Module 5: Managing Rights

By David Scott, Emily Cox, Melanie Dulong de Rosnay and William Fisher

Learning objective

This module describes how copyrights are managed through individual licenses and collecting societies.

Case study

In the previous module, professor Angela identified some ways in which the materials she hopes to include in her course pack may be used without permission. Now she needs to get permission for other activities that are not subject to one of the previously discussed exceptions. She discusses the following questions with Nadia, the librarian who is assisting her:

• What activities may be covered by licenses the library has already obtained from publishers or collecting societies?
• For the activities that require a separate license, what clauses should I negotiate?
• How should I handle those materials whose authors cannot be identified or located?

Individual management

What Is a Copyright License?

Remember that the concept of copyright grants to a copyright holder several different, exclusive rights. A copyright license is one way in which a copyright holder may grant one or more of her formerly exclusive rights to other people. Licenses often precisely define those rights that are granted according to many criteria:

• the authorized use (e.g., reproduction, the preparation of derivative works, public performances);
• the duration of the authorization (e.g. one year);
• the nature of the authorization (e.g. exclusive or non-exclusive);
• the fee related to the transaction (e.g. a flat fee or a fee proportional to the number of copies or of uses);
• the format or media type (e.g. print only or also digital; text only or also in another media, such as a recording or a film);
• the audience and location (e.g. a particular country, the premises of the library, the classroom, a distance learning course).

Sometimes the copyright holder and the prospective licensee negotiate a license directly. At other times, a license may be offered by the copyright holder in a standard form. In such circumstances, there may be little or no possibility for modification of the terms.

Some licenses are exclusive. In other words, the licensor agrees not to permit any other party to engage in the activities covered by the license. Others are non-exclusive, meaning that the licensor remains free to permit other parties to engage in the same activities.

An assignment occurs when a copyright holder permanently and exclusively transfers some or all of his exclusive rights to another party so that they become the only holder of one or more rights to the work. For example, historically publishing contracts have often required the author to assignment all rights to the publisher. (More recently, many authors have resisted assigning the copyrights in their works as part of a publishing agreement. The Scholarly Publishing & Academic Resources Coalition (SPARC) has created a model addendum for publishing contracts to allow authors to retain the copyright to their work. More information about the SPARC Author Addendum can be found here.) This type of agreement can be compared to the sale of physical property, because the assignor permanently surrenders the ability to exercise any of the rights at issue himself or herself.

Some countries allow the authors of certain types of works to "recapture" the rights associated with a copyright that has been assigned or licensed after a set period of time, subject to certain limitations. To recapture the copyright, the author or her heirs must comply with certain formal notice requirements. For example, U.S. law contains two provisions addressing the recapture of copyrights. (17 U.S.C. sections 203, 304.) When and how a copyright can be recaptured will depend upon a number of factors, including when the work was created, who signed the agreement licensing or assigning the work, when the agreement was signed, and whether the work has been published. Creative Commons has created a tool to help authors and their heirs determine when or if a copyright can be recaptured.

Negotiating a license

Copyright holders are generally permitted to divide and license the rights to different uses of their work as they please. However, the copyright laws in some countries limit the freedom of contracting for copyrighted works or contain specific provisions regulating transactions involving copyrighted works. For instance, some countries require licenses or assignments to be in writing and to specifically outline the terms of use, or else the license or assignment will be invalid.

The degree to which the terms of a license are negotiable depends on the type of work at issue and the bargaining power of the licensor and licensee. Potential licensees can sometimes increase their bargaining power by acting collectively. For example, a consortium such as eIFL.net has more power than its individual members.

Click here to learn more about eIFL.net Model licenses.

Content of a Standard Licensing Agreement: The Example Of an Online Database

Clauses addressing the following categories of information will be found in a standard licensing agreement and should be considered before engaging in licensing negotiations:

Identification of the Parties to the Agreement

It is important not only to identify the parties to an agreement, but also to confirm that the persons negotiating actually have the legal authority to make agreements on behalf of their organization. If a library is part of an educational institution or is funded by the local government, for example, every librarian may not have this authority. A licensor might want proof that the person claiming to negotiate on behalf of the licensee is in fact permitted to bind the licensee by contract. The library might want to make sure the same is true of the person negotiating on behalf of the licensor, and that the licensor is entitled to exercise the rights of the copyright holder. This should be clearly addressed and included in the agreement.

