"In contrast to previous economic eras,
intellectual property will be the primary source
of new wealth in the 21st century."
- Gregory A Piccionelli, 1989
 
AREAS OF PRACTICE
• Internet Matters
• Music & Other Entertainment Matters
• Intellectual Property Rights Enforcement
• Crowdfunding Matters
• Freedom of Expression Matters

Getting The Biggest Bang For Your Legal Buck Part 4: Basic Content Rights Acquisition Forms

JULY 2009

Every adult entertainment company that produces or exploits content, or operates under a brand name is in the business of exploiting intellectual property rights. In fact, it would be accurate to say that the principal product of the adult entertainment industry is intellectual property. Because of this fact, I have always strongly encouraged my adult business clients to think of themselves not only as providers of erotic entertainment, but also as business persons who create and exploit a special form of property recognized by the law, that is called “intellectual property”or sometimes, “intangible property”. A fundamental part of the process of any such creation or exploitation of intellectual property, however, is the acquisition of the intellectual property rights in the first place. And that is most often accomplished through the proper use of well-drafted intellectual property rights acquisition agreements.

What Is Intellectual Property?

 

To better understand what an intellectual property rights acquisition agreement is, it helps to understand just what “intellectual property” or “IP” is. To begin with, intellectual property is, well, just that, property, albeit in a form that is for most people not as familiar as a house or other real property, or personal property like an automobile or a computer. Intellectual property is, nevertheless, full-fledged property under the law that is just as real as real estate. It’s a type of property that can be bought and sold just like car. And if someone steals it from you, it is just as wrong as grand theft auto.

 

Regardless of the reality that IP is bona fide property under the law, its intangible nature can make the concept of intellectual property a bit difficult to comprehend. For example, it has always seemed to me that the association of terms like “intellectual” and “intangible” with a good, solid, muscular word like “property” has a kind of oxymoronic character about it. The term “intellectual property” seems like a close relation to other internally inconsistent phrases like “jumbo shrimp”, “military intelligence”, “compassionate conservative” or “Fox News”.

 

In fact, I think the strangeness of the concept of “intellectual property”, may be part of the reason why I have found that many adult business owners who have heard the term do not fully understand what it means. But you can’t really blame them. Even lawyers have trouble defining it. You see, there really is no single standardized definition of what constitutes intellectual property.

 

But rather than take you down a rabbit hole of legal mumbo jumbo, let me give you a fairly useful definition of intellectual property, or more accurately, a definition of intellectual property rights that I have found to be generally sufficient for most adult business purposes. Simply put, intellectual property rights are rights that a government allows to be associated with things that people create.

 

For example, one form of IP rights, copyrights, in the United States, are rights that Congress provides to artistic or expressive works like photographs, movies, books, websites, music, software code, and just about any other form of expression that can be recorded or otherwise “fixed” in a tangible medium of expression. This means if you can photograph it, record it, write it down, or get it into a computer, it’s probably something that can generate copyrights. Patent rights, on the other hand, are rights that Congress has provided to useful creations,inventions, such as machines, articles of manufacture, compositions of matter and processes.

 

Interestingly, both copyrights and patent rights are rights provided by Congress to artists and inventors pursuant to Article I, Section 8 of our country’s supreme law, the Constitution. The founding fathers wisely knew that our country would prosper best by both guaranteeing the people the freedom to express themselves and by providing them with the means to make a buck doing it. In fact, the author of the Declaration of Independence, and one of our greatest presidents, Thomas Jefferson, was also our nation’s first patent examiner.

 

Trademarks are another important form of intellectual property that every adult entertainment entrepreneur should know about. Simply put, trademark rights are rights associated with words, symbols, phrases or even sounds that have been created to be closely associated with goods or services.

 

It’s All About Rights.

 

While our working definition of intellectual property is only one of many ways this admittedly abstract brother of real and personal property can be described, one thing is certain. At the heart of any definition of IP, is the concept of “rights”. Specifically, the rights that the law associates with the creative work.

