Chapter 5 - Sample Licensing Clauses
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Jake Blues: My name is Jacob Stein. I'm from the American Federation of Music. I've been sent to see if you gentlemen are carrying your [copyright] permits.
Jake Blues is John Belushi's character in the movie The Blues' Brothers (1980), written by Dan Aykroyd and John Landis
A comprehensive licensing agreement policy may include sample clauses and the position and policy of the museum in relation to each clause. As both licensors and licensees, the policy may set out the position of the museum vis-à-vis each clause, from both the licensor and licensee perspective. Further, suggested wording for each clause might be included in your policy.
If you are creating your museum's first licensing agreement policy, you may find it difficult to include the museum's policy on each clause and may in fact find this task overwhelming. Since it is likely that you have already entered into some digital licensing arrangements, review these licences and see what your museum has learned from them, and what may be useful in your policy. At first, your policy may only deal with a few clauses, but as your policy is a live document, keep updating it and including information that reflects your museum's ongoing licensing experiences.
Each Licence is Unique
Different licence agreements are written in different manners. Some are as brief as one page while others are 20 pages. Some are written in non-technical language while others are filled with legal terminology. This chapter discusses key digital licensing clauses common to many licences. Although each licence is unique, the clauses in this chapter may serve as a valuable checklist when examining licences you are negotiating or interpreting. You may use this checklist, for example, as an agenda of issues to explore when developing your licensing policy. Appendix A sets out the clauses in this chapter in the form of a checklist to be used in each consultation when reviewing and negotiating your licences.
Be cautious when reviewing the clauses in this chapter. In some circumstances, you may find it difficult to compare these clauses to sample licence agreements and to agreements to which you have signed, or to which you are contemplating signing. Licences vary to a large degree in how they set out the terms and conditions of the licensed content. For example, one licence may have a clause dealing solely with rights, while another licence might include the rights granted under a more comprehensive clause such as one covering the licensee's obligations or restrictions on use. Before interpreting any one clause in an agreement, you must read the entire licence and see how the various terms and conditions are organized and set out. Do not be concerned if you see different terminology and headings in other licences than those in this chapter. When reviewing licences, look for clauses you may have to be add, omit and amend to meet your particular circumstances. In many situations, your licence may be brief and the details about the clauses may appear in an appendix attached to the licence. This is common for definitions, terms and duration and payment. Also, the order of clauses in a licence may vary from agreement to agreement.
When a museum is part of a government agency, it may be required to include or exclude specific provisions in its licences. Check this possibility with your corporate counsel. Also, you should understand that other licensors and licensees may also be required to include or exclude specific provisions in its licences, and they may not be able to negotiate these specific items.
Sample Digital Licensing Clauses
The clauses discussed in this chapter are set out in an order that is intended to be logical in terms of reviewing an agreement from its beginning to end. You may find a different order in your licences.
The preamble is the introduction to your licence. The preamble sets out the purpose of the agreement, i.e., for one party to license the content of the other party. Typically, a preamble sets out identifying information about the two parties who will sign the agreement, the names of the parties, their addresses, the name or a brief description of the content being licensed, who owns the content, and who wants to license the content. It often sets out the date the agreement becomes effective; alternatively, this may be set out at the end of the agreement above the signature lines.
A preamble is not considered part of the agreement. However, it may be referred to should the licence later result in any ambiguity and require interpretation.
A preamble may also be called "Background", "Recitals" or "Parties", or have no title at all. Many licences, especially shorter ones, do not have a preamble, nor is one mandatory. Many preambles begin with various "whereas" statements such as "Whereas the Publisher is the owner of the rights granted under this Licence And Whereas the Museum wishes to license these rights, It is agreed as follows. . . " As discussed elsewhere in this book, it is not necessary to use such legal terminology as long as the clauses in the licence are clearly written and understandable.
If there is a preamble in your licence, it should be as concise as possible.
Parties to the Agreement
A licence must clearly set out the names of the two parties entering into the licence. Where this is not done in the Preamble, it is important that the licence, preferably at the beginning of the agreement, set out identifying information of the parties. It may also be placed in the Notices clause discussed in Chapter 6.
Identifying information includes the following:
- the legal names of the parties
- snail mail addresses (i.e., postal mailing addresses)
- email addresses, telephone and fax numbers (as a convenience in order to locate the other party during or after the licence has been signed. Although this is not routinely done, it is highly advisable to have all of this information in the licence itself since much of your correspondence during and after negotiations may be via email.)
The parties to the agreement are the licensor and licensee. The owner of the digital content is the licensor. The licensee is the party obtaining access to the digital content (often for internal purposes as well as for "walk-in" researchers, or the public at large.) Although many licences use the terms Licensor and Licensee throughout the agreement, it is not necessary to use these words once the parties have been identified. You may then simply use "the Museum" and "the Publisher" or "the Content Owner", etc., or the names or abbreviations of the names of the two parties. However, reference to the legal names of the contracting parties should be included somewhere in the licence. Some museums are legal entities within themselves and may sign legal agreements whereas other museums are part of larger legal entities. If you are unsure of your legal name, consult your counsel. This is important information to research prior to entering into a licence agreement.
Both parties must have the authority to enter into the agreement. Before entering into the agreement, be sure to ask the following questions: Does the owner of the digital content have authority to license it, or do they need to clear rights with another party? If your museum owns this content, make sure you have all the necessary rights in it. (This is further discussed in the warranty and indemnity sections of this chapter.) Do you have signing authority on behalf of your museum? If not, who should be signing the agreement? Make sure that the name on the licence is the one that has legal authority to enter into legal arrangements. Also, see below under Warranty and Indemnity as well as Chapter 6 under Signature.
Since there are no specific standards or universal models for a licensing agreement, a good licence agreement is one that is clear to the parties who sign it, and to others who will be interpreting it and applying its terms and conditions to particular circumstances. The agreement should therefore define terms whose meaning may be unclear or which may have more than one meaning.
Terms that you should consider defining include authorized uses, authorized users, commercial use, content, licensed content, premises and territory. Note that authorized uses and users are often not defined in the definition section if they are defined in a separate clause. The basic rule of thumb is that if a word is being used other than in its ordinary dictionary meaning, then include that "special" meaning in the agreement. That meaning should be one to which both sides to the agreement agree, and may be part of your licence negotiations. Other terms to consider defining in licence agreements are: “archiving”, “perpetual access”, “site”, “unauthorized use”, “personal use”, “third party uses”, “re-use”, “adapt”, “modify”, and “technical support”.
If you have more than one licence with the same party for different content, you may use different definitions in each licence as the definitions may vary vis-à-vis different content.
The definitions may be set out in a separate section, usually at the beginning of the licence, or defined throughout the licence. They may also be included in an appendix. Placing all of the definitions in a single place in the licence can make it easier as you may consult the one section when coming across various terms in the agreement.
Social networking and the re-use of content are considerations for museums as licensors and licensees. When you license your content, what are your expectations of your licensee when using that content, when the content is posted and re-published as-is or in a modified format? Similarly, how does your museum use content now, and does it need permissions that extend to various third parties and social networking venues? Definitions can both expand and limit uses of content. Define words in a manner that meet your preferred and intended uses of content.
Museum as licensor: If your museum is drafting the licence, take the time to consider each term in the licence and which ones require a special definition for purposes of the licence.
Museum as licensee: When reviewing a licence offered to you, take the time to carefully review the way terms have been defined, even if at your initial glance they seem straight-forward. The way words are defined should meet your needs and expectations. The definition may affect other parts of the agreement and you always want to ensure that you are licensing content in the manner that works for you.
Content Covered by the Agreement
The clause dealing with content covered by the agreement is often called "Subject", "Subject Matter" or "Product Definition."
It is vital that your agreement is clear as to what content is being licensed. Is the content a single photograph or a set of photographs by a specific photographer on a certain topic? Or is your museum licensing the electronic version of a print publication to which you subscribe, or an electronic-only periodical? Is the content an online subscription to a journal, database, or encyclopedia? You may need to define whether such content includes full text articles, abstracts, table of contents, indices, and new or special online products, sections or services that are available online.