Definition of Terms That Will Be Used in the Agreement

Because libraries often obtain licenses from copyright holders from other countries and from various industries, similar terms can have different meanings to the negotiating parties. One important term in licensing agreements is “material breach.” A material breach is an action by one of the parties to a licensing agreement that permits the other party to terminate the contractual relationship. Because of the importance and ambiguity of this term, the library should specify in the agreement what actions by a each party would amount to a material breach.

For instance, suppose the library were to negotiate a license to access materials from an online database. In this case, it might be a material breach if the database is inaccessible for long periods of time. Likewise, the staff should consider what potential failures by the library to live up to its end of a licensing agreement might legitimately be considered material breaches.

Subject of Agreement

Parties to an agreement should be very specific about what copyrighted work is being licensed. If it’s an online research database, for example, a licensee should make sure that the license entitles patrons to view the full text of articles, rather than just abstracts or summaries. If the resource is something that should contain a table of contents, index or images, the licensee should ensure that these are included in the license as well. If there are images, one might even want to determine whether they will be viewable and/or printable in black and white or color.

Use Rights in the Agreement

Licensing agreements often contain clauses that reserve to the licensor the exclusive right to all uses of copyrighted works that are not specifically mentioned in the agreement. A licensee should therefore think of all possible uses that it might want to make of a copyrighted work before it engages in negotiations. These use rights provisions are the most important part of a licensing agreement because they control what the agreement actually allows a licensee to do.

Where an electronic resource is concerned, some basic use rights might include: searching or browsing the database, viewing and downloading material, forwarding articles to others, printing materials, and including a listing of the works and possibly their abstracts in the library’s own catalogue. A library that is affiliated with an educational institution may also want to make sure that a license allows faculty and staff to place materials in electronic reserves, include them in course packs, and distribute and/or display portions of the materials in lectures or other speaking engagements.

Further, while the practice of loaning materials to other libraries or sharing a reasonable amount of materials with colleagues for scholarly purposes is implied in some jurisdictions by law, a licensee cannot normally share copyrighted materials for commercial purposes. If a licensee wishes to do so, it will have to negotiate for the right and included it in the agreement. If modifying a work in order to abide by local norms is necessary, a library should make sure that the modification does not conflict with the author’s moral rights.

Other Conditions on Licensed Uses

A licensor might want to limit certain uses by location or frequency of access. In return for the right to unlimited printing of the copyrighted material, for example, a licensor might want additional compensation. In this event, a licensee can negotiate for the right to charge its patrons fees to recover copying or printing costs. A library should also determine who its users are going to be and where they will be able to access a given resource. For example, it may wish its users to be able to access the copyrighted material from any computer or only from computers located in the library. It should also decided whether access to the copyrighted material or certain uses of it will require a password or will be open to any member of the public.

Licensor Obligations

Licensor obligations are the duties a licensor has to her licensee. This clause is particularly important for electronic resources.

For instance, it is reasonable for a subscriber to an online journal, database or other resource to expect that the material will be accessible very close to 24 hours a day, every day. Where a library has a software license, it might want to negotiate for the right to maintain a back-up copy of the program. In either case, licensing agreements for electronic materials typically include some obligation on the part of the licensor to provide the licensee with technical support. Because a licensor and its technical support staff might be located in another country, a licensee should make sure that technical support will be available during the library’s peak hours.

On a related note, most online resources have periods of downtime during which the licensor’s technical staff will update the online materials. A licensee might want to ensure that this is not normally done during the library’s peak hours. When an online service or other electronic resource is unavailable for a significant period of time, licensing agreements typically include a penalty clause that requires the licensor to partially refund the licensee’s subscription fee.

