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Contract Glossary

Portions included from the Graphic Artists Guild Handbook of Pricing and Ethical Guidelines. 

What is a contract? A contract is an agreement, whether oral or written, whereby two parties bind themselves to certain obligations. Synonyms: agreement or letter of agreement (if the contract takes the form of a letter). This glossary simply explains what the clauses in your contracts mean.

Contract Terms

All-Media Rights: The media that conveys your design can take many forms. Print media means the final design is printed from a press in the form of a book or magazine. Electronic media means it goes out in digital form, such as on disk or thumbdrive, uploaded to the cloud, or as a multimedia presentation. Television, radio and internet are other examples of media. Each one of these areas are valuable and worth compensation to the graphic artist. Contracts that ask for All-Media rights are, in essence, asking you to allow the buyer to distribute your work in all media, often adding the clause “now known or invented in the future”.


All-Rights: More and more publishers are doing away with contracts that allow the graphic artist to retain any connection to an image after the artist has accepted a payment for the image. Artists are being required to give up “all rights”, and as a consequence, they have no claim on any future income the image might generate. While “all-rights” can mean different things to different publishers, under a typical All-Rights Contract, the publisher pays a fee (usually a single payment) and purchases the right to use and reuse the piece, in any medium, any number of times, forever. The artist, in exchange for that fee, gives up any and all interest in, and control over, the use of the image. In some cases, the artist is even agreeing to give up the boards and computer files with which the image was created! 
  

All-Rights Contract: a contract under which the artist who created the work gives up any and all claims on that work in the future. The artist is prohibited from reselling the artwork and the company who buys the art can sell and make money off of your work without any compensation to you. The all-rights contract claims the right to use the image, in every type of medium, for all time.

All-rights contracts, as bad as they are, are distinct from “work for hire” contracts. “Work for hire” strips you not only of the rights but of authorship; the buyer is the author under the law. Thus, the all rights contract is always better than the work for hire contract. If the all-rights contract is not work for hire, the artist still retains a statutory termination right. See the discussion of termination rights under perpetuity below.

Blanket Contract: A “blanket” agreement is a contract kept on file by the publishing firm covering all future (and sometimes past) assignments. Blanket contracts require special vigilance by the artist, because in addition to the current job, any future jobs are controlled by its language. The Meredith Corporation, publisher of many Better Homes and Gardens specialty magazines, has required its contributing graphic artists to sign such a blanket contract. Shouldn’t you be able to renegotiate a reprint rather than sign away that right for nothing?

Cancellation/Kill Fee: A “kill fee” is a fee paid by the client to the artist when the client does not use the artwork. “Kill fee” is a general term that covers two types of payments: a cancellation fee, and a rejection fee.

Cancellation Fee: A cancellation fee should be paid when the artwork satisfies the client’s stated requirements, but the client decides, for reasons outside the artist’s control, not to use it.
 For example:
 the artwork was intended to accompany an article that has been killed; or unforeseen space limitations didn’t leave enough room for artwork. 

Rejection Fee: A rejection fee should be paid when the artwork does not satisfy the client’s stated requirements. When this happens, the causes are, in theory at least, within the artist’s control. 
For example: the artwork unexpectedly deviates from the artist’s traditional style;
 or the final artwork is not consistent with the preliminary sketches or roughs that were accepted by the client.

Ideally, the artist should be paid a fee in either case. Artists generally negotiate the kill fee as a percentage of the agreed-upon fee for the finished piece. We have seen a wide range of kill fees, from 20 to 100 percent, usually depending on the stage of completion of the artwork at the time the project is killed.

Two additional points are worth noting:

1) The issue of copyright does not go away just because a project has been killed. When a project is cancelled, the client still obtains all of the originally agreed-upon rights to the use of the artwork upon payment of the cancellation fee (unless there is a written agreement that the rights revert to the artist if the project is cancelled). When artwork is rejected, the client has chosen not to obtain any rights to the use of the artwork.

2) If the contract does not mention a kill fee, there is no guarantee that one will be paid.
    
  
Confidentiality: Lately we’ve noticed an addition to the standard confidentiality clause that is found in many contracts. Usually worded to prevent the disclosure of company secrets and information concerning the job, confidentiality clauses are now being drafted to prevent discussion of the contract terms as well. This addition will make it harder for artists to publicize unfair client terms within the community. Once the contract is signed, the artist is bound by the clause to keep the terms private. What can you do? Discuss the terms of the document before it is signed. Of course we realize that during an assignment company secrets may be on the table and it is reasonable for the client to want assurances that the artist will not be indiscreet. But we are talking about discussion of standard business practices, not the next release of Essence Make0ver 5.0!