Keep in mind that with digital content there may be more than one type of content which must be covered by the licence. Less obvious works and underlying works that may be subject to the licence are: text, images, databases, musical and other audio works, video and film clips, computer software and the like.
If the description of the content is lengthy, some licences include the description in an appendix attached to the licence. For instance, you could include a five page list of articles which are subject to the licence. Also, if the content is brief, for example, a single article or a single image, you may attach a copy of the image or article to the licence so it is easily identifiable.
Also, see the discussion below under Delivery and Continuing Access to the Licensed Content about a reimbursement of the license fee should content specified in the licence no longer be accessible during the duration of the licence.
Some licences state that copyright in the content remains with the content owner. This may also be dealt with in a separate Copyright clause as discussed below.
Museum as licensor: The more specific and narrow the description of the content, the more you are protecting your copyrights. For instance, if you license all of your slide collections from 1998, then the licence will cover the use and payment in relation to all of your 1998 slides. However, if you license only the 1998 slides relating to artists A, B and C, then you still have other 1998 slides to license to the same licensee in the future.
Museum as licensee: The more general the description of the content, the greater the content to which you will have access.
The grant clause or licence sets out the rights being granted to the licensee by the owner of the digital content. It states how the licensee may use the content being licensed and what uses of the content are prohibited. This clause is sometimes titled "Permission", "Permitted Uses", "Grant of Licence" or "Authorized Uses".
The rights may be non-exclusive or exclusive. Non-exclusive means that the owner may grant another individual or organization the right to use the same content. For example, Publisher X may grant the right to use its content to Museum A, Museum B and Museum C. Exclusive means that the content owner may only grant permission to use the content to one party at any given time.
Many grants of rights state that the licence is "non-transferable." This means that the licensee may not transfer its licence to another licensee. This is further discussed in Chapter 6 under the Transferability or Assignment clause.
The grant clause sets out the scope of rights. Rights may be set out narrowly or broadly, depending on what the parties agree upon. An example of a broad licence would be a licence to use the content in any manner whatsoever for the entire duration of copyright of the content. A narrow licence might be the inclusion of a specific chapter of a book on your museum's Web site for a sixty-day period.
There are no special rules or words for setting out these rights-what you want is a clear statement of what the parties have agreed to. Although some licences use terms like reproduce, adapt, exhibit, transmit, broadcast, communicate by telecommunication, perform in public, and other terms found in the Canadian Copyright Act or in various copyright statutes around the world, other licences use wording relating to the relevant activities such as searching, retrieving and printing.
The grant of rights sets out the permitted uses. Both the licensor and licensee must ask themselves what sorts of permitted uses make sense in relation to the content in question. For example, a licensee would ask the following: What uses does it require in relation to the online content being licensed? Do you need to be able to view, reproduce, store or save copies of the electronic content, (i.e., on a hard drive or other digital information storage media)? What about the ability to search, browse, retrieve, display, download, print, forward electronically to others, email to oneself, fax to oneself or to a colleague, include in a Web site, social networking site, intranet, extranet, LAN, WAN or other closed network (or in a Web site that is password protected)? These are all things that may be addressed in your agreement.
Below is a list of rights you may see or want to consider for inclusion in your licences. You may have a different perspective with respect to each right, depending on whether your museum is then in the capacity of a licensor, or a licensee.
Some of the terms set out below may need to be defined in the licence agreement.
In reviewing various licence agreements, rights granted or "permitted uses" often include the rights to:
- Reproduce (sometimes for specific purposes)
- Store or save copies or a certain portion of the licensed content (i.e., on hard drive, floppy disk, backup tape or on any digital storage media)
This may be temporary storage in which case your agreement should state the length of permissible storage. In addition, this may include caching as discussed in the immediate section below.
Although rarer, this may include permanent storage. Also, see Archiving and Perpetual Access clause below.
- Download (see store and save, above)
- Print (this is generally individual articles or small portions of an electronic product.) If the licensee is printing the article or portion on its premises, the licensee may negotiate that the licence allow the licensee to charge a fee to cover costs of the printing.)
- Forward electronically to others
If the licensed content is a database or other compilation or collection of information, your licence may specifically state that the rights include extraction and manipulation of information from that database.
In addition to the rights granted set out above, there are other permitted uses that are sometimes included in the grant of rights, such as:
- Email to oneself
- Fax to oneself or to a colleague
- Electronic links (to allow the licensee to link to the licensed content for purposes of its researchers accessing the content.)Footnote 4
- Caching (so the licensee can make a digital copy for purposes of efficiently providing the content to its users)
- Inter-library loan (see below)
- Include in an intranet, extranet, LAN, WAN or other closed network (or Web site that is password protected)
- Include in a Web site or blog
- Re-publish in a social networking site (to share privately or publicly)
- Course packets, training materials (this may include print copies or electronic copies)
- Electronic reserve (this may be for a specific course and will usually only be for a portion of the licensed content)
- Index the contents
- Distance learning (or more specifically, e-learning systems). The licence may be limited to non-profit education and your museum may need to consider whether to negotiate for for-profit education as well, or to negotiate a separate fee for for-profit education when negotiating the initial licence.
- Special uses (for example, patent or drug applications)
- Load the content onto the licensee's server
- Make back-up copies for a specific period of time
- Embed copyright information and employ technological measures to track use of content (and monitor unauthorized uses)
Rights for “Re-Use”
There are a number of rights for specific uses and media that museums have recently started to consider when licensing the content of others. For many of these uses, it is possible that the licensor will only allow a limited excerpt in the general licence and that use of larger portions or whole works will require an additional separate licence likely for an additional fee. These include:
- Use of licensed content in an e-book published by the museum
- Use of content transferred to an iPod for access by museum visitors
- Use of content for creating podcasts
- Use of content for virtual exhibits (by both physical and virtual museums)
- Use of content on social networking sites including MySpace, YouTube, flickr, blogs and wiki’s
The above rights may be subject to specific terms and conditions set out in clauses relating to Sub-Licences, Authorized Users, Authorized Site, Usage and Usage Restrictions (see below.)
Museum as licensor: Only license the rights that the licensee requires. Review the lengthy lists above, and determine what makes sense in the circumstances of each licence.
Some licences set out the grant of rights followed by a phrase such as "and all similar uses" or "and related uses", etc. This is advantageous to a licensee as the licence may include some uses that are not specifically mentioned in the licence. As a licensor, it is in your best interest to explicitly state what uses are included in the licence agreement, and to explicitly state what uses are not included (or to state something to the effect, "all uses not specifically mentioned herein are retained by the museum.") Licences more commonly take this latter approach. Although this is less flexible for licensees, it also helps to avoid ambiguity in the licence.
Museum as licensee: Without the proper grant of rights, your museum may not be able to do what it needs to do with the licensed content, and therefore the content is less valuable to you. Make sure the licence meets your needs and allows you to do all that your museum requires. Otherwise, you may have to make additional payments and obtain additional permissions after signing the licence.
Examine your agreement and see what uses are specifically permitted. Are some uses missing? Do you need to include some of these omitted uses/rights? What is your "normal" use of the content? How about future uses of this content, does the licence provide for this or will you have to return to the content owner for further permission? Do you have plans to post content on flickr, YouTube, or on other social networking sites, and will you require additional rights to do so? With the rights granted to you, are you able to carry on with your regular role of providing content to your staff and to researchers, and possibly the general public?
Generally, a licence involves two types of arrangements. The first is a licence, let's say, for the use of a photograph or a database. The second is called a sub-licence, to allow the licensee to provide the photograph or database to its staff, researchers, and possibly the generally public. In other words, a sub-licence is a licence a licensee gives to a third party or end-user – a person who has not signed the licence agreement.
Some licensees, such as libraries, are licensing content from museums, publishers and other content owners for the purpose of sub-licensing it, to its patrons and researchers. For example, a CD-ROM of Museum Z's collection may be licensed to Library X, then Library X "sub-licences" the content on the CD-ROM to a library patron or researcher by allowing that patron or researcher to view the contents of the CD-ROM and to print copies of specific works from it.
