Bo's bLAWg - Get Back Your Rights: Royalty Minimums

 

MJ Bogatin (“Bo”) of Bogatin, Corman & Gold, is an Arts and Entertainment Attorney in San Francisco.  He is also Co-President of California Lawyers for the Arts.  www.calawyersforthearts.org  Bo is available to answer some of your questions surrounding the business of Art Licensing. - THANKS BO!

 

An artist asked how they can get back her rights to a group of illustrations that are licensed exclusively but are not making her any money.

The main way that an Artist can look to insure she can get back her rights to an illustration under an exclusive license that is not earning sufficient royalties is to include a provision in the License Agreement that requires minimum royalty benchmarks to be satisfied on a year-to-year basis. At least that is what I look to do for my clients.  Establishing such benchmarks need not be put in terms of royalties, but can be based upon the Licensee’s earnings of sales, whether the Licensor Artist’s royalties are based on gross or net receipts.

This is part of the conversation that the Artist or I would have with the prospective Licensee in the course of negotiations. What is the projected sales income? If the Licensee’s projections compute into royalties that satisfy the Artist’s minimal royalty expectations, then look to include those sales thresholds as ‘minimums’ for the Licensee to maintain exclusive rights. At the very least, even if the Licensee insists their rights continue for the full term, it is possible that the License can be converted to a non-exclusive one – either automatically or upon written notice.

One additional term that might be included is that if the Licensee pays the Artist additional royalties to make up the difference between those actually earned and the minimum expectation, the Licensee may maintain exclusive rights. In that way the Artist can be assured that her minimums are always achieved, or some or all rights revert to her for further use of the licensed image(s).

I can provide specific language on all these terms as needed. Just ask. I can be contacted through my website linked below.

 
Disclaimer: The information contained in this website is not intended as legal advice. Because the law is not static, and one situation may differ from the next, we cannot assume responsibility for any actions taken based on information contained herein. Also, be aware that the law may vary from state. Therefore, this website cannot replace the advice of an experienced attorney. Receipt of this information does not create an attorney-client relationship. MJ Bogatin, Bogatin, Corman & Gold, www.bcgattorneys.com