Chapter 3 - Speaking the Language

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The law is a hard, queer thing. I do not understand it.

Poundmaker, Cree Chief, who was frustrated by the government's failure to fulfill treaty promises - statement to the court at his trial in Regina on August 17, 1885

When developing your digital licensing agreement strategy, you will need to be aware of various laws and legal concepts. Some of these are background information that will further help you understand the realm of licensing, while others are key concepts that will arise in the course of creating your strategy and various licensing experiences. Many of these laws and concepts are described in this chapter in a licensing context and may have different meanings in a different context. These concepts are the foundation for understanding the clauses and negotiating points in further chapters in this book.

This chapter intentionally does not define the digital forums available for licensing content. There are too many forums which are available and new ones constantly arise. With a solid understanding of the legal basis for licensing, you should be able to apply your knowledge in any sort of licensing situations.

Licences are not Assignments

A full understanding of the terms licences and assignments is essential. In simple terms, licences and assignments are two ways to legally have permission to use content.

In an assignment situation, a content owner assigns his rights. In an assignment, the content owner is permanently giving away his content, or a portion of his content, or even assigning all rights but for a limited time. An assignment is like a sale or a transfer of rights, whereas a licence is comparable to a lease or a rental of rights. In a licence, the content owner licenses a piece of her content, thereby temporarily permitting someone else to legally use it.

Using the words assignment or licence may not by themselves guarantee what types of rights are being granted. The wording used in a licence agreement could be such that, in practise, it has a similar effect to an assignment. What you need to understand is that rights may be exploited (usually in exchange for money) without necessarily being sold or permanently given away to someone else or to another organization. For example, your museum could license the rights for its staff to use a publisher's database, but your museum has no permanent or ownership rights in that database.

When you are involved with licence agreements, you may hear the term "purchaser" of content being referred to both assignment and licensing situations even though there is no actual change of ownership in a licence situation. This is because the "purchaser" purchases the right to use content in a certain manner even though he may not acquire outright ownership of that right or content. Similarly, the term "buying and selling" content may refer to licensing content. These are terms and meanings used in the marketplace and something of which you should be aware.

What is a Licence Agreement?

A licence agreement is a legally binding contract between two parties. The licence is a legal term for permission to use or access copyright protected material. In this book, a licence agreement or contract means a written document setting out mutually acceptable terms and conditions under which a museum may permit others to use its content, or may obtain permission to use content owned by others. The licence agreement sets out the conditions of use of the specified content — at a specific price for a specified period of time.

An example of a licence agreement in a non-digital setting is a print book publishing agreement. Your museum may license or obtain permission to include certain text and photographs in a print book undertaken by your publications department.

What Does "Digital Licensing" Mean?

Digital licensing means the licensing arrangement containing the particular circumstances under which a content owner and user agree upon for the use of, or access to, specified electronic or digital content.Footnote 1 The details agreed upon are usually set out in a written form called a licence, a licensing agreement or a contract. In simpler terms, a licence agreement or contract are terms used for "permission" to use certain content.

Digital Rights Management

Digital rights management, commonly referred to as DRM, relates to technology (i.e. computer software) protecting content.Footnote 2 For example, when you download a movie, there may be DRM technology on that movie so that you can only watch it one time, or you cannot watch the movie after forty-eight hours. When you license content for your museum, you are agreeing to comply with the terms and conditions in the licence. Your employees, consultants, researchers, and so on should also be complying with the terms and conditions. DRM in this context would refer to either the content owner or the museum using software/technology to ensure that only those rights permitted in the licence are available and to block non-permitted uses, rather than relying upon voluntary compliance with the licence from end-users.


For purposes of this book, content refers to licensed works such as electronic books, periodicals, journals, databases, news feeds, encyclopedias, images, Web site content, and the like. The content may be in a non-digital or digital format, however the end use will be in a digital format. If the content is in a non-digital format, the licence agreement will set out specific provisions relating to who is responsible for digitizing the content.


A licensor is generally the owner of the electronic content. A museum is a licensor when it owns content that it is licensing to others. Other licensors include a photographer, periodical writer, database or journal publisher. Generally, the licensor owns the content and can legally allow others to use that content. In some situations, the licensor does not actually own the content but has acquired the rights from the appropriate owner in order to be able to license that content to others. Also, see below, the description of Content Owner.


A licensee is the person or entity who obtains permission to use the electronic content. For example, a licensee may be a museum, educational institution or library which licenses content from the licensor.