Often licensors are obligated to periodically provide the licensee with an "audit of use." An audit of use is a report that gives the licensee details about how its patrons are using the licensor’s program or database. Such use audits can help library staff members in future licensing negotiations, enabling them to determine better which features and uses of licensed materials are most valuable to the library patrons. Where use audits are performed, the parties might also want to include refunds to the licensee for periods of underuse and additional fees to the licensor for periods of overuse. Lastly, a licensee should make sure that there is an indemnity clause, through which a licensor guarantees that it owns the copyright in all of the works it is licensing and accepts liability for any conflicting claims of rightsholding of those works.

Term, Termination and Renewal of a License

Negotiating parties should specify how long they intend the license to last. As discussed earlier, the parties should also list all of the conditions that would lead to a termination of the licensing relationship. This might require the parties to create an end-of-term agreement, which specifies the procedures that will be followed in the event of termination, including the costs that may be recovered by either party. If an agreement is terminated because of the licensor’s failure to make the licensed material available to the licensee, for example, the parties will want to create a formula to compensate the licensee.

While most licensing agreements contain a provision that provides for automatic renewal of the licensing relationship, many do not guarantee that the same terms will be available for the following subscription period. A licensee should make sure that, if the terms of the previous subscription period are subject to change, the renewal clause includes an obligation on the part of the licensor to notify the licensee of these changes in advance of the new subscription period.

Fees

Fees for subscriptions to journals, online databases or other resources are typically paid on an annual or monthly basis. When works are being licensed to libraries or other large educational institutions, licensors typically take the size of the institution, the number of users and the number of pages that are downloaded into account when determining the appropriate subscription fee.

Licensors of online journals and electronic databases vary widely in their flexibility regarding fee arrangements. Some licensors are willing to negotiate fees, others offer various packages, and others offer only one arrangement. A subscription fee could include unlimited use of the licensor’s materials, limited use for particular purpose, a pay-per-use arrangement, or a combination of these.

Pay-per-use arrangements might set a fee for each log-on access, each time a user searches for content, or might allow unlimited access but charge users or subscribing institutions for each download. Universities often purchase what is called a site license, which gives all the members of the university community access to the material for a set fee.

Licenses in the Digital Environment

Many online and electronic resources are now subject to electronic licenses. One common form of electronic license is called a unilateral or shrinkwrap license because it comes with prescribed terms and is rarely subject to modification. (The term "shrinkwrap" comes from the plastic wrapping often found on software boxes.) Unilateral licenses are most often used by licensors of software products.

Another common form is called an end-user license agreement (EULA) or browsewrap license. These are frequently used by licensors of online content. EULAs allow prospective licensees to read the prescribed terms of the license on the licensor’s website. If they decide they want to use the licensor’s product or service, they can enter into the license by clicking on a button stating “I Agree.” Some licenses do not even require a “click” (the electronic manifestation of a signature), but instead presume that use of the licensor's website is sufficient to demonstrate a tacit acceptance and thus form a license.

Shrinkwrap licenses and EULAs are often limited to the specific user of the material, and does not extend to the entire organization of which the user is a member. Both shrinkwrap licenses and EULAs contain preset terms, and are typically non-negotiable.

While many legal systems have not fully addressed the effect of these types of licenses, courts in some countries have ruled that a valid consent, giving rise to a binding contracts, can be formed in these fashions. In most countries, however, the terms of such agreements will be subject to consumer protection laws and other limitations on unconscionable provisions.

Collective Management

Purpose and Functions of Collective Management Organizations

The system of direct licensing described in the previous section is fairly simple. A copyright holder often authorizes the use of the work by a licensee under specified conditions. Because copyright licensing often involves widely distributed works, individual licensing can become both very difficult and prohibitively expensive. It would not be practical, for example, for an holder of rights in a popular song to attempt to respond to thousands of licensing requests from radio stations all over the world.

As a result, copyright holders frequently allow collective management organizations (also known as collecting societies or collection agencies) to grant licenses, monitor uses of copyrighted material, and collect and share compensation from licensees on their behalf. This allows copyright holders to exercise their rights as efficiently as possible, as they can grant many more licenses than they would be able to under a direct licensing system. They also benefit from the bargaining power of an organization that negotiates payments on behalf of them and many other authors, and can bring infringement suits against persons or organizations that use copyrighted works without permission.