Some sub-licensees are dealt with in a licence provision referred to as Authorized Users, and your licence may not include clauses for both of these terms. Some sub-licensees are media specific – for example, the sub-licence may allow you to post the licensed content on your MyFace page. The bottom line is to ensure that whatever terminology is used, all necessary sub licensees are provided for in the licence. Look for “sub-licensees” in the following clauses: Rights Granted; Authorized Users; Authorized Uses; Authorized Site; Usage; Usage Restrictions.
Museum as licensor: Consider who will be using the content under the licence. Does it make sense to license the content to the licensee and to include a sub-licence to that licensee? Or is it more practical and/or profitable to directly license the same content separately to the licensee and any of its possible sub-licensees?
Museum as licensee: Determine all uses of the licensed content that may be made and by whom, then include these people as sub-licensees. Consider “secondary” and any possible unintended or new sub-licensees whenever you are considering a new licence.
An inter-library loan (ILL) is the lending of library materials from one library to another library. ILL is generally for print materials such as a book, periodical article (though not usually for an entire issue of a magazine), pamphlet, government document, etc. Generally, audiovisual materials, such as videos, and digital materials, such as DVDs, online content, computer software, music CDs and databases, are not part of an ILL.
An ILL is important in the library community because it allows patrons at one physical location of a library to borrow materials from a library at a different physical location without the need for travel. If your museum has a library or resource centre, whether virtual or not, an ILL clause may be important to you.
The inclusion of an electronic ILL in licensing agreements between publishers (and other content owners) and libraries is somewhat controversial, and agreements vary on whether to include it or not. One reason it is controversial is because traditional ILL meant that the print documents were shared with another library, then returned to the original library. This therefore may not be applicable to electronic documents, though a publisher allowing ILL may ask that the electronic document be destroyed after a certain period of time from the "borrowing" library. Also, developing digital rights management mechanisms may help protect digital content from unauthorized uses. If you agree to an electronic ILL, it may be necessary to define ILL for purposes of your licence, i.e., in an electronic context.
The inclusion of an electronic ILL provision may exist in a variety of forms. For example, a licence may allow printing an article from an electronic database which may then be faxed to another library for ILL purposes. A licence may allow electronic ILL subject to specific and sometimes extensive record keeping which goes beyond what is normally required for print ILL. You may need to negotiate an ILL provision that best works for your museum and the library licensee who requests the ILL provision.
Museum as licensor: When you are involved with a library licensee, you may need to consider whether electronic ILL is permitted for the content licensed under your agreement. As the licensor, it is not necessary for you to automatically offer this in a licence with a library. However, if the library requests an ILL provision, your museum should have a policy on this issue.
Museum as licensee: If your resource centre is involved with ILL's, you may want to negotiate an ILL clause in your licence.
In Canada, licence agreements may limit rights that otherwise would apply under the application of the Canadian copyright law and principle of fair dealing. If an agreement does not discuss fair dealing or expressly acknowledge it, then it will apply. However, the agreement may restrict fair dealing. Note that even if fair dealing is restricted, it will only be restricted in terms of the licensee, and not vis-à-vis any third party as the agreement is only valid between the parties who sign it. This is a controversial issue. Some licences that specifically refer to Fair Dealing allow it under the licence in a manner that is consistent with the Fair Dealing provision in the Canadian Copyright Act.Footnote 5
Fair dealing exists in other countries like the United Kingdom; a comparable (though differing) concept of fair use also exists in the United States.
Museum as licensor: Explicitly stating that fair dealing applies to the licensed content may make a licensor appear in a more positive light to licensees.
Museum as licensee: If you are licensing content from another country, your licence may be subject to the laws of that country. As such, it is important to understand the parameters of that country's fair dealing or fair use provision, if they have one.
E-rights or electronic rights is a term that has become very popular in licensing parlance. E-rights are not, however, specifically defined in the copyright laws of most countries. E-rights would be included as part of the more general or flexible rights such as the right of reproduction which is set out in Canadian copyright law and in copyright laws around the world.
E-rights may include a large variety of rights for such things as using content in electronic books, journals, e-reserve, e-learning systems, databases, DVDs and other storage media, online, Internet, intranet, extranets, Web sites, social networking sites, and archives. As technology changes, so may the meaning of e-rights, and even the notion of such popular platforms as CDs and DVDs. If you use the term e-rights in your licence, it should be defined. For instance, will it include all electronic rights, or just Web rights, or blog rights, or virtual exhibition rights, for example, or other specific rights? Unless your licence does cover all electronic uses, which is unusual, then your licence should refer to the specific electronic uses that you require and which are set out above under Rights Granted/Licence.
Museum as licensor: Understand what is encompassed by the broad term, e-rights, and ensure that the specific necessary e-rights are defined and set out in your licence. Only license the necessary rights and retain all other e-rights to yourself (and possibly for further licensing.)
Museum as licensee: A savvy licensor will only license specific rights to you. Make sure that you have all the necessary rights as it can be costly and time-consuming to return to the licensor to obtain additional rights not initially contemplated. It is best to err on the side of caution and to obtain more rights than necessary, however this should be at a reasonable fee to your museum.
Usage or Authorized Uses
Licence agreements generally specify the purpose of the use of the content for licensing and sub-licensing. This is sometimes referred to as "Authorized Uses", "Conditions of Use" or "Purpose". Usage may include the following:
- Collaborative works
- Review or comment
- Private use or research
- Electronic reserves
- Use of excerpts in e-books
- Class packages, training courses, course management systems
- Internal research in the course of employment, business or profession
Some of the above concepts may need to be defined for purposes of your licence. For example, terms like non-commercial use or commercial gain may need to be defined. Does that mean that a licensee cannot charge a researcher to access the licensed content? What if the researcher is a student, as opposed to one earning $25/hour for his research?
Museum as licensor: Determine (and possibly negotiate) in what manner the content will be used and ensure that this is carefully and narrowly addressed and defined in your licence.
Museum as licensee: If you are licensing certain content for use on your Web site, such as an image for your home page, you should ensure that the licence allows this particular use. In fact, this may be a useful negotiating point. For instance, if the content owner asks for $1,000 for the use of his image on your home page and you only have a budget of $200, you may be able to pay $200 for use of the image on a page other than your home page.
There may be certain things which the licence specifically states are not permissible under the licence, that is, things an authorized user or the licensee may not do with the licensed content. Foremost, the licensee may not share the licensed content with any unauthorized users. Other usage restrictions may include the following:
- Substantial or systematic copying. (For example, this is to prevent an entire issue or a substantial part of an individual journal from being copied, including copying one article at a time, and over time, resulting in a copy of an entire journal.)
- Transmitting content including digital or other reproductions of content other than to authorized users, (i.e., redistribution is not permissible for example by re-distribution, re-selling, or loaning.)
- Removing the content owner's copyright notice on any content.Footnote 6
- Modifying or altering the content. (Ensure that this does not conflict with any intended use of the content. If the licensee needs to modify the licensed content, for example, for teaching purposes, the licensee should ensure that this is permitted under the licence.)
- Merging, value-adding or including content with any other product, service or a database, or creating a derivative work.
- Undertaking any activity that may harm the content owner's ability to sell its content.
- Using the licensed content in any commercial manner (including selling it for a fee or for a profit.)
- Federal and provincial archives have certain authorities concerning the long term preservation and retention of records. In instances where museums are considered agents of the Crown, whether federal or provincial, they may be subject to these authorities notwithstanding the duration or terms and conditions of a license. Parties do not have the ability to contract out of them. In addition, the federal Librarian and Archivist under section 8(2) of the Library and Archives of Canada Act has a right to sample content from the Internet in the event that it is considered to be documentary material of interest to Canada without seeking any further permission. This means that regardless of the term of the license, content that is made available on the Internet may be retained by the Library and Archives of Canada perpetually notwithstanding the duration of the license.
Museum as licensor: Consider any restrictions on the licence that might ensure only authorized uses of the content are made, as well as ones that may help your ability to license the same content to others.
Museum as licensee: Ensure that any restrictions are fair and reasonable and do not interfere with your intended use of the licensed content. Ensure that the license states that any governing laws are mentioned in the licence.