Content Owner

The content owner is the person or entity that created the content being licensed, or has acquired the ownership of the content from the actual creator of it. A content owner is sometimes referred to as a content provider.

When licensing content from a publisher, aggregator or vendor who does not own the rights in the content, you want a guarantee that they actually have the rights to license you the content. This should be carefully set out in the warranty and indemnity sections of your licence, as discussed in Chapter 5. Likewise, when your museum licenses content that you do not own, you may have to provide certain warranties (usually coupled with an indemnity) to your licensees, that you actually have the right to license the content to them.


An end-user may be a researcher or a member of the public who has access to licensed content but did not in fact sign a licence agreement. For example, Museum X signs a licence with Publisher Z. End-user Steve has access to the content as a patron of Museum X, but is not directly subject to Publisher Z because he did not sign the licensing agreement. Also, see the definition of Privity of Contract below. An end-user may also be called a sub-licensee or an authorized user.


The rights granted in a licence may be exclusive or non-exclusive. Exclusive means that the content owner may only grant a licence to use the content to one party at any given time.

Non-exclusive means that the owner may grant more than one organization the right to use the same material at the same time. For example, Museum X may grant the right to use its content to Library A, DVD Producer B and Corporation C, all at the same time. Most digital licences entered into by museums are on a non-exclusive basis; this allows the content owner (which is sometimes the museum) to simultaneously license the same content to many others at the same time, and hopefully economically profit from doing it.


Rights are the uses permitted under the licence. For example, this may include the right to post on a Web site a poster, print a copy of an electronic article, or the right to access a database. Rights are defined by your licence agreement, and may even include such things as the right to post an image on flickr or on your museum’s blog.

In copyright law parlance, there are economic rights such as those listed above which allow a copyright owner to control his work and also financially benefit from it, and there are moral rights which protect the reputation of a creator (and not necessarily the owner) of a work.

Moral Rights

Moral rights under Canadian copyright law ensure that an author has his name on his work, and that he can use a pseudonym or remain anonymous. Moral rights also protect the integrity of an author’s work. An author’s right to the integrity of a work is infringed if the work is, to the prejudice of the honour or reputation of the author, distorted, mutilated or otherwise modified. A court held a moral rights infringement against the Toronto Eaton Centre when it tied decorative red Christmas ribbons around the necks of the sixty geese in Michael Snow’s sculpture Flight Stop. In today’s world, the right of integrity may be infringed by digitally manipulating an image.

A third moral right is the right of association. An author has the right to prevent anyone else from using his work “in association with a product, service, cause or institution.” This right is subject to the distortion, mutilation or other modification being prejudicial to the honour or reputation of the author – a matter of fact to be decided in each situation. With the collaboration and sharing in online communities, it is possible that more authors enforce their right of association if their works are used in a manner that they feel hurts their reputation.

Unlike economic rights in the Canadian Copyright Act, moral rights cannot be assigned in a licence. However, authors in Canada may agree not to exercise their moral rights. Thus, the clause in Chapter 5 on moral rights relates to the issue of waiving some or all moral rights.

Fair Dealing and Exceptions

This book presumes that fair dealing or any exceptions from copyright law is not applicable to the use of the electronic content you want to license and therefore you need permission to use the content. However, you may still need to deal with fair dealing in your licence, as discussed in Chapter 5.

Clear rules do not exist for interpreting what use would constitute fair dealing. Thus, it has been a cause of frustration for many who attempt to apply it to their situation. Legislators intentionally left fair dealing ambiguous so it could be applied in a wide variety of situations. Ultimately, it would be up to a court of law to determine whether a use is considered fair.

The principle of “fair use” does not exist in Canadian copyright law. This is a U.S. concept and you should not confuse fair use with fair dealing (even though the two are somewhat comparable). When content is used in Canada, fair dealing may apply to that use. Fair use would only come into play when content is used in the U.S.

Exceptions from copyright law mean that you do not have to pay to use a copyright work and do not have to obtain permission to use it. Exceptions from copyright law specifically for museums exist in Canada and in other copyright laws around the world. Generally, these exceptions are for specific uses of copyright materials such as preservation copying. It is unlikely that an exception in a copyright statute would ever allow for the free use of an electronic database or electronic journal. Therefore, you would still need a licence to use electronic materials in your museum. Likewise, you should obtain a licence whenever someone wants to use content owned by your museum.

