Agree to Agree, Part Five

I fondly remember my original intention to have this entire series – a breakdown on contracts and agreements for creators – done over the course of a few weeks.  Fortunately for me, and perhaps unfortunately for those waiting with bated breath for each chapter, I ended up getting so busy with non-blog writing that it was difficult to carve out the time to finish it up.  However, I’ve gotten enough comments, Twitter mentions and so on to know that people are actually finding this series to be pretty useful, so I’ll redouble my efforts to get it done.  Assuming things go as planned, there will be six chapters total, plus a seventh that will be composed mainly of a sample agreement or two for creators to use.

The previous four installments covered contracts in general, rights, term/termination provisions and work-for-hire.  While it’s not essential, I would suggest reading those before going through this chapter, which will discuss scary language in contracts – the sort of things you want to think twice about before agreeing to.

Before I get into those, let me first say that the “goodness” or “badness” of a contract, or any specific provision in it, is very much context-dependent.  To illustrate, let me tell you a story: in the early days of Saturday Night Live, the agreements with the performers were much like the contracts on any television show.  The actors showed up, helped to write sketches, performed, took a day to sleep and then did it all again the next week.  Anything they did outside the scope of that job wasn’t covered under the contract.  As some of those early actors started to get famous (Belushi, Murray, Chase, Radner, etc.), they began to appear in movies during the SNL summer hiatus.  Some of them went on to lucrative sitcom careers.  Others didn’t (Where Art Thou, Charlie Rocket?), but by and large, it started to become clear that SNL was a major launching pad for a career in entertainment.  Eventually, Lorne Michaels and his people realized that if they were going to be picking comedians out of obscurity and essentially handing them (some of them, anyway) multi-million dollar movie careers, then they should participate in some of that.  So these days, if you sign on at SNL, you agree to cut them in to a portion of entertainment projects you are able to get going for a specified period – even after you no longer work at the show.

You know what, though? That’s really not such a bad deal.  SNL is a proven commodity as a talent launcher.  Getting a spot on that show is like winning the lottery as far as national exposure.  So, what would have been a terrible agreement for Bill Murray to sign (because when he started on SNL it was just a scrappy variety show that no one could have predicted would go as far as it did) turns out to be pretty darn okay for a guy like Jason Sudeikis.  The point is that context is really important when dealing with contracts.  The most important thing is to understand what’s in front of you.  If you understand it, and how it might affect you, then you know what you’re going to object to.

So, some things to watch for – first, tread carefully any time you see the word “perpetual” in a contract, or you see a term that doesn’t seem to ever end.  Perpetual means, of course, forever.  If you’re granting a perpetual right, license or anything like that, it means that it’s basically gone forever absent a lawsuit alleging that the contract was invalid for some reason.  I see this a lot – people assume a contract will last for, say, the length the book’s being published, when in fact it might go on forever.  Perpetual provisions can be hidden inside other terms, and they might not be immediately obvious.  There are only a few specific reasons why a term in a contract might need to be perpetual: (1) you’re being paid money specifically to give up a right perpetually, such as in a work-for-hire agreement (see the last installment for more on that); (2) the person you’re contracting with has a valid reason for needing to be able to have that right forever (like if they’re incorporating your work into something bigger that will have a life of its own, and you’re cool with that); or (3) the person you’re contracting with needs to know that they can rely on you not doing something forever (I often see this with confidentiality clauses, where you’ll get to see specific secret information as part of the contract, and they need to know you’ll keep it secret forever).  Otherwise, it’s hard to see why any term needs to last forever – even those SNL contracts probably have a point where the show stops participating in an ex-player’s career.  There can be exceptions to every rule.  Just pay attention if you see something that’s supposed to last forever.

Next thing to watch for: deferred compensation, aka “I’ll pay you later.”  As I’ve discussed in previous chapters, there’s nothing wrong with not getting paid up front if you’re sure that’s what you want to do, but it’s an area to make sure is handled in a crystal-clear fashion in the agreement.  If you’re taking a piece of the overall revenues from a project, you want to know exactly how much you’re getting, and exactly when you’re supposed to get them.  Watch for the terms “gross” and “net” when applied to deferred pay.  If the contract says you get a share of the gross, it generally means that you get your percentage from the first dollar earned by the project.  If it’s net, it means that you get paid out of what’s left after a bunch of other expenses are paid (printing, marketing, maybe even other creators).  There are no absolutes here, and again, the most important thing is to understand what you’re agreeing to.  Anything dealing with what you’re supposed to get paid should NOT BE VAGUE.