Licensees also benefit from the use of collective management organizations because collection societies provide users with easy access to rights that they can be acquired though a single contract for a specified period of time. A radio station wanting to broadcast music from around the world on a daily basis would not be able to do so if it had to seek out and acquire rights from the copyright and neighboring rights holders of each song, but can easily enter into licenses with a small number of collective management organizations.

A copyright holder that uses a collective management organization for some, but not all, of her rights is engaged in partial collective management. Again, a copyright holder’s exclusive rights in a work means that he or she alone is able to decide whether to authorize or prohibit any use covered by that copyright. This gives copyright holder flexibility in deciding, if they choose to use collective management at all, exactly which functions a collective management organization will perform on their behalf. Some collective management organization, however, require a participating author to assign all of his or her rights in a copyrighted work to the organization. In these situations, the author will not be able to license others to use the copyrighted work, except through the collective management organization.

Collective management organizations may also provide social welfare benefits to their members in addition to their royalty payments, such as medical insurance and retirement packages. They may also use part of the royalties they collect to fund drama festivals, music competitions, or the production or export of national works.

Compulsory Collective Management

Compulsory collective management systems ensure that the benefits of collective management are actually realized. If a collective management organization does not have the rights to a significant number of works within its particular field, then it no longer serves the socially valuable purpose of being able to license a large repertoire in a single agreement.

As a result, some countries choose to make collective management for certain types of works mandatory. This often happens where a use serves an important public purpose or where works of that type are used primarily for non-commercial purposes. In such situations, royalties are usually gathered either through a tax on copying equipment, or through a predetermined fee to be paid by users (such as companies, libraries, universities) to the collecting society. Those royalties are then divided among the copyright holders according to how frequently each work is used. Collective management is sometimes criticized for the complexity and lack of transparency of its calculation rules for collecting and distributing royalties when they do not exactly correspond to actual uses.

Areas in which compulsory collective management is fairly common are:

• public lending rights for works available in public libraries in countries such as Canada and Australia, and in some but not all European countries. (Many authors and organizations, including IFLA, are opposed to this practice.)
• reproduction rights for literary works, a right which is sometimes interpreted to include not only photocopying but also printouts from digital databases.
• neighboring rights for public performance, broadcasting, and cable transmission of sound recordings.

Some reformers have proposed extending this model to the distribution of works on the Internet, arguing that such a system would benefit both users (by legalizing file-sharing) and creators (by providing them with a reliable source of revenue).

One of a copyright holder’s most basic rights is to control the conditions under which her works may be used. Arguably, any national law that forces a copyright holder to let a collective management organization make these decisions for him or her is a limitation of this basic right. Articles 11bis(2) and Article 13(1) of the Berne Convention, however, provide that a country may determine the conditions under which rights can be exercised. Because compulsory licensing can reasonably be called a “condition” of exercising one’s rights, it is consistent with the Berne Convention where the right being managed is not an exclusive right included in Article 9.

Even where exclusive rights are involved, other non-voluntary forms of collective management may be permissible under the Berne Convention. For example, extended collective management allows a collective society to license the works of all copyright holders for a certain creative class once they represent a large number of that class. This generally includes foreign and non-member copyright holders.

Collective societies often enter into agreements with their sister societies in other countries in order to represent their repertoires. Sometimes such societies are also organized into international networks. Examples include the International Confederation of Societies of Authors and Composers (CISAC) and the International Federation of Reprographic Reproduction Organisations (IFRRO). These networks typically participate actively in negotiation of new copyright legislation at the international and national levels.

You may find more information about compulsory licenses in Module 4: Rights, Exceptions, and Limitations.

Technological Protection Measures

Some copyright holders, particularly holders of copyrights in digital works, take technological measures to hinder or control the ways in which users can access or use them. These features are called Technological Protection Measures, or TPMs. This technique is also sometimes called (misleadingly) digital rights management (DRM). TPMs typically prevent the copying of an electronic file, or restrict the number of copies that can be made or the number of devices that can access the file. Rights holders or distributors use such devices to enforce their licensing terms and to prevent unauthorized copying. A single work may thus be subjected to copyright, neighboring rights, a license, and a technical protection measure.