How will the licensor be compensated for use of the content? In legal terms, this is called "consideration". Consideration is an exchange of benefits to each party. The licensee receives the benefiting of using the content while the licensor receives monetary or other compensation. Although monetary compensation is the norm, other compensation may include publicity for the content owner when the content is used, or other "creative" benefits.
There are a number of issues to address in terms of compensation, especially monetary compensation. Will the licensor be paid per use of content (e.g. per article or per photograph), per media (e.g. per Internet, intranet or a blog), for the time the content is accessed, or according to a set fee for a specified period of time with unlimited use during that time? There are no standards for method of payment -- it depends on what works for the parties involved.
In determining the appropriate fee, both content owners and licensees must be able to evaluate the value of the electronic content being licensed. As licensing electronic content is still new to most of us, this may involve some guesswork or experimentation. If you are unable to accurately determine or negotiate the value of the content being licensed, you may be able to arrange an interim deal to help you determine this value.
An issue both parties must consider is whether the agreed upon fee is inclusive, and includes all services relating to accessing the electronic content under the licence, as well as all applicable taxes. It is best to ensure that neither party is surprised about any hidden or missing costs from the license fee at a later stage.
Other factors to take into account when determining the appropriate license fee are such factors as: expected use of the content; any maintenance or training costs associated with accessing that content; preferences for formats in which the content may be accessible; whether any additional software or hardware will be necessary by the licensee in order to access the content; costs for such things as updates to the content; and future license fees for this content or archived content. Both parties need to carefully consider these factors in order to determine the appropriate license fee. Consider whether the license fee is the only fee in relation to the licensed content, or whether there are other financial considerations such as time to negotiate the licence, lawyers’ fees in relation to the licence itself, and software or hardware you may need to purchase in order to access the licensed content.
Your licence needs to address when the fee is due and payable, whether it is payable in stages, and the amount of each payment. You may also want to address the currency of the payment as well as any applicable taxes (this is also discussed in Chapter 6.) This may all affect the value and price of the content.
The licence should also address when the license fee is due. Is it due upon signing of the agreement or is it due at a later date? Or if the fee is payable in stages, and if so, what is the frequency and amount of each payment? It is common to attach these details in an appendix to the agreement.
Museum as licensor: Some factors that the content owner may take into account when putting a price tag on its content are the following: the cost of creating and/or digitizing the content; the cost of maintaining the electronic content or database, including updating the content; design costs and packaging; costs of developing and maintaining software to access the content; the expected usage of the content; the intrinsic value of the content itself (e.g. financial, cultural, aesthetic); the medium in which the content is supplied (e.g. DVD, digital tape, on-line access to remote server); expectations as to future need for and value of the content; the increased ability to search and maintain content; documentation and services to help licensees use the content.
Museum as licensee: Licensees have to consider their budget for any product and how flexible this budget may be. For instance, if your museum is able to license an image database for $5,000 for use by your staff and museum members, can your museum afford an additional $1,000 to ensure that all members of the public may equally access the content? In many situations, licences allow for flexibility in terms and conditions and such terms and conditions are balanced against payment for using that content.
Payment methods vary from licence to licence. You must look at all of your particular circumstances to determine which payment method or which combination of them makes the most sense for any particular licence. If you are licensing a single photograph, you will likely have a short and uncomplicated licence and pricing structure. A fixed fee or lump sum payment is often the best choice for individual pieces of content such as an image, or a series of images. However, if the content in question is an online database, for instance, you may have to consider more complicated pricing models. There are numerous pricing models from which content owners and licensees may choose. In some situations, the content owner may offer more than one model to choose from. In other situations, the content owner only has one pricing model to offer the licensee. In some circumstances, the content owner may be open to the licensee's suggestions in terms of a new and creative pricing model.
Databases and Journals
Discussions in setting fees for licensing content such as electronic databases and online journals often focus on: a) subscription fees for limited or unlimited use; and b) pay-per-use. Even within these two models, there are many, many variations, some of which are included below:
- A set fee for each log-on to the online content
- A set fee for each search of the online content
- A set fee for each download of an item such as an article or photograph. (Is this a print-out or electronic download? This would need to be defined in the agreement.)
- A fee per length of online time
- A fee per search
- Subscription fees (annual, quarterly, monthly or otherwise) for unlimited use (i.e., allowing concurrent/simultaneous use for any quantity of content)
- The number of concurrent users may need to be defined (e.g. allowing 5 users to access the content at the same time)
- Subscription fees for limited use
- Based on a set number of users, or size of institution
- Based on the number of pages downloaded
- Based on the number of workstations/computers on the premises of the licensee (i.e., no remote access. If there is more than one physical location of a licensee, this would need to be addressed in the licence)
Any model that the content owner and licensee agree upon is feasible. Other models include:
- Initial fees for installation of software and any special hardware and no subsequent fees (though no fee for software seems to be the norm.)
- Cost of print journal plus a percent for electronic access (where for instance the licensee is already licensing a print journal), and the variation: cost of print journal plus a set fee for online access based on number of work stations on the premises of the licensee
- No fee for using a limited amount of the data as a "teaser/promotional" tool in order to encourage subscriptions for the entire database
- No fee for "looking" and only a fee for downloading, or for printing (and can charge at a variety of rates for either or both)
- Fee for unlimited intranet use
- Fee for "value-added" licensees; different fee for those who do not enhance the content
Each model has its advantages and disadvantages. Below, two models are selected followed by discussion of its benefits and weaknesses. It may be helpful for you to go through a similar analysis to determine what may make sense for you in your circumstance.
Subscription fees (annual) for unlimited use (i.e., allowing concurrent/simultaneous use for any quantity of permitted uses)
Advantages: This model allows for less administration as there is one set payment per payment period (year.) It may be easier for licensees to budget this set amount. Less record-keeping and monitoring are required to determine, for instance, how many pages are downloaded by a licensee.
Disadvantages: This model makes it difficult for the content owner to determine the value of its content since it may not have actual knowledge of statistics concerning use of electronic content (though record-keeping could be built into it.) It may not be ideal in the initial stages of licensing content though it may be preferable after benefiting from statistical information. Also, it may be harder to monitor who is accessing the content and whether they are covered by the licence.
Subscription fees for limited use (i.e., for a set number of users or number of page downloads)
Advantages: More accurate for content owners and licensees to determine the value of the content by knowing how much is being downloaded. The content owner may be required to provide a simple means for automatically recording searches of licensed content; some licensees may insist that this means be the licensor's responsibility.
Disadvantages: Licensees may not always have the amount of access required to meet their demands. There is a burden on licensees to keep records (and on the licensor to ensure record-keeping is accurate.) There are burdens in both terms of administration and costs. Licensees will need to set up some sort of workstation registration or authentication to ensure only authorized users are accessing the content. Alternatively, the licensor may have to ensure only certain IP (Internet Protdm-tocol) addresses have access to the content.
This clause sets out what the licensor is obliged to do under the agreement. The licensor's key obligation is to provide the content. Some licences merely state this obligation. Some licences incorporate these obligations into other clauses in the licence. Additional issues which would be helpful to include in your licence are the following:
- In what format will the information be provided? (i.e., DVD, digital tape or other physical form, or online via the licensor's server, or through a network, or by a file transfer such as FTP (File Transfer Protdm-tocol).
- If the content is on a DVD, are there warranties that it will be in working order and free of defects?
- If the content is accessed through the content owner's server, what about server problems? Does the licensor agree to take adequate steps to ensure service interruptions are as infrequent as possible? Will there be back-up servers? Can the hardware handle a minimum number of simultaneous users? Does the licence specify the quantity of downtime which is unacceptable? Does the licence state that the subscription fees will be adjusted or rebates given if there are frequent service interruptions?
- However the content is accessed, will the content owner provide technical support? (Also, see below under the clause Support and Documentation).
- How often will the content be updated? Monthly? Weekly?
- Will the licensee be notified of changes to content? If so, how will the licensee be notified?
It is important that your agreement addresses in what format the content will be supplied to the licensee, when it will be supplied and what technical or other support is available in the event that there is a problem accessing the content. It is generally not possible to ask for totally uninterrupted access when accessing content from the licensor's server, however it is fair to ask for reasonable efforts from the content owner and specify that a certain amount of interruptions results in a rebate of fees to the licensee. If possible, it is helpful that the licensee is notified before downtime for service or updates, routine servicing of the server be done during off-peak hours, and explanations and/or notices are sent to the licensee as soon as possible for downtime.