In fact, that’s another biggie – vagueness.  A good contract is perfectly clear.  There shouldn’t be anything to hide.  Legalese has its place, but it’s not always necessary.  Watch for a contractual partner who says something like, “well, it’s not in the contract, but if this happens, then we’ll definitely do this – you’ll be fine.”  Incorrect – if something goes wrong and you end up in court, it’s almost always the contract that rules the day.  (That’s called the “four corners” rule, as in “unless it’s inside the four corners of the paper that the contract’s printed on, then whatever.”)  If someone is telling you something verbally that isn’t in the agreement, it doesn’t count.  If they mean to stick by what they’re saying, they should be happy to put it in the agreement, in writing.

Alternative dispute resolution – this is a fancy term, also called ADR, for any way of solving a disagreement in a contract besides going to court.  It primarily covers things like arbitration and mediation.  The intention is to streamline disputes, so everyone can get an answer quickly and move on with their lives.  These provisions are usually structured so that both sides waive their right to a jury trial or other court proceeding, and instead they have to do something else, like arbitrate.  In many cases, arbitration and mediation are awesome – they really do speed things up, and they can reduce some of the uncertainty and expense connected with jury trials.  However, that’s mostly true when the parties on both sides of a contract are either corporations or moneyed individuals.  The thing about ADR is that it’s still pretty expensive.  Filing an arbitration claim usually costs thousands of dollars.  In addition, if you give up your right to a standard trial, it also means you give up one of the most powerful tools for freelance creators when they need to get paid: small claims court.  In every state, you can go to small claims if you’re owed less than some threshold amount (usually $5,000-$10,000) and get a quick resolution, from a judge, that costs you almost no money.  You don’t need a lawyer, you just have to show up and present your case in plain language.  However, if you agree to an ADR clause, this right goes bye-bye.

Similar to the preceding point, watch for “choice of venue” clauses that would force you to sue the other party only in one specified location (usually the home base of the person giving you the contract.)  If you live in Miami, and the contract requires you to sue in Oregon, that can be troublesome.

Watch for the term “best efforts” – if a contract says you’ll use best efforts on a project, it seems like you’re just supposed to try really hard – do your best.  Nope.  “Best efforts” is a legal term that means you will use every ounce of energy you have to complete a project, to the exclusion of everything else in your life.  If you don’t, and the other side can prove it, then they can say you’re in breach and refuse to pay you.  Best efforts is a term that almost never has a place in a contract.  If you see it, object, and ask it to either be deleted or, at worst, amended to the phrase “commercially reasonable best efforts.”

I think I’ll stop here – there are certainly other things that can be drafted into contracts that can be troublesome, but every contract is different, too.  As I’ve tried to illustrate, one person’s horrible agreement can be fine to someone else.  The most important thing, again, is to read the whole thing, every single word, and understand what all of those words mean.  If you don’t know what you’re signing, then you deserve what you get.  Ask the other side about anything unclear, or even better, ask your own lawyer.  There are plenty of pro bono arts lawyer organizations out there that will help you for free: the biggest is Volunteer Lawyers for the Arts, but they aren’t the only ones out there.

Still deciding what to cover for the final installment, but I’m leaning towards some general contract negotiation tips.  See you then!

 

 

Agree to Agree, Part Four

So here we are, the fourth installment of my ongoing series about contracts for creator-owned comics (and creative works of all types, really.)  In the previous chapters, we’ve discussed contracts in general, rights and term/termination provisions.  Check those out if you missed them.  Each bit is intended to work on its own, but I definitely think it works better as a series.

Today’s topic is “work for hire.”  This is a term that gets thrown around constantly within the comics business, and I think often with something of a negative connotation.  Even a casual student of comics history has probably heard something about the way work for hire (which I’ll abbreviate to WfH going forward for my own sanity) “stole” the rights to Superman from Joe Shuster and Jerry Siegel back in the 30s. In truth, that’s not really accurate, but I think that’s the general impression.  Jack Kirby tangled with it, as did Stan Lee and a number of comics’ earliest luminaries.  In some ways, WfH is why charities like the Hero Initiative are so important (they provide assistance to aging creators lacking financial resources for medical or other needs.)  WfH has a stigma attached to it, as if it’s a doctrine that allows fatcats to steal from poor, ignorant creators.

