Copyright: buy, rent, aggregate?

In the digital world pioneered by Uber, AirBnB and Google, ownership of physical assets is no longer essential. But does the same apply to copyright? Is it better to build, buy, rent or just aggregate copyright for your project?

What’s copyrightable?

Under Australian law you don’t need to register copyright to own it. Copyright automatically arises when a human creates a “work” or “subject matter” in material form. Broadly this includes anything written, coded, drawn, compiled, recorded, photographed or performed, provided it has some originality and substance to it. The threshold of what is “original” and “substantial” enough to be copyrightable is pretty low – even fonts, emojis or a tattoo can qualify.

Why is copyright valuable?

Because copyright is a property right, it is an asset that can be invested in, bought, sold, licensed and distributed. Copyright gives the owner the exclusive right to control (with some exceptions) how the material is reproduced and exploited. Because most countries have signed copyright treaties, this right can be protected and monetised throughout the world.

Copyright can be licensed to different territories, to multiple parties at once, or kept exclusive to the owner. Copyright generally lasts for decades: the term varies, depending on what it is. Copyright can be a valuable asset after the death of the creator, as evidenced by the recent controversy over copyright in Albert Namatjira’s paintings.

Why invest in making copyright?

The creation of original copyright material is a potentially expensive investment. Whether it is worth it depends on what it is for. For example, in the creative industries, copyright is the central asset. In other areas, copyright assets might consist of valuable research, reports or plans, or marketing materials. Copyright comes with the right of attribution of authorship and the moral right of integrity, which governs how the material can be credited and presented.

A critical step in any project is to clarify who owns copyright. For example, if an employee creates something in the course of their employment, then generally the employer is the owner. But if the creator is a contractor the position may not be as clear. In some industries, the use of commissioned contractors is standard. Examples are the hiring of photographers to do publicity shoots, or the use of consultants to write reports. In the “gig” economy contractors are becoming ubiquitous. When engaging a contractor a written agreement setting out matters such as fees, credits, copyright ownership and ongoing usage rights is essential. If there is no written agreement then the default position may be that the contractor retains copyright, even if paid a fee.

Copyright in project collaborations

Creative collaboration is a common way to share the expenses and skills needed to creating original copyright material. Examples include song writing and film collaborations, multi-party research projects, joint exhibitions, events or marketing initiatives. Before investing it’s important to agree on whether copyright will be jointly owned, or owned separately by the party which created it, what can be done with the copyright jointly or by each party, who can sell out, and how project expenses and profits will be dealt with.

Failure to deal with these issues up front can lead to misunderstanding as to each party’s rights later on. Trying to argue your rights afterwards on the basis of conversations, meeting notes or exchanges of emails is not desirable. Far better to invest in legal advice up front to ensure that all issues are considered, and the agreed terms are set out in a simple clear document, in plain English.

Why buy existing copyright from someone else?

It may be more efficient for a project to buy existing copyright material. One factor may be timing. Another may be that the copyright material is already of market value. In copyright terminology, buying the entire copyright is called an “assignment”. A limited purchase of exclusive rights in a particular territory or for a particular purpose is an “exclusive licence”. To be enforceable, an assignment or exclusive licence needs to be in writing and signed by the person who originally owned it (ie, the creator), and it needs to be clear as to what is being transferred, including the right to alter or adapt it if needed, and what if any fee is to be paid either upfront, as an ongoing royalty, or both.

Why “rent” copyright?

If the project doesn’t need to own the exclusive rights in the copyright material, or doesn’t need to use the copyright after a certain period, then it can be cheaper to “rent” – that is, to licence, not buy, what is needed. It is generally cheaper to rent non-exclusively. The software industry works on this model, as do commercial photography agencies and music licensing agencies such as APRA. It may be possible to source royalty free material under creative commons licences. Before licensing copyright, read the fine print to ensure that the terms are clear and allow the necessary rights to exploit and edit the material as required. Regularly review your licence agreements and compare fees. Don’t sign a long term licence unless you are locking in a good price.

The public domain: aggregation, fair dealing and third party hosting

Global tech businesses such as Google and Facebook have made millions from aggregating copyright links, or hosting third party copyright posted by users. Other business models rely on exceptions such as fair dealing or in the US, “fair use” to sample and share third party copyright. There are potential risks of being sued in basing a business model on the use or hosting of third party material, as evidenced by a recent case I blogged about here. In particular, if you are considering using third party copyright without permission you should develop a risk management strategy based on legal advice.

Repurposing

It may be worth considering the repurposing of old copyright assets. Archives of copyright assets can be uniquely valuable and can be considered for new digital uses. Examples include film and video footage, manuscripts or photographs held in government or company archives. The biggest challenge, apart from technical costs, can often be establishing copyright ownership. In many cases, ownership records can be incomplete or missing. Australia is yet to get “orphan works” legislation, but in the meantime a risk management approach can be used strategically to clear old assets for new uses. Other options could include insurance, relying on fair dealing, renegotiating licences, setting aside an “await claim” fund, or editing out high risk material.

So what about those tech companies…is owning copyright important to them?

Tech companies like Uber, AirBnB and Google may not own too many physical assets relative to their size, but you can be sure they are keen to protect their intangible assets. These could include original code, compiled data sets, research, marketing materials, websites and artwork that nobody else has. In the digital world, offices and servers might be rented until a business is big enough to splash out on buying or building, but owning copyright (along with patents, trade secrets, trade marks and other intangible IP assets) is key to success.

A snapshot questionaire

  1. Do you have the right mix of build, buy and rent in relation to copyright in your project?
  2. What original copyright material does your entity make? Are you using copyright notices, copy protection technology or properly drafting licence agreements to protect it from unauthorised or inappropriate use?
  3. Of the copyright material your entity makes, what does it actually own? Are there records to prove ownership (eg employment agreements, contractor assignments?) Are these easily accessible if you need to prove ownership?
  4. Do you own copyright in joint collaborations with third parties?
  5. What third party copyright material does your business use? Do you have the appropriate licences in place and are they right for your business needs?
  6. What existing copyright assets do you have which could be repurposed?  What copyright risk management strategy do you have in place if ownership is unclear?

I frequently advise businesses, government clients and creators on issues concerning copyright. This is a summary only and does not constitute legal advice. If you have a query, please contact me to discuss your project needs.

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