These measures are problematic from several perspectives for users: they often do not permit interoperability, and they are incapable of taking into account exceptions to copyright law. It is often not determined whether exceptions to copyright protection (of the sorts discussed in Module 4: Rights, Exceptions, and Limitations) should override technical protections. However, it is sometimes possible to disable TPMs and thereby enable the reproduction of the copyrighted work. Most countries have enacted anti-circumvention statutes, which prohibit such disabling of TPMs. However, some of these statutes include exceptions for libraries. Out of the 184 WIPO countries included in the WIPO Study on Copyright Exceptions and Limitations for Libraries and Archives, 79 had statutes that prohibited circumvention of TPMs, and 26 of these provided explicit exemptions for libraries. The majority of countries that have enacted these explicit exemptions are members of the European Union. Countries outside the European Union that provide explicit library exemptions from anti-circumvention statues include Australia, Croatia, Norway, Singapore, and the United States.

Orphan Works

Sometimes a licensee may want to license a work from the copyright holder but cannot locate the holder through reasonable efforts. In these situations the work becomes an orphan work. Orphan works may not have a name attached to them, or they have may have been published anonymously. Older works may become orphaned because it is unclear who inherited the copyright from the original rightsholder. Orphan works are problematic because a prospective user has no way of contacting the rightsholder to ask for permission to use the work and to negotiate payment for that use.

Although most countries do not have statutory provisions for dealing with orphan works, some countries have implemented systems to deal with these works. In the context of international copyright agreements, these systems are justified by the three step test of Article 9(2) of the Berne Convention discussed in Module 2: The International Framework.

For example, Canada has enacted copyright legislation that provides a method for authorizing the use of orphan works. Those who wish to use such works must apply to the Copyright Board of Canada for a license. Such applicants must first show that a reasonable effort to locate the copyright holder has been fruitless. If the work had previously been published, the Copyright Board will then grant the applicant a non-exclusive license (effective only within Canada) to use the work. The license is limited to particular types of uses, and requires the applicant to pay a designated royalty fee. This royalty can be claimed by the copyright holder for up to five years after the transaction, in the event that she later comes forth.

The Nordic countries of Denmark, Finland, Iceland, Norway and Sweden have also enacted statutory regimes governing the licensing of orphan works. In Denmark, for example, the licensing of orphan works is arranged through a collective management organization. The Danish Copyright Act provides that an individual interested in using an orphan work may arrange to pay a rights management organization for that use, provided that the organization represents a “substantial number” of Danish copyright holders. The royalties paid to these organizations may be claimed by a copyright holder for up to five years, and unclaimed royalties for orphan works are donated to public works programs.

Another country that implements a licensing regime for the use of orphan works is Japan, which operates a compulsory licensing system for orphan works codified in Section 8, Article 67 of its copyright laws. Japan requires that a prospective user perform “due diligence” in attempting to locate the copyright holder, but does not explain what qualifies as “due diligence.” Like Canada, Japan requires that the work have been previously published, and allows the government to grant a license to the user upon payment of a royalty. Royalties are placed in a fund from which copyright holders may receive compensation if they later discover and object to the use of their works. Notably, the holder may petition the government for an increase in the royalty rate within three months of the issuance of the license if she learns of the use and believes the initial rate to be unsatisfactory.

Other countries do not currently have statutory provisions dealing with orphan works, but may enact such provisions in the near future. American legislation dealing with orphan works is currently being considered by the United States Congress. The proposal would limit remedies in civil suits over the use of copyrighted works, as long as: (1) the user had made reasonable, but unsuccessful, efforts to locate and identify the holder, and (2) the work was attributed to the holder (if identified but not located). The proposal has been criticized by Lawrence Lessig, among others, and is unlikely to be adopted.