Museum as licensor: The licensor should carefully consider all obligations it undertakes. Although you want to provide good service as well as valuable content, be reasonable and only agree to what your own budget and staff allows you to provide. If the licensee requires additional content or service than you are offering them, you may be able to negotiate an extra fee in order to provide such content or service to them.
Museum as licensee: Ensure that the licensor's obligations allow you continuous access to the licensed content, and includes safeguards that downtime will be limited. Are you being offering sufficient content and service to allow you reasonable access and use of the content?
Delivery and Continuing Access to the Licensed Content
The licensor needs to provide valuable information to the licensee about the history of the content being licensed, how often it is updated, added to, and detracted from. In order for the licensee to have maximum benefit from the licensed content, the licence should include a date of delivery of the content or when the licensee may access the content itself, the frequency (assuming the content is changing, being updated, etc.), and the format.
Before signing an agreement, the licensee should sample the content. This will ensure its technology is compatible with the licensee's hardware and software, and that the content is in a format and media that the licensee and its sub-licensees may easily access. If it is not compatible, then you need to work towards remedying this prior to the effective date of the licence. Generally, if the content is not available on time, the content owner will have a specific amount of time, let's say 30 days, to remedy this situation. (This is addressed under the clause pertaining to Termination, below.) This clause may also discuss other technological details of accessing the content.
If the licence is for electronic content that is also available in print form, the licence may include a clause stating which format will be available first, and the time difference between the two formats.
Another issue sometimes addressed is the situation of the content owner discontinuing availability of some of the content being licensed. Where specified content is no longer available during the duration of the licence, the licence might state that the licensee is entitled to a proportionate amount of its fee to be reimbursed. This may be more exact and state something to the effect that if more than 10 percent of the content is no longer available, then the licensee is entitled to a 10 percent reimbursement of fees paid and/or payable.
Museum as licensor: The licensor has the obligation to provide (reasonable) continued access to the licensed content. If the content is not available, the museum must find solutions to remedy the solution and to offer these in advance to the licensee.
Museum as licensee: Specifics as to the delivery of the content will secure maximum use of the content by the licensee. Look at your particular circumstances. How often is this content licensed and by whom? What are the harms and problems if the content is no longer available, or not available for certain periods of time?
Support and Documentation
It is helpful for a licence to include specifics about support and assistance for an electronic product. This may be for free or for a fee. This may be limited or unlimited support.
Support may include a telephone support HelpDesk (and the licence should state the telephone number and if it is toll-free), online help either through a searchable list of questions and answers on the content owner's Web site, and/or real time online support in which you may email a support person. Further, your licence may address the hours of operation of support (e.g. 24/7 or during business hours EST), and the amount of waiting time to obtain support, i.e., through a telephone or in response to an email). In some situations, sub-licensees may also need access to support.
Documentation in the form of a user's manual may also be helpful in efficiently using the licensed content. Some content owners may provide on-going documentation such as a print or email newsletter.
Museum as licensor: Providing some support may be necessary in order for the content to be fully and continuously accessible by the licensee. What is reasonable and at what fee? It would be great to provide unlimited resources, but you must look into your own budget and staff demands to see what is fair for you, and still profitable in terms of licensing the content.
Museum as licensee: Ensure that you have sufficient support or documentation -- either for free or for a reasonable fee -- to access the licensed content in the necessary manner. Although unlimited support is ideal, if the content owner does not provide you with this, try to negotiate some free support, another level of low cost support, and perhaps a yearly support plan for an annual fee or per enquiry.
Users of content have certain obligations towards owners of content. A licensee's main obligation is to use the content according to the terms and conditions set out in the licence. The content owner may want to place specific restrictions on how its content may be used by the licensee. Here are some examples of licensee obligations you may see in a licence:
- The licensee will notify its authorized users about the terms and conditions of the licence including any limitations on the use of the licensed content.
- The licensee will only use the content in the manner set out in the licence and will not otherwise use that content in a copyright manner without prior permission from the content owner.
- The licensee will monitor illegal uses of the content. (Generally the licensee should not be obligated to police illegal uses, but perhaps to inform the licensor of any illegal uses that it may spot.)
- The licensee agrees to cooperate in the implementation of any security and control procedures relating to accessing the licensed content. (For example, issuing passwords to Authorized Users.)
- The licensee must keep statistics regarding the usage of the content. (See below under the clause Monitoring Use.)
Because of the ease of copying and distributing electronic content, content owners are concerned about uses beyond its control and try to protect themselves as much as possible. This is because once content is accessed by a third party, the content owner has no contractual remedies against unauthorized uses against that third party (because the licence is between the licensor and licensee and cannot be enforced against the third party.) However, the content owner may have other remedies under the copyright laws of the country where the content is being used.Footnote 7
This is where international copyright issues come into play in a practical manner. Under international copyright principles, you apply the copyright law where the work is being used. Thus, if an end-user is physically in France, she is subject to the copyright laws of France – even if the museum that has the licence for the periodical in which the article appears is based in Canada, and the publisher is also based in Canada. If the end-user is in Canada, then you apply Canadian copyright law to the use of the article by the end-user. Practically speaking, a content owner does not want to be in the position of having to enforce its rights against individual users of its content (in France or elsewhere!). Does this mean that licence agreements should obligate licensees to be responsible for the uses by sub-licensees and end-users? Many argue that this is an unreasonable request and burden to put upon a licensee.
A compromise is for the licensee to be responsible for acts that are within its direct control or within "reasonable" control. However, a licensee may argue that it is impossible to monitor even authorized users and may request that their obligations be met if they do certain things (see suggested safeguards below.) One possibility is that a licensee's responsibility be so far as to inform its own legal counsel or the content owner if the it sees anything that may appear to be an infringement, and that it co-operate with the content owner to stop further infringements. A licensee should not be in the position of interpreting copyright law and determining what uses may constitute an infringement of copyright.
Some safeguards may be employed by licensees to help prevent patrons from infringement of copyright and these may be included in a licence. These safeguards may obligate licensees to do certain things such as:
- Each reproduced article state the content owner's name and email address with a copyright notice/warning (as agreed upon).
- Wherever and whenever access to the licensed content is made available, researchers and others should be explicitly warned about copyright law and licence agreements. For example, a copyright notice should be posted near a computer terminal. Where access is remote, a copyright notice should appear prior to granting access to the content. The wording of such a notice would be agreed upon in advance by the content owner and the licensee.
- The licensee should have information on copyright law and licence agreements easily accessible to staff, researchers, and the general public, for instance, via their own Web site, as a listing of links to other Web sites, or on a shelf in their resource centre.
In addition, it is important that all curators and museum staff are made fully aware of the licence terms and conditions and may easily access them should it be necessary to clarify which conditions apply to which licence and content. (See the section on Managing Multiple Licences in Chapter 8.)
Museum as licensor: As a content owner, you want to ensure that only authorized persons access the licensed content. However, you must also be sensitive to the practicalities of monitoring the use of licensed content. Be sure to include some safeguards to help prevent infringement of copyright in your licensed content.
Museum as licensee: Your obligations should be reasonable and not overly burdensome; for the most part they should comply with the current day-to-day operations of your museum.
The licensor may require the licensee to take security precautions, such as requiring passwords for use of the licensed content, in order to ensure that the content is used under the terms and conditions set out in the licence. They may also want the licensee to track usage of their content. Although it is not unreasonable to take security precautions, a licensee should not guarantee to the licensor that it can prevent all unauthorized use of the content. This is something that a licensee cannot prevent no matter how effective its security precautions. It is acceptable to agree to have security precautions in place, as discussed in the above section, but a licensee should not promise to prevent all unauthorized use of the licensor's content.