Here’s the truth: work for hire is a business term, not exactly a legal one.  It can have substantial legal (and financial) consequences, but ultimately, it’s a deal point that can be negotiated.  This post will aim to explain why WfH can be useful to everyone working on a project.  It’s not good or bad, it’s just a tool – the key is knowing what it means to you, and whether or not you should agree to it.

So, what is “work for hire?”  To understand, first you need to grasp the way copyright law in the US and most foreign jurisdictions handles copyright in a given creative work.  The first place copyright sits when anything is created is with the creator.  I own the copyright in this blog post, just by virtue of the fact that I’m the person sitting here and typing it out.  I can do absolutely anything I want with it, and no one can tell me any different.  If I scrawled a picture on a napkin, I’d own that work, even if I never registered it with the US Copyright Office.  Siegel and Shuster owned Superman outright, lock stock and barrel, until they sold the concept to DC.

Work for hire flips that basic concept on its head.  It says that if you’re a creator, and someone else pays you money for work you create, then copyright in that work is THEIRS, not yours.  They can do whatever they like with it – change it, sell it, sequelize it, Underoo-ize it, all without your permission or any further money required to be paid to you.

You may be wondering why anyone would agree to such a thing.  It’s simple: money.  Not every creator cares about the potential long-term rights of their creations.  They would rather get paid up front, and that’s a perfectly valid position.  In many cases, particularly in creator-owned or small-press comics, it’s the only way TO get paid, since smaller books don’t always generate a lot of revenue.  Taking a back-end deal could mean working for free, more or less.  I often see situations where writers will hire artists to work on their books, and will require the artists to sign a WfH agreement in exchange for being paid up front.  Again, it’s perfectly fine, if the parties agree.  The writer is taking all the risk by paying up front, and the artist can work with some degree of certainty that he’ll be paid for his time.

The other time this appears is when a creator works on a company-owned character or line.  If you get a job writing Spider-Man, everything you create in your story will be the property of Marvel, period.  Characters, storyline, all of it.  That said, newer company-owned contracts do sometimes include provisions allowing creators to participate in revenues generated by characters if they become a big deal.  For example, Brian K. Vaughan’s excellent series Runaways has long been rumored to be a contender for a big-screen treatment.  While I don’t know for sure, I wouldn’t be surprised if he’ll get to see something if it does.  The characters are all owned by Marvel, and they can do whatever they like with them, but the company seems to have learned something from the PR disasters of the 60s and 70s with Kirby and many of his colleagues, and allows some participation by the creators in ancillary revenue.

Pay close attention to any WfH provisions in an agreement you sign.  To be effective, a true “work for hire” provision must include the following:

a. It has to be in writing.

b. It should explicitly say that the work is “work for hire,” as defined in the Copyright Act of 1976.

c. You must receive actual compensation for the WfH, of some sort.

Oftentimes, these provisions are accompanied by an assignment clause, whereby the creator agrees that if the work for hire section is deemed to be deficient in some way, then the creator assigns all of the creative work to the new owner.  This language is like a backup plan to the WfH clause.  If you see it in a contract, rest assured that whoever’s buying your work is going to do their damnedest to hold on to it.

So, that’s the way work for hire, err, works.  As with most legal concepts, it’s more complex than I’ve presented here, and there are always exceptions and counter-examples to be found.  There’s nothing wrong with signing a work for hire agreement, unless you don’t understand what you’re signing.  Now that you’ve read this, though, that’s impossible.  Right?

Please feel free to ask any questions you may have in the comments.  Next chapter will be about things to watch out for when someone gives you a contract – the scary stuff!

 

Agree to Agree, Part Three.

For the third installment of my open-ended series on creator contracts, I want to talk about two important parts of most creator contracts that often get lumped together into one section: term and termination.  My working theory is that “term” is the first syllable of “termination,” although I’m still doing research on the subject.  Whatever the reason, these two things are not the same, and they’re each crucially crucial in their own right.  “Term” in the contractual context refers to the planned length of a contract (a year, six months, whatever) and “termination” covers the ways the contract can be ended by either party before the term is up.