A typical Confidentiality Clause reads: 
Artist (licensor) may, during the course of providing his or her services hereunder or in relation to this Agreement have access to, and acquire knowledge regarding materials, data, systems, and other information of or with respect to…which may not be accessible or known to the general public. Any knowledge acquired by (artist/licensor) from such materials…shall not be used, published or divulged by Licensor to any person, firm…

Okay, sounds fair. Now, here’s the new language we are seeing: 
Licensor specifically agrees that the foregoing confidentiality obligation applies to the terms of this Agreement and any information disclosed to (artist/licensor) in any document provided to (artist/licensor) by (the company).

There are two ways to look at this new language:

1) The client feels public disclosure of the terms may give the competition unfair advantage. Perhaps the client doesn’t want competitors to know what goes into the cost of manufacture of a product. Or…they are planning a worldwide advertising campaign using your work which they are going to spring on the competition or…

2) The contract terms are so unfair that the client would prefer no one outside of the artist have knowledge of them for the sake of good public relations. The Monitor, or course, wants to believe that no client would have need of reason number two. However, we would like to caution you, as always, to read the contract carefully, discuss the terms within the community (and with a lawyer if necessary) and sign it when you feel clear about the terms of the job and its fairness to your own business.


Electronic Rights: Many publishers are attempting to retain electronic publication rights, and artists should consider this carefully when negotiating fees. Artists should make every effort to retain these rights. This need to repurpose the art in on-line and digital media without compensation is the persisting thorn in our side.

Exclusive Use: No one except the purchaser of the image can use the image without permission of the purchaser.
 

Moral Rights: right of identification of authorship, right of approval, restriction, or limitation on use or subsequent modifications. The moral rights provision of the copyright law, the Visual Artists Rights Act, clearly does not apply to reproductions of artwork. It can only apply to alterations of originals, such as gallery works, murals, etc. Even then, you only have the right to remove your name.

Briefly, moral rights are personal rights of creators in their original (not reproduced) works, regardless of the sale or transfer of copyrights.

Four specific rights are included:

1) the right to protect the work from modifications that would harm the reputation of the artist;
2) the right of attribution, so that authorship is acknowledged;
3) the right of disclosure, to control presentation of artwork to the public;
4) the right of recall, to withdraw or disavow a work if it is changed.

No Assertion of Rights: This is a clause that ought to be included in every artist’s contract: “NO ASSERTION OF RIGHTS It is expressly understood and agreed that, except for the licenses granted [Client] under this Agreement, as between Originator and [Client], all right, title, and interest in and to Licensed Digital Files vests solely and exclusively in Originator.”

This important statement makes it clear that the rights licensed to the client are only the ones specified in the contract, and that the artist retains all other rights. You can think of this clause as your Bill of Rights. In fact, it’s just like the final item in the real Bill of Rights! The Tenth Amendment to the Constitution of the United States (you remember that one, don’t you?) states: “The powers not delegated to the United States by the Constitution or prohibited by it to the States, are reserved to the States respectively, or to the people.” Good precedent!

Non-exclusive Use: Purchaser is allowed to reuse (or resell) the image in specified regions and situations along with the artist. Non-exclusive clauses are usually an area of broad gray areas and need to be specified and clear to avoid future conflicts of interest. Non-exclusive clauses are often the home of grants not fitting anywhere else.

Ownership of Artwork: Standard industry practice: the artist owns the original artwork even if rights of reproduction are transferred. Artist, can, on the other hand, sell the original and still keep rights of reproduction. The copyright law clearly states that the copyright is separate and distinct from the material work in which it is embodied. 
 

(in) Perpetuity: forever. It is recommended to negotiate rights for an image for a limited time period. Perpetuity means forever, but the termination right (or, the “recapture right”) which the artist keeps if he or she retains authorship is statutory; that is, the copyright statute says clearly that the artist retains the right regardless of the terms of the contract. The termination provision of the copyright law has not been tested yet, as it kicks in at thirty five years and the law has been on the books only since 1978. One of the reasons we are now for the first time seeing “perpetuity” in contracts is because the publishers intend to mount an assault on the termination provision, but as the law is currently constituted, if you retain authorship (no work for hire), even if you sign a contract with a perpetuity clause, you or your heirs should be able to terminate it after thirty-five years.

Return of Artwork: Standard industry practice: when client has original artwork during the project, client is responsible for returning the artwork undamaged.
 