In certain circumstances, the licensor may want the licensee to track usage of the licensed content - who is using the content, and how often it is being used. Tracking usage may raise the question of privacy, especially for uses by non-employees of the licensee such as "outside" researchers. Monitoring how and when researchers are using licensed content may be an invasion of their privacy. It also requires staff time and equipment, such as software and even hardware to conduct this monitoring. Before a licensee agrees to track usage, it must think about the privacy of its researchers and the other costs involved. If a licensee agrees to track usage, it is a good idea to inform its researchers about this practice.
Museum as licensor: Before requesting a licensee to monitor use of the licensed content, make sure that it is essential or at least very important to the licensing of the content. Why do you want the licensee to monitor the use of the content? Would it be considered an invasion of privacy of those accessing the content? Are there alternative ways to achieve the same goals (for instance, could you "blindly" keep track of usage without specific identification of users of the content)?
Museum as licensee: Take great caution in agreeing to monitor any use of the licensed content. Ensure that your museum has safeguards if you are required to do so.
As discussed in Chapter 3, moral rights protect the reputation of the author of a work and not necessarily the owner of a work. For instance, a painter would be protected by moral rights if someone modified the painting by adding a moustache to the face of one of the persons in the painting, provided this would harm the reputation of the painter. Another example of a possible moral rights infringement is morphing or manipulating a digital photograph. Moral rights also ensure that the author has his or her name associated with the work, may use a pseudonym, or remain anonymous.
Moral rights is one of those lesser known areas of copyright law which is gaining exposure with both digital and global licensing. Although moral rights exist in many countries, moral rights protection varies from country to country. For instance, in the European Union countries, there are strong and perpetual moral rights provisions in their copyright statutes. In the U.S., the moral rights are much more limited. In Canada and the U.K., the moral rights are fairly strong but are lessened by the fact that they may be waived by the authors of copyright works and that they expire when the duration of copyright expires.
Depending on the nature of the content and how it is being used, your licence may need to address the issue of moral rights. In general, most online subscription or database agreements do not include a clause dealing with moral rights. However, if a licensee is specifically including content (like a photograph or video clip) on its blog or Web site, then you may need to address this issue. Addressing moral rights means including a waiver of some or all of these rights in a licence agreement. Moral rights may not be assigned in Canada (except upon death).
Museum as licensor: In Canada, moral rights belong to the author or creator of a work, even in an employment situation where the employer owns the copyright. As such, a museum is unable to waive moral rights in its licences. If a licensee acquiring content from a museum requires a waiver of the moral rights, the licensee must obtain a waiver from the author of the work in question. The museum may assist the licensee in obtaining this waiver.
Museum as licensee: If your museum is using an individual person's content on your Web site, you may want to obtain a waiver of moral rights at least in those countries where a waiver is permissible (and be sure to word it this way so that you do not have to name specific countries where a waiver is permitted.) The waiver may be applicable solely to you, or also to anyone who sublicenses and uses the content through the museum’s licence.
The licence may specifically state how any licensed content will include the content owner's name and copyright notice. Generally, the content owner will want its name, the copyright symbol and year of publication on the licensed content. This way, anyone who has access to the content through the licensee is made aware that the content is protected by copyright and the name of the owner of the copyright. Some licences go further and state where the notice will be placed and the size of the notice.Footnote 8
Related to Credits may be the issue of content owners listing licensees on their Web site. For instance, Publisher X may list Museum C as a licensee. If the content owner wishes to do this, he should have permission from the licensee. For various reasons, this is something to which a licensee may not wish to agree.
Museum as licensor: Determine your reasons for licensing your content. Are you licensing it primarily for financial gain, or also for promoting your museum? If the latter, then credits are extremely important and you must consider the best way to promote your museum (e.g. by including a URL or otherwise), without interfering with the licensee's use of the licensed content.
Museum as licensee: Ensure that the credits are not in a position or in a size that interferes with the enjoyment of the content.
Territory refers to the geographic boundary of the licence. For example, content may be licensed for use only in a specific state or province, or a country, or sometimes the licence may refer to North America. Global or worldwide rights are the norm for online products as it is difficult and not always feasible to distinguish territories on the Internet, however stand-alone products on physical storage media such as DVDs may be licensed by specific territories. If a licensee is based in Canada and it has people accessing the licensed content from outside of Canada, you will need to address this in your licence. See further discussion on this issue in the clause Authorized Users and Authorized Site. In fact, you may not need a specific clause for Territory if these other clauses address the same issues. Sometimes territory is defined in the Definitions section of the licence.
Museum as licensor: Only license the territories which are necessary for the licensee's use of the content. For instance, only license use in Ontario, or only in English speaking countries, or only in Canada. Do not license worldwide rights unless it is necessary, for example, when content is being placed on the Web. For a DVD, for example, you could limit the use of the content to Canada or otherwise.
Museum as licensee: Worldwide rights will cost your museum much more than narrow rights such as Canadian rights, so you may be able to negotiate a lower payment if you can narrow the territories for the rights you want to license. However, keep in mind that online uses generally entail worldwide access and use.
It is important to determine in your licence who is authorized to use the licensed content. How will authorized users be defined? Will all staff be excluded? What about non-staff of the licensee? What about the public; will they be authorized to use the content?
The content owner may want to limit who may access the content and where (see Authorized Site below.) It is important to ensure that this part of the agreement is broad enough to serve all of your staff, and the public if necessary. Your definition of authorized users may be a negotiating point in relation to your licence fee. When negotiating your licence fee, if applicable, ask if you could obtain a lower fee by narrowing the scope of users,.
Many agreements use the term "authorized user" to refer to a sub-licensee or end-user such as a researcher or the general public.
Some authorized users you may want in your agreement include:
- Employees or staff
- Consultants/independent contractors
- Affiliated researchers
- Specific "registered" persons
- Members of the licensee organization (e.g. museum members)
- Students and interns (part and full time)
- The public. The public would include persons not specifically affiliated with the licensee and who are not physically present on a day-to-day basis at the licensee, and are often referred to as "walk-ins".
In an academic setting, an authorized user may include: employees, faculty or department members (permanent, temporary, contract and visiting), staff, consultants, and students (part and full time) associated with the school, and authorized patrons of the school's library -- this could be for in-library or on-the-premises uses as opposed to remote access. Alumni are generally not automatically included as authorized users in an academic library setting; this is something the licensee may wish to negotiate if necessary. In some situations, students enrolled in a specific course may be specified as an authorized user group.
An important issue to consider is whether the public may be an authorized user (if so, this may be reflected in the licence fee.)
Another consideration is whether the group of authorized users is defined geographically, for instance, all faculty on campus X. If the licensee has more than one physical location, you may want to consider a multi-branch licence so whatever people at the main location may access, people at other locations have the same access. University libraries want to ensure that all of their campuses are covered by any licence agreements. In some situations, licensees may need to access the licensed content from other countries. If this applies to you, make sure your licence allows this and is not limited, for instance, to physical locations in Canada. Also, see discussed below on Authorized Site.
How will authorized users gain access to the licensed content? Various methods include authenticating users by their Internet Protocol (IP) address, through passwords, electronic keys, or other protdm-tocols agreed upon between the content owner and licensee.
Also, see discussion above on Sub-Licences.
Museum as licensor: Be aware of all of the locations of a particular licensee. If the licensee is headquartered in Regina, does it have other physical locations in other provinces, or perhaps in other countries? If there is only one physical location, or perhaps no physical location at all but merely a virtual existence, how is this covered by the licence? Your museum needs to be aware of who is accessing the content and from where, in order to ensure that the licence and licence fee is reasonable and makes sense for them in the circumstance.
Museum as licensee: Determine and set out who will be using the licensed content. Define this as broadly as possible in order to ensure that any relevant persons are included and you do not have to obtain further permission in the future from the content owner for other users.
It is important to specify from where the authorized users may access the content. Generally, this relates to two places, on-site (i.e., on the premises of the licensee), or remotely (i.e., from a home or office or while travelling or living in a different city, state or country.) On-site access may be easier to control and content owners may be better able to ensure some degree of compliance with the licence agreement. However, licensees often require remote access, depending on how its staff and the public access and use its facilities and network. For instance, if a licensee provides proxy server access to authorized users or the licensed content is available from a Web site, this access will be available from anywhere in the world. If this applies to your end user's situation, it will have to be addressed in your licence. If the licensee is an institution where many of the staff travel and access content from outside Canada, ensure that the licence allows for access by them. In fact, a licence that is non-site specific may be preferable. More simply, if the end-users of the licensed content need to access that content at home or from their offices, this should be expressly permitted in the licence.
