between you and your licensee.

The Licensed Property and Licensed Products

The agreement will be as precise as possible as to what exactly is being licensed (your art, usually called the “Property” or “Licensed Property”) and what it’s being licensed for. Often at this point the agreement will refer to an “Exhibit A” (sometimes “Schedule A”), which is attached to the agreement (and usually it’s the first of any such exhibits/attachments because the property list is the first order of business). The Exhibit A is often written as a list of artworks described by title, sometimes (helpfully!) with a thumbnail image of the artwork next to the title.

Typically the license gives the Licensee the right to use the Property “in the manufacture, sale, advertising, and distribution” of “Licensed Products” (sometimes referred to as “Licensed Goods” “IP Products” “Licensee Products”). Exhibit B will describe the Licensed Product(s) on which a Property can be used.

Importantly, the artist does not license the property(ies) on Exhibit A for all purposes. Exhibit A and Exhibit B work together, with A saying which property can be used and B describing a particular product. The licensee may use a shop keeping unit (SKU) or other product description unique to the licensee that will be put into Exhibit B’s description of the product. It’s helpful to copy the selected images from Exhibit A and put them into schedule B in relation to the exact licensed products because, as noted, the artworks on schedule A won’t necessarily be used for all products on Exhibit B.

Scope of Licensee’s Right to Use Property

Another aspect of the property the license agreement will address is exclusivity. A non-exclusive license allows you to license the artwork to others even in the same product category. Most manufacturers will want some exclusivity; for example, a promise that an artwork licensed for a particular product will not be licensed to any other manufacturer in that same product category, during the term of the agreement. That’s reasonable. But some licensees will ask for a broader exclusivity—much more than they reasonably need—giving the licensee the exclusive right to use the image for all purposes (i.e. on any product imaginable) and thus keeping the artist from further using that artwork commercially.

A non-exclusive license, or one where the exclusivity is limited to a specific product category, is far better for the artist because it gives you more flexibility to license that artwork elsewhere, to continue selling it in your Etsy shop, or in any other venue or forum that tickles your fancy. This is of particular concern with artworks that become especially popular either before or after they’ve been licensed. When you have an artwork that resonates with your audience you want to have the maximum flexibility to use that artwork yourself. Carefully containing exclusivity or insisting on non-exclusivity is the key to that flexibility.

Extra credit

If you’ve ever wondered why certain words in an agreement are always capitalized (e.g. LIcensee, Licensor, Property, etc.), it’s to emphasize the fact that these are terms with definitions that are included in the agreement. Those definitions may be spelled out in the paragraph where the term is first used, but sometimes there’s also an exhibit to the agreement that includes all definitions of important terms used throughout.

That’s our lesson for today, folks! On Tuesday we’ll talk about how long the agreement lasts and what happens if it ends early.

Please remember: The information provided on this blog and throughout our website is intended for general educational purposes only. While some information on this site relates to the law as a topic, it's not intended as a substitute for legal advice. Only a lawyer, selected by you and fully informed of the facts relating to your particular situation, can render legal advice.