In April 2008, the European Commission’s High Level Expert Group published a report on Digital Preservation, Orphan Works, and Out-of-Print Works which recommended courses of action for member states of the European Union to establish licensing systems that would deal with the problem of orphan works. At the same time, numerous rights holders and representatives of libraries and archives signed a Memorandum of Understanding on orphan works which expressed the commitment of these organizations to facilitate and encourage the licensing of orphan works for certain purposes. The Memorandum of Understanding and the European Commission’s report are not law and are therefore not binding.

One reason why orphan works are problematic is that copyright law does not require that works be registered to be protected. This is the system set up by the Berne Convention. Although the lack of registration has many benefits to rightholders, one downside to the public interest is that all works are protected by copyright, including orphan works and works whose creators may have wished to make them available to the public. Arguments in some recent cases, notably Kahle v. Gonzalez in the United States, have attempted to challenge this system to make copyright an “opt-in” system (in which copyright protection is only obtained by fulfilling certain formalities) rather than an “opt-out” system (in which copyright exists upon the creation of a work). The United States Ninth Circuit Court of Appeals in Kahle, relying on the United States Supreme Court’s decision in Eldred v. Ashcroft, rejected the suggestion that the creation of an opt-in section implicated First Amendment rights to freedom of speech. The rejection of an opt-in copyright scheme may be necessary in light of the requirements of Article 5(2) of the Berne Convention, which prohibits member states from attaching formalities to the receipt of copyright benefits.

Back to the case study: getting permission

Nadia and Angela have identified works that Angela wishes to use that are copyrighted and not in the public domain. They need to get permission from the rightsholders for uses that are not covered by exceptions and limitations.

First, they have to identify the copyright holders. Original authors may have licensed or transferred rights to a publisher or a collecting society, or the creation may be a work-for-hire. For the reasons explored in module 3, other persons' rights may also be involved, such as music performers, or persons depicted in photographs (who are protected by the right of publicity against certain uses of their image), in addition to the photographer or entity who owns the copyright. When the contact information for the copyright holder is not available on the work, it might be possible to locate the holder though national copyright offices or collective rights organizations.

Once they have identified and located the rightsholders, Nadia and Angela will request permission to use the works. While a first contact by email or phone can be useful to explain the use they are considering, they will likely be required to follow up with a request in writing that describes accurately the copyrighted work (title, author, copyright holder, URL), the purpose of the use (a description of the use in the course pack), and the conditions of the permission that have been discussed (for a small fee, for free, etc.) Commencement and expiration dates of the license, as well as complete contact information for and signatures of both parties will complete the document.

Assignment and discussion questions

Assignment

1. Understand a license

Select a license governing access to electronic resources in your library or find the standard terms of a publisher online. Read the use rights described in the license, and explain whether, to what extent, and under which conditions it covers the following actions:

• reproduction by the patrons;
• reproduction by the librarians;
• downloading by the patrons;
• interlibrary loan of a printed copy;
• interlibrary loan of a digital version;
• publication in an electronic reserve or a course pack;
• rights when reusing resources: translation, compilation, indexing, abstract, data-mining, etc.; and
• other uses that you may define.

2. Collecting societies

What collecting societies, copyright clearing houses, copyright offices, or other entities collectively managing rights are operating in your country? For each of them, provide the name of the society, the website if any, and the type of media or works covered. Read the applicable statutes or bylaws. Explain what rights are managed, if members must transfer all of their rights to the organization or may only license some of them, and if it is a voluntary or a compulsory system.

Discussion Question(s)

Comment on the answers of your colleagues to question 1, and select the most favorable terms and licenses among those which have been analyzed.

Sources

Belzos, Salvador M. “International Approaches to the Orphan Works Problem”

Collective Management of Copyright and Related Rights, 2-47 (Dr. Daniel Gervais ed., 2006)

“Collective Management of Copyrights and Related Rights” → publication from WIPO’s website; http://www.wipo.int/freepublications/en/copyright/450/wipo_pub_l450cm.pdf

Ricolfi, Marco. “Individual and collective management of copyright in a digital environment”. Copyright Law: A Handbook of Contemporary Research, 283-314 (Paul Torremans, Ed. 2007)

KEA Study- Collective Management of Rights in Europe: A Quest for Efficiency (2006)

WIPO Guide on the Licensing of Copyright and Related Rights (2004)

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