Right to Modify (Alterations): The purchaser of rights to art for inclusion in the collective work holds only the copyright in the collective work, not in the underlying contribution (the art) itself. Since altered artwork is in fact a derivative work of the original, if the artist does not grant the right to prepare a derivative work, the client has no right to alter the image. Alterations to artwork should not be made without consulting the the initial illustrator, and the Illustrator should be allowed the first option to make alterations when possible. After acceptance of artwork, if alterations are required, a payment is charged over the original amount. Another possibility is to define “alterations” as “cropping and sizing only.”

Sub-licensing Rights: Some companies are asking for the right to “sublicense to third parties any of the rights granted to the publisher”.  “License” in a contract usually means the ability or right to resell the artwork to another. They can resell the artwork to another, in either exclusive or nonexclusive areas, for profit while you receive nothing.

If the artist grants the right to sub-license, the artist can demand a percentage of the fee received for sub-licensing. Does the sub-licensing act as an exclusive licensing right on the part of the client, or is the artist left free to sell the image elsewhere?

The question of licensing artwork to a third-party is complicated. Briefly, however, we recommend that the right to license artwork to a third party not be included in a contract unless the basic elements of the third-party license are spelled out. In general, when a third party acquires rights to use artwork, the third party should be under the same copyright limitations as any other client, and the artist should receive the same fees as with any other client.

Termination Rights: Termination Rights involve two things: the termination right provided in the copyright law (which is also discussed under “Perpetuity”), and the issue of putting a termination right in a contract. For instance, most contracts with agents have termination clauses, which govern the basis on which the parties can dissolve the relationship, and how long after dissolution the agent can either rep the artist or receive payment for jobs the agent has gotten the artist.

Transferring: Usually refers to right of company to resell or relicense signed over rights to your drawing. “Assigning” is another term commonly used for reselling. Assignment usually appears in contracts under a section at the end which reads: assignment of rights/delegation of duties. Duties are generally specific to the contracting parties, but assignments can be transferred. We’ll discuss this in terms of illustration.

The illustrator cannot delegate his duty to create the illustration, because it is a personal duty based upon his/her vision and drawing style. If the illustrator cannot perform his duties and contracted, the deal is off. In exchange for doing the drawing, the illustrator has the right to get paid. The illustrator can assign this right to someone else, if he or she wishes; for instance, if you owed someone money and wished to pay it by having a client pay them the money from the job directly (this does happen, really; it is not just legal theorizing), you could assign the right to payment by specifying in the contract that the payment was to go to this third party.

The client has the duty to pay, and for fulfilling that duty gains certain rights to the work. If the client wishes to assign its rights in the art to a third party, that may be permissible, as long as the contract clearly states that the rights assigned are no greater than those the client would have had.

The difficulty arises if the client tries to delegate its duty to pay to another party, which has no direct obligation to the illustrator.

Sometimes clients try to specify that a successor company will hold the rights that it has purchased. This happens if a company is about to be bought out by another. There is no real reason for the company to specify this, insofar as a successor company which acquires a company’s assets would routinely become the original company’s successor at interest.

Warranty/Indemnification: You guarantee that the work you create will not violate the copyright of any party. Usually a mention of legal fees (that will have to be covered by you in case of copyright infringement) is included. A warranty/indemnity clause can be beneficial or disastrous, with very subtle differences in the phrasing. For instance, you can ameliorate the warranty of non-infringement by adding that the work does not infringe “to the best of the artist’s knowledge and belief.” This means that if you don’t know about a similar work, you are not liable for the similarity. If possible, do not sign an indemnity clause which requires you to hold the client harmless (pay the attorney’s fees and damages) if you have no input into the defense; do not sign it if it covers “all actions arising from the artwork,” since frivolous suits can still bankrupt you. If the clause instead says “all judgments arising from the artwork,” you are limited to actual lost cases. Try to limit the indemnity to copyright infringement; avoid inclusion of trade dress.

Work For Hire: All work created by employees, unless otherwise negotiated, is done as work-for-hire, which gives authorship and all attendant rights to the employerr. Negotiating those rights back, while possible, is not easy. In contrast, independent contractors are recognized as the authors of their work and control the copyright unless they sign a contract that specifically states the work is a "work-for-hire." The Graphic Artists Guild is unalterably opposed to work for hire contracts.

Disclaimer: This information is true and accurate as of the dates specified, to the best of our knowledge and belief, and is provided by the Graphic Artists Guild to help artists make informed choices.


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