Business Musings: Stealing Intellectual Property (Contracts/Dealbreakers)
I just had the most illuminating conversation. I had been consulting with someone about one of the TV deals I’m currently negotiating. I had run into a situation I had never encountered before, and I needed help evaluating it.
No one I knew personally could help me. Either my good friends had not done a TV deal in years or they had let their agent handle it. (Which was not worth my time to discuss with them, because I know they got screwed.) I am not to the stage of bringing in my attorney, because I doubt this deal will make me any money at all. And I don’t bring in an attorney until I know the deal will cover his costs, at minimum.
So I needed information on some detail stuff, stuff that could become important later on. I didn’t want to miss a big-ticket item by failing to recognize it as such.
The expert I consulted, gracious and interesting, had a lot to say about a lot of things. He gave me tips that are too on-point for my negotiations to share here.
And then he said something that scared the crap out of me.
Once a big company, studio, or someone with too much money has an option on your book, that organization will often register the copyright.
Initially, I was unconcerned when he said that, because, as I told him, the first thing I do when anyone connected to the film and TV industry comes knocking is this: I register my copyright with the U.S. Copyright office. If I answer someone’s email, it’s guaranteed that before I do, my work is registered.
If you don’t understand the value of registration, when it’s needed and when it’s not needed, then get yourself a copy of the Copyright Handbook from Nolo Press, and read the damn thing from cover to cover. I am not answering basic copyright questions here, although I did address some on a post some time ago. I also addressed a lot of copyright issues in my book on contracts and dealbreakers from last year.
It doesn’t matter if your copyright is registered, the expert said. They’ll register anyway, even before they’ve started production on anything. The strategy is to create confusion over who owns the copyright, and it’ll take litigation to straighten that confusion out.
The best thing I could do, he said, was to make sure that any agreement I have with anyone had an active termination date in which all rights reverted to me without me taking an action at all. What does that mean?
Instead of calling this a termination clause, he called it a snap-back. If the person I’ve negotiated with doesn’t have a screenplay by such-and-so date, then the rights licensed in the agreement automatically revert to me. If there’s no principal photography by such-and-so date, then the rights licensed in the agreement automatically revert to me. If the movie has not been made by such-and-so date, then the rights licensed in the agreement automatically revert to me. And so on, and so forth.
He warned me that I’d get a lot of pushback on that, but I don’t care. I’m a hard negotiator and I prefer to hang onto as much as I possibly can. It helps that I’m not desperate to have a movie or TV show made of my work. It’s not as easy to take advantage of someone who really doesn’t give a flying squirrel, as opposed to someone who really, really, really wants that deal.
That sideways comment explained something to me, though, about a different deal that I had turned down so fast my head is still spinning.
A person I had successfully done business with ten years ago had moved to a new company, one that wanted to make inroads into the film industry. I can’t give you many more details than that, except to say that this company is not one you’ve heard of, although you might’ve seen a few of the films it made in the past eight or nine years.
This person contacted me a while back over a property that I had no idea they even knew about. They thought it would be perfect for TV. I had my doubts, but I’m always willing to “listen”—via email and always in writing, even with someone I’ve worked with before.
This person started throwing out the usual b.s—they can do this for me; they can do that for me—and I said, um, I don’t really care. What do you want? A shopping agreement? An option? Because unless we have something in writing, you and I aren’t doing business together.
Okay, the person said. They’d like an option. And they’ll have their attorney draw one up.
Whoa doggies, I said. We haven’t negotiated anything.
This person said that the document would just be a first draft and we could work on negotiation once we had paper.
Here I am, thinking that this person had misunderstood me about something that was going to be in writing. I meant an email negotiation, followed by some kind of agreement. But this person leapt straight to the agreement.
It didn’t hurt to look at some work product the lawyer drew up—after all I wasn’t paying the lawyer. So the document hit my email shortly thereafter.
And it is, by far, the worst option I have ever seen. I mean that. It looks like the idiot lawyer stuck unrelated boilerplate together. Most of the contract made no sense except the Grant of Rights clause.
The company my friend now worked for wanted everything. That’s not unusual. I always have to make sure the Grant of Rights is limited, and that everything I want is protected.
This Grant of Rights clause was particularly egregious—giving them for a tiny amount of money—all of the rights in my property forever and ever and ever. Irrevocably.