Let’s hit term first. Term can be any length, and there’s no “right” length.  It just depends on how long the parties want to be tied together through the contract.  The length of a contract is really a business term, so when you’re thinking about how long a contract should be, put your business hat on and think about it as practically as you can.  This is especially true with respect to rights contracts, and more particularly licenses.  For example, let’s say you license your finished comic to a publisher, and you give them the rights to print it, market it, use parts of it in promotional activities, maybe even make t-shirts or other merchandise, all in return for some percentage of revenues (the cash it makes.)  The expectation when you grant the license is that they will actually DO those things, and they will continue to do those things as long as the comic makes money.  But what if it doesn’t, or if the publisher doesn’t do a particularly good job of using the property?  What if they don’t do anything with it at all?  In those cases, you might want to know that the rights will revert back to you after a certain period of time – the end of the term. Some licenses have “perpetual” terms, and those can be ugly – unless they have a good termination clause, which we’ll talk about in a minute.  A perpetual license means the person you’re licensing your work to has rights to it forever.  In the indie comics world, I would read contracts with perpetual license terms very carefully.

Now, that’s not true for a work-for-hire contract, or a sales contract, where one artist is selling their work to another for an up-front fee.  In that case, the term of the contract is by definition perpetual.  For example, if you buy a car, the person you sold it to can’t come up to you a few years later and ask for it back.  The deal is done, and that’s that.  There are sometimes good reasons to provide your work to a third party as a sale as opposed to a license – the price might be right, for one thing.

On to termination.  Termination is the way the contract gets cancelled if things go wrong.  Sometimes the termination provisions are conditional (“if THIS specific bad thing happens, the contract can be ended”) or they’re tied to time (“either party can terminate the contract at any time upon 90 days written notice to the other party.”)   They don’t have to be mutual – the person on one side might have the right to terminate under certain conditions, and the other might be able to do it in completely different situations, or on different timelines.

The most common reasons a termination provision would kick in within the comics context would probably be if someone isn’t getting paid when they’re supposed to be, if someone isn’t doing what they’re supposed to be doing (such as publishing a book, or providing art on time, etc.) or if someone goes out of business.  This last point can be very important.  It’s a sad fact that comics publishers go under all the time.  Let’s say you’re a creator with a project at Publisher A, and that company goes out of business.  Unless your contract has a termination provision in case of bankruptcy, the rights to the project remain an asset of Publisher A, and they can sell them to Publisher B – some company you have no relationship with, and might not have wanted to work with in the first place.

So, there’s your summary of the way term and termination work in creator contracts.  No contract you sign (or write, you aspiring legal drafters out there) should be silent on either point.  Like I said in the first chapter, contracts are about everyone knowing where they stand at all times, and not just at the beginning, when everyone’s hoping for the best.  Knowing what happens when things go to hell is at least as important – if not more!

Next time… work for hire.  It’s a topic that has some negative associations, but like everything else in law, it can help or it can hurt – just depends on how it’s used.

 

Agree to Agree, Part Two

The first installment of this series seemed to generate a fair amount of interest – it seems like this subject is something that indie creators wanted to know about.  So, I’ll continue with thoughts on some of the different types of agreements creators can make when putting together a project.  My fellow creator Len N. Wallace (check out his book Love Buzz from Oni Press!) suggested that I also include (at some point) some discussion about provisions to watch for when you (as an indie writer or artist) are handed a contract by someone who wants to hire you.  Contracts aren’t always transparent – in fact, they’re sometimes written in a way that’s intentionally confusing.  That can leave a creator unaware of what they’ve really given away or agreed to do when they sign.  Anyway, I think it’s a good idea, and I’ll definitely address that at some point.

But not today.

Today, I’d like to talk a bit about the way rights can be handled under creator contracts, with a particular focus on rights to do things beyond just creating or publishing the comic.  Rights to “intellectual property” (a term that just means, in its very simplest terms, anything created, whether a work of art, a brand, a logo, an invention, etc. – yes, legal scholars out there, a more technical definition could be provided, but for the purposes of this blog, that’ll do) are often described using the “bundle of sticks” analogy.  In other words, think of a bundle of sticks tied together with a string.  Each stick represents a right to do something with a given piece of intellectual property (in this situation, let’s call it a comic book project.)  One stick might represent the right to publish the book.  Another might represent the right to be paid when and if the book makes money.  Another stick could signify the right to take the comic book and make a second type of work based on the book (movie, TV show, t-shirt, etc.)  Each of those sticks could be broken down into smaller sticks, too – for example, the right to publish the book could be divided into two sticks – one for publishing the book in the US and another for publishing the book overseas.

