Today’s Biz Ladies post is Part 3 of our contracts and licensing series from Ben Pollock, owner and founder of The Juniper Law Firm. Over the last two weeks, Ben has shared his expert advice on working with and developing contracts and how to manage the rights to your work and services. For his final post, he is offering some great insight into copyrights and general information on protecting your work. Thank you, Ben, for a wonderful series! — Stephanie
Read the full post after the jump . . .
In the world of designers and artists, copyrights are what protect others from stealing your work. And as a designer, you generally own all the rights associated with your designs unless you are designing as an employee for someone else. This means that you can use your design to produce all the products you want for sale, from textiles to greeting cards. But what if you are just a small shop? What if your resources are limited and you can only produce a limited amount of product? What if you specialize in something like letterpress, think that people would like your design on an iPad case or any number of other products, but you have no way of doing that yourself?
You generally have four options:
1. Just stick with what you are good at and don’t use your design for applications other than letterpress.
2. Pay another company to make other products with your design that you then market and sell yourself.
3. Sell your design for a lump sum of cash to a bigger company that has broader resources and capabilities than your little shop.
4. License your design out to manufacturers who make and sell products around the world that you cannot.
Most designers stick with #1, and that’s fine if you are satisfied with the sales of your product and don’t want or need to expand. Slightly fewer designers will go with #2, but they often see a relatively small profit because of the cost of having the product made by someone else and the limitations of marketing and selling a new product type to a new market on their own. One exception to this, however, would be if you were branching out to other products that are still similar to your original products and thus have the same target customers. In that case, it would be easy enough to add the new product types to your line without having to add any more marketing than you already would for the products you produce in-house.
Even fewer designers succeed in achieving #3, and they are often revered by other designers who wish they could have their design featured on products sold by a major player, not to mention the stack of cash the designer gets up front. These are the big leagues, right? Wrong.
Option #4 is where too few designers are looking, and it is where the most potential lies. For example, the letterpress printer from our hypothetical above may have a friend who makes and sells screen-printed fabrics. So what would happen if the letterpress printer allowed the screen-printer to use her design on his products in return for a portion of the profits? The letterpress printer would instantly have access to an established market built through years of work by the screen-printer without having to do any work herself. She won’t have to market, sell, make or even pay for someone else to make the screen-printed fabrics. She could just sit back and collect a check every month.
Granted, that check isn’t likely to be nearly as large as the check from option #3 (if you license to a larger company, you will generally get less than 10% royalties or a one-time fee), but you get it over and over and over again. It’s not a one-time deal. And imagine what would happen if that same design were licensed not only to a screen printer, but also to someone who makes the iPad case she imagined from the start, a graphic designer, a textile manufacturer, a wrapping paper manufacturer and any other manufacturer that she could imagine might use her design. Now she’s not getting one check a month, but many.
A copyright is an amazing thing. You can sell the whole thing, as in option #3, and never look back, or you can literally split it into a million pieces and license those out for a portion of the profits. This allows you to retain ownership while giving permission to those who have the capabilities you don’t, or who are established in markets that it would take you years to penetrate, to sell products with your design in return for a portion of the profits.
And, yes, you are paid less money per product sold. But you also don’t have to market it, package it, ship it or pay someone to make it, leaving you more time to design and license again and again. So ultimately, this ends up being closer to even than you would think. And if you’re letting someone use your design to make products different from those that you make, your design is now being marketed and sold to people in your new partner’s markets that you likely never would have reached.
In the industrial age, the market was dominated by the sales of goods. But in today’s information age, real wealth is developed through the leveraging of intellectual property, such as patents, copyrights and trademarks, through licensing.
Where to Look for Licensing Opportunities
When looking for opportunities to license, conventions like Surtex® come to mind first. If you are unaware, Surtex® is a national convention that takes place every year in New York in May. Literally thousands of businesses from around the world converge on this one convention to sell and license designs. This would be a great place to get started, learn the industry best practices, learn what will be hot for the coming year, make valuable business connections and hopefully sign a licensing deal. Attending Surtex® would allow you to make connections with both international and local businesses.
But if you can’t make it to New York every year to exhibit at or at least attend Surtex®, there are more ways to find licensing opportunities. One simple and very realistic strategy would be to first think about where you would like to see your design implemented — that is, on what sort of products. Take our letterpress printer we used as an example above who wanted to incorporate her designs on iPad cases. Second, do some research to find successful small local companies that produce those products.
You can search Etsy®, national design blogs like Design*Sponge® or even your local craft or other industry fairs. Then reach out. It can be intimidating to make a cold call to a company about licensing, but any ambitious business owner would love to find ways to add to or improve their current product offerings. And when two small businesses work together to form a partnership, they are on a more even playing field than if you were to try to license with a large corporation. As a result, the splitting of profits will often be more equitable, maybe even 50/50 after all costs are covered.
For example, what if these wonderful fabric designs by Amy Butler could be etched into these Grove products made with beautiful wood and leather? Grove would benefit from great designs to offer its current customers, and Amy Butler could tap a market she hasn’t yet touched.
Because the range of licensing possibilities are limited only by your imagination, very few licensing agreements will ever be identical. For this reason, you must always be on guard to make sure nothing is slipped into a licensing agreement that could do you harm. This topic is large enough to cover in several posts, but I will attempt to highlight a few red flags to look out for: 1) Exclusive licenses, or licenses that give away more rights than they need to accomplish what they told you they want to use your design for. Never take someone’s word that they will only use your design in certain ways if the agreement gives them the ability to use it otherwise. 2) Promises not put in writing. Never accept a verbal promise; always insist that it be put in writing and that the writing is non-ambiguous. It doesn’t matter what you think it means; it only matters what it could mean. Make the writing super clear. 3) Infringing licenses. You can license the same design to many different people for use in many different ways. But when you enter into a license agreement with a company that makes wrapping paper, make sure the license does not conflict with any earlier exclusive license you gave to a paper goods producer who primarily makes cards but who may also be allowed to make wrapping paper according to the license granted in your agreement.
I hope this post has been informative and has at least made you think more seriously about the possibilities of licensing. Licensing can be very complex and intimidating, but there is no better way to learn than by jumping in and giving it a try.
But, as always, please seek advice and aid from a licensed attorney who can help you develop a licensing strategy tailored to your particular circumstances. This will not only help you develop a plan, but it will also ensure that you don’t have to learn the hard way how to protect your copyright and get your fair share from anyone using your designs.
Please remember that the rules I laid out above are very general in nature and are intended only to give you a basic background on these issues. This is not actual legal advice for your situation. If you would like advice that fits your situation, please contact your local friendly attorney. You can find me at www.juniperlawfirm.com.