In addition, your licence may need to set out whether access will be permitted from a single computer, or from a network with a specified number of simultaneous/concurrent users, or perhaps an unlimited amount of users.
You will need to be specific in the licence about who are authorized users and authorized site access. Never assume that users or sites are included under the licence.
Museum as licensor: Carefully review who will be accessing the licensed content and from where they will access it. Are you comfortable with this? Does the licence adequately compensate you for all of the uses and users?
Museum as licensee: Ensure that any access limitations allow for the reasonable use of the content by your museum and possibly the public, and contemplate any off-site access that you may need in your licence.
Often the licence will state who is the copyright owner in the print content, if any, and in any electronic content. Some licences might state something to the effect that copyright remains with the content owner and that the licensee has the right to use the content (without transfer of copyright ownership) under the terms and conditions of the licence. As discussed in Chapter 3, this is a licence or mere permission to use copyright work and not an assignment or transfer of those rights.
Also, the licence should ensure that the content owner does in fact have the rights in the content that it is licensing to the licensee. This does not necessarily mean ownership rights, as long as the licensor has the rights to license the content. This is further discussed below under Warranties and Indemnity, and under Limitation of Liability.
Museum as licensor: You can only license content to which you own the rights, or have the authority to license to others. Always check to ensure that you own the rights, for instance, for works in your collections and works prepared by freelancers. By owning the physical work or paying a freelancer to perform work for you, your museum does not automatically own the copyright in those works.
Museum as licensee: Throughout the licensing process, keep in mind that you are licensing the content and not obtaining any assignment or permanent rights in it. You do not need to own copyright in that content in order to access and use it under the terms and conditions of your licence.
Duration of Grant of Rights (Term of Agreement)
Duration or term of agreement relates to the period of time in which the licence persists, or in which the content owner provides access to its content. The licence may only be cancelled before the end of the term if there is a fundamental breach of the agreement, or if a provision in the agreement allows for early termination upon the happening of a certain event.
The duration may be based on a specific length of time (for example, from January 1, 2011 to December 31, 2015, or for one year from the signing of the licence), or it may be based upon the payment of each yearly subscription fee. Educational institutions may prefer that the licence cover the school year as opposed to the calendar year or another designation of time. It is important to specify how long the agreement continues. An organization may prefer a length of time consistent with its fiscal year. The agreement can specify a certain date on which it will terminate or a certain length of time for which it will continue. It is also possible that the agreement renew automatically under the same conditions and terms, by inserting a renewal clause in the agreement (see Renewal, below.) This would be provided both parties to the agreement are satisfied with it and would like it to automatically renew.
The agreement should address how and when the agreement can be terminated. You can include the right to terminate the agreement for serious violations of the terms and conditions in the agreement, and/or include termination of the agreement for any reason, provided notice is given to the other party. Automatic termination is another option, whereby you set forth in the agreement what events automatically end the agreement. Examples include default in payment, bankruptcy or material breach for invoking automatic termination of the agreement.
Museum as licensor: The content owner usually initially suggests the length of time for the licence. When dealing with a new licensee or if you are uncertain about other terms or conditions of the licence and what would be most appropriate in the circumstances, a short duration may be preferable. That way, you can determine during the length of that licence what terms and conditions make sense for future licences.
Museum as licensee: By agreeing to a shorter duration of the grant of rights, you may lower the licence fee for use of the content.
At the end of the time specified in the contract the contract ends, unless it allows for automatic renewal. You may request a specified period of time of notification should the renewal be a new price so the licensee has time to evaluate that price and determine whether its budget allows for it. For instance, you may request a clause stating that 60 or 90 days notice prior to the termination of the agreement must be given by the licensor to the licensee in order to allow time for the licensee to examine and consider any price increases.
An automatic renewal clause is very inviting in many circumstances as it means that if both parties are happy with the agreement, then it will continue and thus you do not need to renegotiate the licence. If either party is unhappy with the licence, then either party may terminate or initiate to renegotiate the licence. However, licensees should keep in mind that if you do nothing, then the agreement will generally automatically renew.
Automatic renewal may occur upon certain things happening like the payment of a yearly fee, or an increased fee from the previous year. If there is an increased fee, a licensee should ensure at the time of signing the original agreement that the amount is reasonable and within its budget. Alternatively, an agreement based, for example, on a two year period, could automatically renew for another two years unless one party notifies the other party within a certain amount of days prior to expiration of the agreement. Another example of an automatic renewal clause may be a variation of the following: if either party wishes to renew, they must advise the other party of their intention six months prior to the end of the agreement upon terms and conditions to be renegotiated with the current terms to run until such time that a new licence is agreed upon, or one year from the date of termination, whichever is shorter. You can negotiate and draft any sort of automatic renewal clause that works for both parties to the licence and is agreed upon by those parties.
If there is an automatic renewal clause in your licence, both the licensor and the licensee should have the right to terminate the agreement and to halt the automatic renewal; this right should not just benefit one party. It is also helpful if the content owner is obligated to notify the licensee that the automatic renewal is about to occur unless the licensee otherwise notifies the content owner. However, many content owners would not agree to include this last clause. Thus, the managing of multiple licences by licensees becomes even more important so that a licence does not continue in automatic licensing arrangements without being of aware of doing so.
An automatic renewal clause is very inviting in many circumstances, since it means that if both parties are happy with the agreement, then it will continue and you do not need to renegotiate the licence. If either party is unhappy with the licence, then either party may terminate the licence or initiate its renegotiation. However, keep in mind that if you do nothing, then the agreement will automatically renew. Determine whether this is consistent with the workings of your museums, that is, to have a contractual obligation automatically occur, without any specific act taking place. In other words, although automatic renewal has its advantages, it can mean the continuation of a licence for an electronic product that you no longer use, simply because you failed to notify the content owner that the licence would not be renewed. An alternative approach with a successful licence is to enter into a letter of agreement signed by both parties just prior to the end of the licence stating that each party wants the licence to continue for an additional period of time such as one year. This is not automatic renewal but is quick and simple and does not involve a new licence review and possible negotiations.
Where automatic renewal is not included in the licence, a licensee may ask the content owner to notify the licensee several weeks prior to the termination of the licence so that it may renew. Although a content owner may resist including this in a licence, it is in their best interests to undertake this task to ensure continuing the licence. Some content owners resist sending out such notices if they have many licences with various licensees as it can be an increased administrative burden for them.
Without an automatic renewal clause, the licence may only be renewed through a new licence agreement signed by both parties.
Museum as licensor: An automatic renewal clause can save the licensor administrative costs as well as negotiating time and expenses. However, ensure that it is properly worded to reflect any increased fees in the subsequent renewals.
Museum as licensee: Consider an automatic renewal clause that allows your museum to continue a satisfying licensing arrangement. Make sure your museum keeps a careful record that the licence will automatically renew unless you notify the content owner in advance.
The licence will terminate or end when the duration of the licence expires provided there is no automatic or other renewal of the licence.
Generally, the termination clause allows either party to terminate the agreement for a substantial or material breach of the licence. For example, a breach would be where access to the content is no longer available or payment by the licensee has not been made. Terminating the licence is usually required to be done in writing. Either party should be able to terminate the licence for a fundamental breach.
It is important that the licence does not expire early due to problematic uses of the content by parties who did not sign the licence. Although the licensee may take reasonable steps to inform the public of the authorized uses of the content, it should not agree to early termination of the licence should this be a problem.
In some situations, a licence will end before the expiry of the agreement if there is a fundamental breach of it, that is, one party does not live up to its obligations. Even in those circumstances, an agreement may provide for a period of, let's say, 30 days, for the defaulting party to remedy the situation and to avoid the termination of the agreement. This also ensures that a licensee does not suddenly lose its access. Most content owners would only agree to such a clause if the licensee continues to observe the other clauses set out in the agreement relating to such things as usage, modifications and security.