A good contract covers the entire bundle, so that no matter what happens with a project, everyone involved knows exactly who holds which sticks.  Some sticks usually end up on one side of the contract, and some on the other.  The nice thing about a good contract, too, is that it can be drafted in a way to take care of sticks that haven’t even been thought of yet.  For example, in the old days, contracts didn’t cover digital media (electronic copies of works, like a PDF or an iphone version), because those didn’t exist yet.  In the really old days, they didn’t even cover reprints or collected editions, because comics were thought of as disposable.  The idea that anyone would collect these floppy little books printed for kids on cheap newsprint, or they would be in print for decades, wasn’t something anyone was thinking of – creators or publishers.

That situation has led to any number of headaches as new technology and industry practices came into use, requiring either renegotiation of contracts or, at worst, lawsuits.  These days, most contracts include language licensing the part of the bundle of sticks covering “ancillary works” (that just means works beyond the original comic, that are based on it) in a way that covers evolution of tech and so on.  The typical language looks something like this:

“The rights described herein are licensed to the licensee for use in connection with all derivative works, including electronic editions, adaptations for film, television, portable devices, merchandising and all other forms of exploitation, whether now in existence or hereinafter devised.”

It’s the underlined part that counts – it means that the rights being licensed cover EVERY way a project or book might be turned into something else going forward.  You can see how this might be good or bad, depending on which side of the fence you’re on.  Most contract language works this way – it’s just a tool, and it can be used for good or evil.

Next up (after New York Comicon this weekend, which should be AWESOME… I’ll be posting up my signing schedule shortly) will be a discussion of how long a contract should last, and how to get out of it.  “Term and termination,” we’ll call it.

Let me know if this stops being useful!

 

Agree to Agree, Part One.

I’ve been meaning to write about this for a while, because I think it’s a topic that a lot of creators in my position or around my level (getting projects together but still nowhere near a Bendis or Johns or Loeb level) would be interested in.  In a word: contracts.  Most projects in the comics world are collaborations between a team of creators – at minimum, a writer and an artist, but often that can expand to include a team of artists (penciler, inker and colorist), a letterer and sometimes a graphic designer/logo artist/layout person.  While some super-talented people can do all of that themselves, it’s more common to spread that work out among a group.

The issue with that approach is that once the finished work is created, there’s a question as to who owns it.  I see that as working in most cases in one of three ways:

1. Certain projects will have a project leader, so to speak, who hires everyone, pays all the money out of his or her own pocket and retains all the rights to any future profits that the book might generate (as miniscule as they inevitably may be.)  This seems to happen most often where you have a writer-driven project, where a writer’s hiring a team to put his vision together.

2. Other times, projects are done in a collaborative way, where people on the team all either work for free or for less than they would charge if they weren’t getting rights in the book’s future profits, and everyone gets a share of those profits, agreed upon in advance. (Say, writer gets 50%, penciler gets 35%, inker and colorist each get 7% and letterer gets 1% – I just made up those percentages, so don’t take them as gospel, and no angry emails from inkers, please.)

3. And sometimes, things are just done with out any of that being worked out in advance, in a total mess.  Maybe the penciler gets paid a little for their work, but the inker doesn’t, but the letterer does, and then the book gets picked up by a publisher, and then optioned for a movie, and everyone thinks they’re entitled to part of the option fee, but nothing’s on paper so no one really knows who owns the project… this happens all the time, much more often than it should.

The ideal situation to my mind is either (1) or (2) – no matter how you apportion the rights, pay and profits, they SHOULD be apportioned.  It doesn’t take much effort to put together a simple agreement to lay out the ownership on a project, and it can be crucial down the road.  One publisher I’ve worked with insists that all people who work on a book have a contract or agreement that clearly lays out where everyone stands before they’ll even consider moving forward.  Fortunately, I agree with that policy, and had all of that in place to provide to them.

I’m envisioning this as a multi-part series that will give the indie comics guys out there some guidance on how to put together agreements with other people they work with.  I happen to be fortunate (?) enough to have some pretty solid background in this area, so I hope I can help out a little bit.  Anyway, enough for the first installment, and more to come at some point soon.