Assignments and Licensing Overview

As an artist, one of the best ways to make money is to license or assign your work. Although many people use the terms interchangeably, there is a tremendous difference between licensing and assigning your art.

• Assignments: An assignment is basically handing your art over -- for good. Assigning your art to someone else gives them full ownership of the art, to do with as they please. There are plenty of good reasons to do this, but if you're going to give your art away for good, you should pay very close attention to what you're actually giving away.
• Licenses: A license is more like renting your art out. It gives someone the rights to use your art for a limited time and for limited purposes while you, the artist, retain ultimate ownership of your art. Once the license expires, the licensee can no longer use your art.

Unfortunately, many companies use terms like "exclusive licenses" for agreements that are actually assignments. Read the fine print carefully, and make sure you know exactly what you are, and aren't, giving away.

Reversions

A reversion is when something happens that causes the rights to your artwork to spring back to you. Knowing the difference between assignments and licenses, it should be apparent that most reversions should occur in licensing agreements. You grant a company a license to use your artwork for awhile, and then when some predetermined event or events happen, those rights terminate and flow back to you.

Here's an overview of how to spot and deal with reversions in an agreement:

• Finding the Reversion: When trying to spot a reversion in an agreement, look for clauses entitled "Term," "Termination," "Reversion," "Grant of Rights," "Commercialization" or "Exploitation."
• Beware Perpetual Licenses: Even though a license by its nature has to end at some point (you're just letting them borrow the art), and presumably revert back to you, some people use tricky language like "perpetual license" to in effect, create an assignment.
• Figure out when it Reverts: Once you've spotted the reversion, make sure you understand exactly what triggers the reversion. Common reversion triggers include:
  • The agreement reaches its end date
  • The company materially breaches the contract
  • The company doesn't make use of your art for a period of time
  • The company fails to use your art by a specific date.

Sometimes you will see a reversion based on a company going bankrupt. This is almost never actually allowed, so be very careful. If a company goes into bankruptcy, it may be allowed to keep the license no matter what you signed.

Assignments and Reversions

Although assignments are traditionally complete and permanent transfers of ownership, some companies have begun including reversions in assignments. This may lead you to wonder what the difference is between an assignment with a reversion and a license with a reversion.

An assignment is complete transfer of ownership whereas a license is the right to use the art. The difference may seem subtle, but it's a significant difference. If someone is assigned art, they can make derivatives of that art, they can sue people who may be infringing on that art, - essentially they own the art and can behave accordingly. A licensee however, cannot make a derivative of your art or enjoy the legal benefits that come with full ownership.

For that very reason, many companies prefer an assignment with a reservation over a license. They want to be able to pursue any infringers, create derivative pieces of artwork based on your artwork, and then sublicense that artwork. If you are going to grant a company an assignment with a reversion, make sure that you are being compensated for it, because it is worth a lot more than a simple license with a reversion.

Deciding Whether to Forgo Reversion

Some companies won't grant reversions and you're left with the decision to sell your art or not. There are many reasons you may be happy without getting a reversion, so keep them in mind:

• The money is just too good to pass up;
• You like the company using your work and it serves as an important piece of work for you to advertise to other customers;
• You believe the design is short lived anyways and wouldn't want it back;
• Assignments are generally taxed at a lower rate (capital gains) than licenses (business income), and the tax benefits are worth it to you.

Next Steps

If you still have lingering questions about intellectual property laws, seek the assistance of a qualified attorney in your area. A business and commercial law attorney will be able to explain the differences between assignments and licenses and help you keep the legal rights to your artwork.