Never would I sign my name to anything like that. Ever.
But, as I went deeper into the document, it got worse. The document wanted my publisher’s signature as well, transferring all the money I earned on my books to the movie company. I had never seen that before (and I hope I never see it again).
And the document also asked for the copyright registration number.
I said no. Emphatically and by return email. I told my old friend that if we were going to work together, this particular document had to be thrown away. We would negotiate first and come up with something final only after we were done negotiating.
But I knew—and you probably know—that this project was done. I was not going to work with these people, not after that.
What I didn’t understand was why they wanted the copyright registration number.
And if I hadn’t just filled out a copyright registration form the day before I talked with the expert, I still wouldn’t have known.
You can cite an old copyright number when you apply for a new copyright on a different form of the same product. That links the two copyrights together, and might—maybe, depending—make some judge think that the new copyright (which belongs to the company) is valid because the company had the original number.
This company that my friend works for is copyright squatting. And if they had gotten me to sign that horrid option, they would have more or less owned my intellectual property, and had a strong argument that I deserved nothing.
The thing is: they probably never would have made a TV show from this project. They wouldn’t have to. The intellectual property would be on their books as an asset and it would help with their company’s valuation.
It has taken years for traditional publishers to figure out that every single book they contract for has a value beyond the cost of producing and selling that book. The film industry is farther ahead of the publishing industry on this.
For example, Disney bought LucasFilm for its intellectual property. Disney could have simply sat on that purchase and let those assets become part of Disney’s valuation, but Disney is actually increasing the value of the IP by exploiting it, with new movies, new merchandising, new TV shows.
Lots of other companies buy up IP and sit on it, just to increase their own value. And this is such a common practice that when I Googled IP Valuation so that I might have some numbers for you, the first thing I got was a list of services that help companies value their intellectual property. Forbes even has a list of the Top 25 Intellectual Property Valuation Service Firms.
That list begins with a paragraph-long explanation for a business thinking of hiring one of those firms. That paragraph starts like this:
The world has changed dramatically in the past several decades with more and more of a company’s value attached not to factories, machines, or hard assets but rather the companies’ ideas, processes, and designs – their intellectual property.
Go read the rest of that paragraph, then remember that publishing companies and movie companies and other conglomerates have a great deal of money in IP.
Those companies can all acquire IP from stupid writers for less than $10,000 per property forever. Just say the word “movie” or “TV” and most stupid writers give away their IP for free, in the hopes of having a movie or TV show made from their property. The property they no longer own, by the way.
Had I signed that horrid option agreement, that deal would have made me a maximum of $200,000 for the life of the TV show. But I probably wouldn’t have seen that money, since most of it was in the form of Monkey Points, which theoretically arrive at the back end of the project (except there never is a back-end). What would most likely have happened is that I would have had to pay the company any royalties earned from my publisher.
So for very little money up front, the company would have owned everything and, over the years, received money directly from my publisher, money that would initially have gone to me but which I would have stupidly signed away.
Am I appalled?
Not entirely. I expect most of this crap from Hollywood, at least on rights licensing. I’m seeing the same kind of rights licensing crap—taking everything and giving the writer nothing—from traditional publishing too, these days.
But the copyright squatting? Trying to actually steal a copyright by filing their own copyright and then disputing who owns the copyright in court?
Yeah, that appalls me.
I’m glad that I’m aware of it now. Because every time I think that major corporations can’t sink any lower, they find whole new depths to sink to.
Copyright squatting. Theft from the ignorant.
What can you do to protect yourself from this stuff?
Don’t trust anyone who wants to make a deal with you. Assume the worst, and hope for the best.
Learn how to negotiate.
But most important of all?
Learn how to say no.
No is your friend. Don’t let the money or the dream of having a TV show made from your work blind you.
Be prepared to walk away.
Now you know what I know.
Remember: forewarned is forearmed.
I wrote this blog some time ago, and saved it for a filler later. I had to write the blog fast, though, before I lost my outrage. Sadly, I’m becoming jaded to this stuff.
But those outrage moments are why I write the blog: I really need to share this stuff with someone, preferably someone who will benefit from the knowledge. If this kind of blog helps just one of you, I’ve done my job.
Please share this blog with your writer friends.