 

This is important because you can buy, sell, assign and license rights. Moreover, you can divide up intellectual property rights and, therefore their exploitation, in a virtually limitless number of ways. For example, IP rights can be licensed or assigned on a geographic basis, on the basis of time duration of authorized exploitation, or on the basis of type of exploitation allowed. Let’s say, for instance, that I own all the IP rights in two hundred adult video clips. To be sure I could sell my rights in all the clips, which would be what is called an assignment of all rights. But I could also license some of my rights and keep others. I could also license some rights to one party and different rights to a second or a third party, or any number of parties.

 

Rights in the other forms of property can be broken up and licensed to some extent too. For example, I can license rights to you to use my car or my house for a week through a rental agreement. But unlike real and personal property, the intangible nature of intellectual property provides to its owner rights exploitation enormous flexibility that is generally not possible with personal property, much less with real property.

 

The following illustration is not only conceptually possible, it is demonstrative of the type of aggressive content exploitation model that is rapidly becoming more and more necessary for content providers to effectively compete in today’s hypercompetitive environment. Continuing with my video clip example above, I could grant to Party A an 18 month license of rights to be the only company entitled to use my adult video clips in DVD compilations that are distributed in Germany and France. Because I have promised Party A that only they shall have these specific rights for the next 18 months, I have “exclusively licensed” rights to Party A to use my clips in Germany and France.

 

But the rights I licensed to Party A are limited in scope to the use of my content in DVD compilations only. As a result, I have only licensed a tiny fraction of my rights to Party A. So, next I decide to make some more money by granting Party B the non-exclusive right to sell my clips for three years via mobile phones in Italy, Greece and Spain. I also decide to grant to Party C exclusive rights for four years to exploit my clips by video-on-demand (“VOD”) and pay-per-view (“PPV”) broadcasts that are effectuated via satellite and cable television means throughout the European Union. But in this last deal, I take care to make sure that Party C’s rights do not extend to the Internet. The reason for this is that I have also decided to grant non-exclusive “Internet VOD rights” to four separate Internet VOD companies D, E, F and G.

 

Finally, I grant to Party H an exclusive license of rights to exploit my clips via interactive in-room entertainment systems in hospitality establishments in North America and Europe.

 

The example above is a relatively simple example of successful modern adult content Intellectual Property rights exploitation. But it also demonstrates the kind of wonderful exploitation flexibility that gives IP rights exploiters many different avenues for monetizing their rights. But to be able to maximally use content rights, they have to be properly obtained in the first place.

 

Getting The Rights Means Getting It On Paper.

 

Helping my clients exploit their intellectual property assets through effective negotiations and properly drafted agreements is at once one of the most challenging and one of the most satisfying aspects of being an entertainment attorney. But before rights can be effectively exploited, they have to first be properly acquired.

 

Remember, our discussion is fundamentally about property rights. Consequently, just like a person normally cannot sell a part of an office building he or she doesn’t own, a content producer cannot legally exploit a segment of rights in content for which he or she does not have the required rights.

 

Acquiring rights in intellectual property is all about agreements, such as rights assignments and licensing contracts. Licensing agreements and other forms of intellectual property rights acquisition documents can be simple or they can be very, very complex depending on the deal, the nature of the rights exploitation and the conditions placed upon the party licensing the rights. Consequently, it would be impossible to discuss all the various types of licensing and rights acquisition agreements.

 

But there are, however, two basic rights acquisition agreements that virtually every adult entertainment content producer should know about and take care to use the most modern and effective forms. The first is the model/actor rights acquisition agreement, often, unfortunately mischaracterized and, even worse, mis-drafted as just a “model release”. The second, commonly used in mainstream entertainment projects but unfortunately, and sometimes tragically, under-used in association with the adult entertainment projects, is the work-for-hire and rights assignment agreement executed by persons providing “behind the camera” creative contributions, including directors, editors, composers, musicians, script writers, web designers, etc.