A content owner should not be able to terminate the licence because it has changed the content being licensed. The content should be available as it is described in the licence throughout the duration of the agreement. Occasionally, there may be events beyond the licensor's control such as lost of a content or database supplier which could trigger such a clause.
A licensee may want to ensure that should early termination occur due to a breach by the content owner, the licensee receives a pro rata refund that it has paid for access to that content. Upon early termination, the licensor may request that the content be returned (if feasible), or destroyed. A museum may not be able to comply with a request to delete all copies of the licensed content whether in print or in an electronic form at the termination of the licence.
There might be specific provision in the agreement that allow for an earlier termination, for example, upon insolvency, or if one party gives notice to the other party.
Museum as licensor: Although you want to ensure that a licensee properly uses the licensed content, in certain circumstances, you may want to give them leeway to correct unauthorized uses. Try to be fair and reasonable, while being protective of your content.
Museum as licensee: If your licence terminates prior to the duration set out in the licence, ensure that you are entitled to a refund of your licence fees for that period of early termination.
Archiving and Perpetual Access
If your museum requires the authority to make an archival or back-up copy of the licensed content, your licence should state such use. If the content owner is required to provide an archival version during the duration of the licence or for use after the expiration of the licence, the licence should state under what circumstances you will have access to the archival version.
One of the oft discussed issues in relation to licensing digital content is perpetual or on-going access to the content after the expiration of the licence. These discussions extend to archiving content that later allows access to content that is cancelled or otherwise removed from a content owner’s server and/or offerings. This is especially true for libraries, museums and others who are "memory institutions" as they are used to permanently having "content." A digital copy of certain content like an online journal or database, with use for a limited period of time is a novel concept and often presents a problem for these memory institutions. Whether you are a licensor or licensee of digital content, perpetual access is an issue that will arise in at least some of your licensing arrangements.
Different agreements deal with perpetual access in different manners. Some licences do not address this issue at all. Some mention that the content owner will provide continuing access at its discretion, or that the parties will work together to develop a mutually acceptable way for continued access to the content. Some provide access to the licensed content "for as long as is practicable", or may supply the archival content on a DVD. Another route is to provide continuous access to any licensed content under the terms and conditions of the original licence.
Depending on what you negotiate, the licensee should keep in mind that there will be a cost to keep its own archives of electronic content. There may be an initial cost of creating the archive and backing-up the content. There may also be the cost of "renewing data", that is, keeping it in a current and accessible format, constantly upgrading it to keep up with technological change, which may be relatively expensive. In fact, making a print copy on acid free paper may prove more economical than an electronic archive, and may meet a licensee's collections needs. Again, if this is something contemplated by a licensee, ensure that permission is provided in your licence.
Museum as licensor: As this is a controversial and difficult matter, it is often best if the licensor does not raise it. However, if the licensee raises it as a discussion point, then the licensor respond to it. Although the licensor will search and possibly offer creative solutions, it must take into account any expenses and administration to provide perpetual access and determine whether this is reasonable or feasible in light of the full circumstances of the licence itself.
Museum as licensee: Discuss with the content owner if and how they may provide on-going access to previously licensed content ( "previously" refers to content paid for but for which the licence has expired.)
The content owner may include certain disclaimers, for example, that it does not warrant that the content will be accessible in any particular hardware or via any particular computer software. The content owner may also express that it does not warrant the accuracy or completeness of any information contained in the content, or its merchantability or fitness for a particular purpose. Generally, the content owner (other than individual content owners) will make all reasonable efforts to ensure its server is available on a 24/7 basis, excluding normal network administration and system down time and will limit its liability to restoring access. Some disclaimer clauses will limit the licensor's liability to no more than the licence fee paid-this is something you may wish to discuss with your institution's lawyer. Certain publicly funded institutions (for instance, in the United States) are not permitted to sign agreements with a limitation of liability and this may affect your licence.
Museum as licensor: It is important to offer the licensee and provide it with the licensed content on a 24/7 basis. However, certain circumstances may prevent you from doing so. Try to minimize the limitations on access to the content.
Museum as licensee: Ensure that the licensor is not disclaiming or limiting its liability to such an extent that the museum is losing necessary protection under the licence.
Warranties are promises that either party makes to the other one in the agreement. For example, the licensor may warrant that it has not infringed the intellectual property rights or other rights of a third party when providing the licensee with the content. The licensor may also warrant that he has the authority to enter into the contract and to license the content does not conflict with any other licences entered into by the content owner. If any of the warranties are untrue, then the licensor making the warranty may be subject to certain "penalties" or indemnities, as discussed below.
Often, the warranties and indemnity are set out in the same paragraph in the licence.
In general, a licensee wants a warranty that the content owner is the owner of the electronic works being licensed and/or has the rights to license them. Otherwise, the licensee could be paying a licence fee to the inappropriate party and may have to pay an additional fee or encounter a copyright infringement suit from the rights holder. Make sure that the warranty is straightforward and non-ambiguous. This warranty should endure for at least the duration of the licence so that the licensor has the right to license the content throughout the duration of the licence.
Although it is not frequently seen, it may be helpful to include a clause that the content owner warrants that it will continue to have the rights being licensed throughout the duration, and any renewals, of the licence agreement.
Museum as licensor: Always start with the assurance to the licensee that you have the rights to license the content in question. And, of course, make sure you do have these rights! By owning the physical property, you do not necessarily own the copyright in it. This may be relevant to art works donated to museums. Also, works created by freelancers and consultants are not owned by the museum unless an assignment has specifically transferred the copyright in them to the museum. In some circumstances, you may not own copyright but you may have the right to license the content in question.
Museum as licensee: Ensure that the content owner has all the necessary rights to license the content to you and that there are no limitations on these rights. Wording like "to the best of the licensor's knowledge" is not acceptable. If the licensor cannot guarantee they can license the content to you, seek a licensor who can.
Indemnity and Limitation of Liability
Often warranties and indemnities are coupled. Whereas the warranty "guarantees" the rights, the indemnity provides for financial compensation should the warranty be false.
An indemnity clause states that the licensor must pay the cost of any legal expenses and other claims that arise from breaching the warranties in the agreement. If there is any infringement of rights by the content owner, the indemnity would say something to the effect that the content owner will indemnify the licensee against "all loss, damage, award, penalties, injuries, costs, claims and expenses, including reasonable attorney fees, arising out of any actual or alleged infringement". A content owner would prefer a clause where the indemnity is limited to any actual infringement as opposed to including any alleged infringements. More generally, a limitation of liability clause sets out how much and what kind of damages the licensor will pay for. The licensor will want to limit its liability by restricting the amount of damages and excluding certain kinds of damages and harms. Many public institutions (for example, in the U.S.) may not accept certain limitations of liability in the indemnity and you may need to check your institution's position on this.
An indemnity is only as useful as the pocketbook of the content owner. In other words, if the content owner cannot pay the amounts set out in the indemnity, then the indemnity becomes useless. As a licensee, you may wish to investigate the financial viability of the content owner when considering licensing content from them and determine what sort of indemnity clause makes sense for you in the circumstances.
It is easy to go overboard when asking for warranties and indemnities. It is not reasonable for either party to ask for, or to provide, an ironclad warranty-indemnity that is not critical to the licensing, and necessary use, of the licensed content.
Museum as licensor: Although you want to provide some sort of indemnity, make sure that it is reasonable and against any actual and real damages. Try to restrict the amount of damages and exclude any damages that are not directly related to an infringement of the warranties you have given in the licence.
Museum as licensee: Your licence should include an indemnity that is strong enough to back up its warranties and to ensure that you are compensated should you run into certain legal or other problems. However, the indemnity clause is only as useful as the financial viability of the content owner. As such, caution should be taken in relying on the indemnity clause.
This chapter sets out a variety of sample licensing clauses that you may find, and may want addressed, in your licences. Consider which ones would work for you and how to ensure they are part of your licence. Keep in mind your perspective as a licensor or as a licensee, as you will need to address most clauses from your unique perspective at the time. Also, keep in mind the other perspective and understand the other side's needs and how your licence may address both sides' needs. Lastly, you may also want to consider certain standard clauses which are included in Chapter 6 and are referred to as "boiler plates."
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