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“Business Musings: Stealing Intellectual Property,” copyright © 2017 by Kristine Kathryn Rusch. Image at the top of the blog copyright © Can Stock Photo / Kirill.
My goodness. That is a new low. I’m sharing your article with my writing group on FB, because I know several of them dream of selling movie rights… it’s good to be warned, and armed.
Thank you again for all the work and research you do to educate and warn us indies.
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Wow! Great post Kristine! Count my eyes open. Writing on list Get copyright, right away. Thank you!!!!
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When I read stuff like this I often wonder if rather than suing somebody over the copyright theft, is it possible to simply contact the Justice Department and report the theft as a crime and have the other party prosecuted.
I get the feeling that there was copyright theft, Interstate Fraud, and possibly racketeering and extortion(RICO), since you have a group of people conspiring to extort money/property from somebody.
All this is Blue Sky of course until an actual lawyer says something, but I’ve always been curious.
Thank you so much for this. Well, for everything else you inform us with as well, but especially this. This is beyond low. Writers can’t live in their writing caves. Just like the commercials; the more you know!
Wow Kris. Kind of weird you talk about a shark registering a copyright for IP they didn’t create. And the very next day this happens to me, albeit in a totally different industry.
Great post as usual.
One of the (several) motives for acquiring IP as you describe is to keep it from the market – a form of control over competition. Copyright-squatting doesn’t surprise me; I’ve found the level of ethics collectively shown by corporates to diminish as the scale of the corporate goes up, and as far as I can tell behaviours have become worse as the entertainment industry has had to adapt to the new internet environment. The general problem of authors and IP vs publishers is long-standing, though. I’ve been in the business professionally over 25 years, as an author (and working in publishing) and the IP side always has been a minefield for novices. Even in standard book publishing, normal contracts have long handed over an astonishing range of IP licenses to a publisher – effectively paralysing an author from re-using the material in any capacity once the book’s gone out of print. If the publisher decides not cancel the contract and release those licenses, tough. Yes, authors can sue for the rights, but who has that sort of resource?
That’s just, just beyond appalling. I think a contract needs another snap-back: if they try to register one of your works, all rights (and monies) immediately revert back to you.
So. Finish a work. Copyright it immediately. Then take a break/go on to next project/have celebratory dinner.
I think I did that when I had the final chapter finished – and no one else had seen it yet.
If you’re going to file a copyright, why wait?
Copyright squatting is a new one for me. Thanks for the forewarning, Kris!
Wow, very informative. But I can imagine this going on in this changing world. It will only get worse. Every creative has to be on guard.
I think instead of ‘copyright squatting’ I would use the term ‘claim jumping’, especially for the filing of a competing copyright, knowing darn well they didn’t own it. And having grown up in a rural area where we get testy about people trying to harvest natural resources from our land without permission or compensation every hunting season, my ideas for the punishment of such claim jumping are both swift and severe. (A person can always dream….)
Wow, Kris. WOW!!! A brilliant post on very important information. Thank you for sharing this. The copyright squatting practice reminds me of patent infringement practices, where a BigCorp will license an invention from a Startup. Then they file their own patents, pretty much hemming the Startup into a no-win, can’t-leave (and can’t work for anyone else in this field for 3 years) situation. Because of this, even preliminary patents contain clauses covering the most unlikely applications, improvements, and technological solutions, using technologies both current and imaginary. (Writing patents is a lot like writing sci-fi.) The best defense? Smoke and mirrors offense. The USPTO was never designed with these shenanigans in mind.
So… treat your copyright registration the way you would your car’s title. Got it.
Kris, this is downright frightening. Thank you for sharing this information. It helps me put in perspective not only what to look out for, but why it makes so much sense to protect and manage my own IP. Thank you!
Wow, Kris, that’s truly appalling. Sometimes I feel being an author is like swimming in shark-infested waters–or throwing our nice juicy IP into those waters and waiting for the first bite to happen. And it sounds like you’re saying that the only way to protect ourselves is to be smart and tough enough to understand what we’re getting into and be prepared to walk away from a deal. Are there any authors’ organizations worth joining because of their readiness to fight against this kind of activity? One of the biggest problems for all authors, and indies especially, is that we’re one person up against huge corporations (including Amazon et al). How do we grow bigger teeth as a group?
I wish I knew. Just be smart & tough, as you said, I’m afraid. 🙁