How to Read a Licensing Contract as a Photographer

So you’ve spent years honing your photography skills, perfecting the art of puppy fashion photography. You’ve set up a website to share your marvelous work with the world, and one day you’re contacted by a corporation who wants to use one of your photos in its ad for doggie perfume. You’re thrilled; you’ve worked and hoped for this day!

Then they send you a huge contract full of fine-print legalese, and tell you the deal’s not going through until you sign.

After about one sentence of “whereas” and “shall inure to the benefit of,” your eyes glaze over from the opaque legal jargon. You don’t want to sign something that’s going to be against your own interest, but you definitely want to get paid for your work. Your blood pressure begins to rise.

Not to worry! I’m here to help you make sense of that contract (and possibly others), in the clearest terms possible.

To get started, there are a few things to know about how to read a contract:

First: This may seem obvious, but you have to read the whole thing. Every single word. I’ve seen a thirty-page contract that had one sentence slipped into a paragraph on the very last page, essentially giving one party total control over the other party’s creative output for life. I’ve also seen a contract (written by a large, well-known tech company) containing one sentence deep in the body that effectively created a “backdoor” in the terms. It would have let the tech company change the terms of the contract to anything they wanted, without my client’s approval, at any time. When you sign a contract, you’re agreeing to the fine print just as much as the large print.

The contract will start off describing what each party is going to do (you’re going to let them use your photo, and they’re going to give you money), but then there will almost certainly be a lengthy section about what happens if things go sour. There may be penalties, sanctions, specified courts of jurisdiction, and/or loss of various rights for the party that breaches the contract. It can be pretty alarming, especially for the layperson who’s not accustomed to these.

Here’s what I always tell my clients about such things: A contract is not a marriage agreement; it’s a divorce agreement. With most business arrangements, everything will go fine and neither party will ever look at the contract again. That’s what usually happens, and that’s what everyone wants to happen. But now and then, one party can’t or won’t live up to its end of the deal. When that happens, you’ll go back to the contract and find that you’ve both agreed on what happens next. Maybe the breaching party pays a fine, or maybe they have to relinquish certain future rights, or maybe some other option is specified. Regardless, if Plan B isn’t spelled out in the contract, you may have to sue to settle the matter, and legal fees can take a big chunk of whatever damages are agreed upon.

One more thing to mention ahead of time: Everything must be in writing. If the contract says you have to provide the photos at the time of signing, but the person says to you on the phone, “Don’t worry about that, you can get them to us next week,” you should insist on putting the actual deadline in the contract you’re signing. Lawyers talk about the Four Corners Rule: Everything you’re agreeing on needs to be contained within the four corners of the document.

OK, with that preliminary info out of the way, let’s look at some elements of a typical photo license. The headings I’m using may not always be in every contract, but the important details should always be there. If you see a contract that doesn’t specify an important detail such as a payment schedule, get it in the contract before you sign it.

Disclaimer: Obviously, nothing in this article constitutes legal advice from me to you. You should always consult a lawyer about your specific situation. I’m a lawyer, but I’m not your lawyer.

Main Terms

Whereases. The contract may begin with a series of statements that begin “Whereas…” and a final one that begins “Now, therefore….” These aren’t necessary, and you usually only see them in contracts involving very large amounts of money, time, and/or people. They are just there to set out some basic facts about the relationship between the parties, the history of their interactions, and why they’re executing this contract. If your contract contains them, you should make sure they’re accurate, but don’t worry about them too much.

Scope of the agreement. Again, this one doesn’t appear in every contract, at least not under that specific heading. This is a general statement, usually short, of what is covered in the contract. It may say this applies to original image files, or just your edited final versions, or some combination. It should include a statement of how the photos will be delivered–file type, size, copies, storage/transfer medium, etc. Will you be responsible for providing backup copies if they have a hard drive crash?

If this section doesn’t appear under this heading, all of this information should nonetheless be covered in the agreement. The more specifics you can agree upon up front, the better.

Rights of the parties. This section will describe what rights each of you have. This may include the Licensee having the right to copy and distribute the images. They may receive the right to modify the images, such as by putting their brand or other information on them, and to do all this without your consent, and without giving you credit on the final image.

Remember: Contract terms are NOT set in stone. If you don’t like a term of the contract, speak up. Tell them you want your photo credit to be included in the final image, or you want the right to see the image before it’s distributed, or something else. They may say no; this is part of negotiation. Or they may say yes, but reduce the amount they’re willing to pay. Or they may just give you what you want. You won’t know unless you ask.

