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Legal Pointers

Here are some pointers regarding the process of making things legal:


Step 1 - Non Disclosure Agreement

The most common concern when discussing new projects and ideas is that the licensee you approach may take the concept and run with it themselves. There is no copyright in an idea alone but only in the representation of it. One way to share and impart ideas and information in discussions is to rely on a non-disclosure agreement or confidentiality letter. This should be presented and signed prior to commencing discussions and should include obligations not to use or pass on information that has the necessary quality of confidence, i.e. that which is not already part of the public domain or rightly and legitimately in the other parties possession.

Step 2 - Cover as much as you can at the start

If you are due to have a meeting, take a checklist of points to discuss. A great deal of time and money can be saved by agreeing as many of the legal/contractual issues at the same time as the main commercial points are dealt with. Money and the type of goods will often be the main issue agreed at your meeting but exclusivity, territory, rights ownership, whether royalties are paid quarterly or monthly, indemnities and sell off rights that will take up the lawyers' time.

Step 3 - Heads of Agreement

Upon agreeing the broad terms of Agreement make a note of them and draw up heads of terms. The deal may not be quite complete and will not have been looked at by your lawyer. It is therefore essential that these heads are marked 'Subject to Contract'.
In formalising the position in this way you help remove ambiguity and uncertainty in the contract process.

Step 4 - Due Diligence

Do your homework - research and check to ensure that the people or company you intend to work with are reputable. Due diligence should be carried out in advance, but it is never too late to undertake it, either in relation to the people you are meeting or the business they are involved in.

Step 5 - Information

Just as it is important that you do not disclose too much information in meetings unless the recipient acknowledges that it is confidential, it is also crucial that you do not say something that is itself subject to confidentiality. You should therefore check your agreements with third parties in relation to what you can and cannot do.

Step 6 - Agreements

Once the preliminary issues are determined you should address the written contract. It is essential that you read all contracts, letters of intent and non-disclosure agreements prior to signing them and if there is something that you do not understand speak to a lawyer or ask them to explain it to you. If they cannot or if neither of you are able to find someone who can (ie your lawyer) then ask for it to be removed.

Step 7 - Rights

Clearances You should ensure that any artworks, names and features of your property do not infringe the rights of any third party. Most importantly check that the name is not registered as a trademark and search the Internet to see if someone else is using it. If it is not and you believe that it is the kind of mark that third parties may want to copy or emulate then you should consider applying for a registration. In any event you should use the 'TM' symbol on sales and promotional materials. This indicates that you are claiming trademark rights in the mark, name or logo and puts third parties on notice that you are using it in a trademark sense or as a badge of origin.

Lawyers benefit most when things go wrong such as when a dispute arises over the ownership of a property or when the Artist hasn't been credited or had the chance to approve the use of his or her works. Most of these disputes arise, not because of any sharp practices but because the Artist and the licensee have not clarified and defined their relationship properly from the outset or haven't understood what their agreement means.

Take for example an artist who designs greeting cards. The card manufacturer's terms state that it takes an assignment (ownership) of all copyright in the artworks created specifically for it. However this does not necessarily give it rights in the character that appears on the cards itself. The card manufacturer is able to use the artwork supplied to it but if the artist wanted to exploit the character elsewhere then there is little that could be done to stop him. If the character goes on to become successful as a television cartoon character, then the card manufacturer will be kicking itself. But this could have been easily avoided if the contract stated that the card manufacturer owned the trade mark rights or the copyright in the character or else imposed a restriction on the artist using the same character for others.