Intellectual Property Protection: Illustrative Contractual Guidelines
By Edwin E.N Mtudza (M.IP, B.A Law)
Intellectual Property Expert
Wilmot and Bennett Legal Practitioners
Point of this article is not to scare you away with legal jargon but to help you comprehend how you can fully protect your creative work in lay-man’s terms. The use of the terms Intellectual Property and contracts will dominate so let us define terms first.
What’s IP? and Why Contracts?
Intellectual property (IP) refers to creations of your mind, in forms such as inventions; literary and artistic works; designs; and symbols, names and images which are used in commerce.
Unknown to many, IP is indeed protected in law by forms such as copyright, patents and trademarks, enabling you to earn recognition or financial benefit from what you invent or create. The balance between the interests of a creator and the wider public interest, aims to foster an environment in which your creativity and innovation can flourish.
Intellectual Property (IP) affects daily life because of all creativity and innovation that we see. There is need to manage IP in a systematic way that benefits, mainly, you as a creator and all those who played a role in coming up with the creative, innovative work because IP holds a private right. In the same vain, written contracts are very essential in building a good business relationship for a successful commercialization of your creativity.
A contract is simply an agreement or the meeting of the minds (consensus ad idem) between two or more persons. Just like there is no meal without a recipe, the same way, for it to be a contract “meal”, there should be an offer, acceptance of the offer and delivery between the parties to create binding legal relationship and consideration, capacity to contract and legal subject matter of the contract. Consideration is important as it separates gifts from bargains. A gift is where you, as a person/party, give value and get nothing in return while a bargain you give value to gain value.
Though usually taken for granted, a contractual relationship is always a good thing in any business for it clearly defines what each party is expected to do and their benefits as well. Important to note is that, written contracts are the best in exploiting your work though some parties end up having implied contracts such as verbal contracts in their business relationships which is more casual at times but risky.
This article serves to sensitize you on the importance of written contracts by all creators be it inventors, writers, singers or artists as right holders. This will assist you, as a right holder, to come up with written contracts in the course of commercializing and monetizing your creative work.
Other advantages of a written contract include setting standards for efficient effective process for both parties, risk reduction as it minimizes liabilities, clarity, only privy to the contract benefits, and that means you get what you had agreed on. In the event of a dispute, you will utilize the contract as point of reference to settle any ambiguity.
Need for Guidelines
Most creators face difficulties in coming up with legal instruments when they want to commercialize and monetize their works. Instead, often, they end up doing business in a friendlier than a serious business relationship. This kind of approach has cost many of the creators and right holders and it will take another article to name all creators who have lost their IP benefits because of this.
Most creators tend to see contracts as a disadvantage because it is time and money consuming to draw them up and it brings litigation as to what should be adhered to within the agreement and only those privy to the contract can benefit. However, the main objective for developing the guidelines is for you to know be aware that, “Creativity has Value and Value is Protected through valuable means for IP is a long-game which needs futuristic foundations”. When you value something you will do all that is in your power to protect it, such as implementing written contracts to explicitly show that creativity is valued in all transactions.
A contract has value and has simple two-fold rule; (i) all parties have to carry out their agreed obligations and (ii) to manage it in order for it to be successful. A contract helps you, as a creator, to exploit intellectual property rights as economic assets and avoid infringing the other creator’s rights too. As a creator you will have written and signed contracts with all those who make contributions in your work to avoid disputes as to the ownership of the works and safeguard all parties against misappropriation.
Parties should consider incorporating important basic clauses when conducting negotiations. These will simply include:
i) parties to the agreement ( full contact details),
ii) definitions of terms (enabling understanding to what you are contracting to)
iii) representations( facts underlying reason for entering into a contract);
iv) warranties (party guarantees to respond in a certain way),
v) terms of payment,
vi) the duration,
vii) consideration of the contract,
viii) terms and conditions for both parties,
ix) the governing law,
x) termination of the contract,
xiv) intellectual property,
xv) amendments and addendums,
xvii) signatures of both parties and their witnesses attested by the commissioner for oaths.
When you commercialize your work, you, the owner, has a right to authorize or prohibit certain acts and monetization of your work. Licensing can be in the form of an exclusive or non-exclusive license. Just be aware that, available options will depend on the market strength and what you, as the right holder, seeks to achieve.
Essential to note is the nature of the contracting parties that is; whether they are legal or natural. If a natural person (Human) is contracting with a legal entity (e.g. Company/organization) then the legal entity should ensure proper signatories are present to sign the contract and not just any employee in the legal entity. As a creator or artist you are encouraged to seek more information of whom you want to enter into contracts with to avoid the contract, being rendered a nullity (unbinding) from the beginning (void ab initio). It is important to seek guidance from a legal practitioner in the respective jurisdiction (place where contract is made) to ensure the necessary laws and procedures are adhered.
Illustration in form of Music Contracts
We will use the illustration of a music contract to extend clarity to some of the elements listed above. Therefore assume you are a music writer or performer in order to understand easily.
The Music Industry inhabits different players who ensure that the music meets market expectations. Musical works comprise of the author’s right also known as the copyright and the neighbouring right also known as the related rights.
a. Any musical work has a person or persons behind it i.e. composer and authors (song writer). The composer creates melody of the song while the author (song writer) creates the lyrics of the song. There is need for a contract, if the composer and the author are two different people. The contract will formalize any engagement that is present and to inform authorized entities such as Copyright Offices or Collective Management Organizations (CMOs) of their documentation.
b. If neither composer nor the author (song writer) is a performer then there should be a contract between the composer, author and performer. Performers (singer, dancers, and musicians) could individuals or a band. If it is a band then the contract should clearly stipulate the name of the band and its band members and what is being agreed upon. Often composers are performers and at some occasion a vocalist is hired to perform or a band. In a case where it is a band, the lead vocalist, backup singers, dancers and instrumentalists are all performers. Where a composer is the performer but is hired by a promoter to perform then applicable changes should be implemented to the performance contract to stipulate the proper parties (i.e. the first party can be the promoter and the second party the composer). Permission should be derived from authorised entities and CMOs through paying relevant license fees as per jurisdiction where performances will take place.
c. An author (artist/song writer) can decide to record the song (if he owns the composition, subject to the initial contract between the composer and the author if they are different persons) – Therefore, there should be an agreement between the author (artist/song writer), composer (if they are not the author) and the recording company (producer).
d. In instances where the recording company is also the music publisher interested in publishing the recorded songs, there should be distinct recording and publishing contracts between the artist and the recording company for the different rights involved. Clarity as to what type of distribution they are engaging in with the publishing house should be reflect in the contract- i.e. is the distribution for it for hard copies or digital copies or both and the territory for distribution among others?
e. Song owners have a right to grant permission to any person who wants to make a cover version of their song. A Cover version is recording of the song by a person(s) who is/are not the author. Therefore there should be an agreement between the owner and the person or band that wants to make the cover version recording, clearly stipulating the percentage of royalties the person or band will get for the cover version and any other entitlements.
Ultimately, there will various types of contracts that you could come across and use to dictate your IP protection, such as confidentiality and non-disclosure agreements, copyright agreement, patent agreements, non-compete agreements, and property or assignment agreements, among others. Regardless of which contract is appropriate for the particular situation, the drafting of any IP-related contract is essential in the protection of your creative work.