Duration. The contract should clearly state how long the arrangement will last. Is it a perpetual license, going on forever? One year? Is there an option to renew when the license expires? Who can exercise that option? Will the fees change in subsequent years? There’s no universal standard answer to these questions, but this should all be included somewhere.

Fees. The contract will specify how much you’re getting paid. Make sure it specifies when and how you’re getting paid as well. Installments? When are they due? Lump sum? When is that due? Will they pay via PayPal? Mail you a check? Send someone to your apartment with a grocery bag full of Benjamins? Make sure this is all laid out clearly. You don’t want them to use your image and then later say, “Oh, we only pay our freelancers in store credit.”

Exclusivity. Somewhere in there it should specify whether the license is exclusive or nonexclusive. This is important. If you’re granting them an exclusive license to use your photo, it means you can’t license it to anyone else during the term of the contract. (Your fee should be considerably higher if it is exclusive, of course.) If it’s exclusive but you still want to use it on your own web site to advertise your work, make sure that’s in the contract.

The contract should also specify that since this is a license, and not a sale of the copyright, you still own the copyright. Be sure to state that outright.

Confidentiality. There will probably be a clause in which you both agree to keep each other’s confidential information (phone numbers, business practices, whatever) private. This section may have specific descriptions of how you’ll do that, so you should read it carefully. I’ve noticed that large corporations often specify rigorous privacy measures that may be unrealistic for individuals, so be sure to speak up if something in this section doesn’t seem feasible for you.

Cancellation. Can either party cancel the contract? What happens then? There may or may not be a fee or other penalty for early cancellation, depending on the type of contract/license. (If both parties want to cancel the contract, you can just agree to tear it up and walk away, but be sure to get that cancellation in writing as well.)

Modification. There should definitely be a provision for changing the contract. The typical arrangement is that modifications must be made in writing and signed by both parties. Make sure to keep copies of any modifications along with the original contract.

Transfer/Assignment. Can the Licensee let someone else use their license? Be careful with this one; I always write contracts so that they require the Licensor’s prior written approval before a license can be transferred.

Boilerplate

At the end of nearly every contract is a section called the “boilerplate.” Any person or business that writes a lot of contracts will use the same language on pretty much all of them–it is copied and pasted identically, just like old metalsmiths would die-cast identical sheets of boilerplating. The boilerplate will cover general provisions of the contract. It’s boring, but you must read the boilerplate. Here is a quick flyover view:

Indemnification. The signing party agrees that if the other party gets sued because of something the signing party did, the signing party will defend them.

Choice of Law//Arbitration. The parties agree that the contract will be construed under the laws of some specified jurisdiction, usually the home state of the party that wrote the contract. There will also be an agreement that if the parties end up in court over this, they’ll go to court in some certain place–again, usually the home city of the party that wrote the contract. Some businesses will agree to change this if you ask, and some won’t. If you’re worried about it, ask.

This paragraph my also say that the parties will go to an arbitrator before going to court. This is a good idea, and it’s usually in everyone’s best interest.

Severability. This says that if the parties go to court and a court finds some part of the contract unenforceable (i.e., illegal somehow), the rest of the contract will still be followed as much as possible.

Waiver. This specifies that if a party doesn’t exercise one of their rights under the contract, they still retain all their other rights. For instance, if you allow the company to send an installment payment two days late, they don’t automatically get to send the other installments two days late. They have to ask each time.

That covers most of the boilerplate. There are other clauses that you’ll see now and then, but none that are terribly widespread or impactful.

There will be, at the end of the contract, a space for both parties to sign and notarize the contract. If you’re getting your signature notarized, don’t sign it until the notary is personally watching you.

There may also be some “exhibits” attached to the end of the contract, such as a list of photos being licensed. These should be fully explained in the body of the agreement.

So that covers some of the basics of how contracts work. As I said above, don’t ever be afraid to ask to change a contract. And if anyone ever tries to rush you into signing (“we need to get signed today or we won’t be able to make the deal go through”), that kind of high-pressure salesmanship should raise immediate red flags in your mind.

Obviously, once AdorablePuppyFashionPhotography.com really takes off, you’ll have a team of staff attorneys, but until then I hope this helps take some of the anxiety out of the licensing process. Again, it’s always wise to seek the advice of a licensed attorney who specializes in such matters before signing.


You can find the archives of Adam Remsen’s column here.


About the author: Adam Remsen is an attorney in Memphis, Tennessee. You can learn about his practice, request his services, or tell him how wonderful he is via his web site, or find him on Twitter.

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