 

Performer Work For Hire, Assignment of Rights and Release

 

When adult content, such as a video work, is created there are usually at least two initial types of authors of such works. The first is the “in front of the camera” talent, the principal performers. The other type of author is a “behind the camera” contributor. This latter category includes artists and technicians such as the videographers, directors, editors, music composers and performers, etc. At our firm, we stress the need to acquire rights in adult content that has created by the two different types of creative contributors via two different initial types of rights acquisition forms. The reason for this is that there inevitably will be multiple creative contributors to the creation of works that are ultimately produced. This, in turn, means that there will virtually always be a multiplicity of intellectual property owners of the content from the beginning. So, if a content company is desirous of owning all the rights in the content created in order to be legally entitled to maximally exploit the content by any and all means, the company must acquire all the rights in and to the content from all the content creators, regardless of the nature of their creative contribution. We have found that the ‘two-form method’ discussed above helps our clients remember that there are, in fact, usually multiple authors’ rights in content to be acquired.

 

Take, for example, even an elementary form of adult content production in which only a photographer and a model are creating photographic content. In this instance, both the model and the photographer are the initial joint authors of the photos of the model that are shot by the photographer. This also means that each party has the right to independently exploit the resulting work without the permission of the other. If an adult company subsequently wants to acquire all the rights to the photographs, there must be an effective written chain of title assignments from both parties that shows that the recipient of the rights actually has all the rights from both initial authors.

 

In the adult entertainment business, there is often a failure to acquire rights from all the parties creatively contributing to a work. This can lead to disastrous results. Several years ago, one of my clients backed out of a multi-million dollar content acquisition deal because the rights for much of the content in the seller’s library were not properly obtained from all the required parties. In another instance, the party that owned the music publishing rights to a song included in an adult movie, that my producer client assumed was written for the movie, sued my client for damages resulting from the fact that the music rights had never actually been licensed to the producer.

 

Typically, an adult content creation company wants to, and expects to acquire all rights in the works it is paying parties to create for them. But many adult content companies hire independent contractors to create the works. In such instances the initial forms discussed above must be what are called “work for hire” agreements to effectively assure that the rights in the work, as it is created for the benefit of the company, vest in the company and not in the initial authors. If a work for hire agreement is not executed prior to the commencement of the creation of the work, however, the rights in the work will initially vest in the authors as discussed above. At that point the way to acquire all the rights is by a clear written assignment. Consequently, given what I euphemistically describe as the looseness of typical adult content production, we draft, and advocate the use of, initial rights acquisition forms that can function as both work for hire and assignment agreements.

 

Get The Rights You’ll Need In The Future. Finally, rights acquisition documents, such as the initial forms discussed above, should be as comprehensive as possible regarding the scope of allowed use of the content with future technology. The form should include, for example, a clause that makes it clear that the exploitation of the content may be exploited by all means and in all media “now known and hereinafter invented”. But it is important to remember that new technologies can create the need for new rights. So acquiring future-created rights to the maximum extent possible is also desirable. This is why for the last fifteen years we have included in our forms the assignment of digital actor or “synthespian” rights and any future-created rights in the area. These provisions are designed to provide to the owner, to the maximum legally allowable extent, rights to use the content to generate avatars and other synthetically created digital beings from the content. While these rights seemed to some far-fetched in the nineties, with the rise of computer games and massive multi-user gaming platforms, these rights have become quite valuable and are likely to become more so in the future.

 

Clearly, this article is not, and could not be a comprehensive discussion about all the various rights acquisition forms an adult entertainment business should use or may encounter. It not intended or should be considered to be legal advice. I strongly urge you to seek the counsel of a qualified and experienced adult entertainment attorney regarding all matters pertaining to rights acquisition and exploitation.

 

1Gregory A. Piccionelli is an intellectual property and adult entertainment attorney also specializing in Internet matters. He can be reached at Piccionelli & Sarno at (805) 497-5886 or greg@piccionellisarno.com.

 

 

 

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