Privity of Contract

Privity of contract is a legal term for a licence only being valid between the parties who sign the agreement. For example, a licence is only valid between the museum and publisher who sign the licence, and a researcher (who does not work for the museum) is not subject to the licence. Therefore, if a researcher violates any terms and conditions in the licence, the publisher has no right in the licence agreement to sue him for violation of the licence. However, there may be rights under the applicable copyright statute. For instance, if the content is used in a manner that infringes the rights of the copyright holder, and the researcher does not have permission to use such content, then the publisher may sue for infringement of copyright, as opposed to violation of the licence itself.


A consortium is a group of licensees who join together to license a single or a multiple of electronic resources. There are also consortia of content owners. There are now hundreds and possibly thousands of consortia worldwide, primarily in the library world. Some consortia charge a fee for membership and other services, while others are free (though will charge for the actual cost of licensing the electronic resources.) Some consortia are for specific types of libraries while others are for a variety of libraries and would include government, public, academic, school and special libraries.

Consortia may, but do not necessarily, save money for licensing fees but can make the same amount of money go much further. They can also benefit their members in terms of saving time and legal costs for negotiating licences and in sharing negotiating expertise.

Each consortia is unique in terms of content it is licensing, structure, background and goals. Joining a consortium is a management decision and you want to ensure that you find the right one to meet your needs and goals. If you join a consortium, make sure it is licensing the content you need, has similar goals to your own, has a decision-making process that meets your needs, and has a strong lead negotiator.

Contractual Agreements

In order to enter into a digital licence agreement, you need to know the basic principles of contract law. A contract or agreement is a tool that clarifies a relationship between the parties, and a document to help you avoid future conflict and possible litigation by setting out the terms and conditions of your arrangements in advance. It is a listing of each party's responsibilities or promises with respect to the rights and obligations of each party. It is a document that you may return to from time-to-time to verify your original agreement, your rights and obligations, and the rights and obligations of the other party in the particular circumstances. It is also a useful tool for identifying all of the costs of a project and who is responsible for paying them. Contracts are enforceable in court, or alternatively through mediation or arbitration, if one party does live up to its obligations in the agreement.

What is a Contract?

For purposes of this book, a contract, licence and agreement are used interchangeably.

In legal terms, there is a contract when two or more persons or organizations, often referred to as "parties", agree to exchange something, physical or intangible/intellectual property or a promise of future performance.

Must the Contract be in Writing?

Contracts may be oral or in writing and they may be a distinct document or part of an invoice or purchase order. Oral agreements can be a problem because they rely on the memory and understanding of the parties involved. For example, if curator Shelley negotiates a licence agreement for a database, then leaves her job, how will the library ensure that they are using the database according to the terms and conditions of the licence Shelley negotiated on their behalf?

In addition, written agreements make the parties carefully think about the terms and conditions in the licence and to be specific about them. If you ever have to go to court or arbitration, a written agreement may result in less dispute about the clauses in the licence.

Some contracts must be in writing to be enforced. For example, the Canadian and U.S. copyright statutes require an assignment of copyright or exclusive licence to be in writing. General contract requirements vary from province to province and from state to state. For example, under the Ontario Consumer Protection Act, all consumer agreements must be in writing. A consumer agreement is defined as: “an agreement between a supplier and a consumer in which the supplier agrees to supply goods or services for payment.” Many U.S. states require that any contract for the sale of goods for $500 or more be in writing.

What is a Valid Contract?

When negotiating, drafting or reviewing a contract, keep in mind that a valid contract has the following three components:

  • an offer to do something or refrain from doing something (for example, to purchase a print book, license an online database or computer software, or commission someone to design a Web site);
  • acceptance of the offer; and
  • consideration. Consideration is something which is of some value in the eyes of the law. Money is one example of consideration; a promise to supply goods or to perform services is another kind of consideration.

Common Clauses

Any terms and conditions to which the parties agree, may be included in the contract, provided they do not contravene any specific laws.

A contract should state the legal names and addresses of the parties who are subject to it. The contract should state the purpose of the contract (e.g. to license an online periodical or database), and the rights and obligations of each party. For example, the publisher will publish an online periodical that the museum will license for a two year period.

Key clauses to include in a licence agreement are set out in detail in Chapter 5.

Further, the contract may have a number of general or boiler plate provisions relating to such things as arbitration, applicable law, bankruptcy, etc., which are discussed in Chapter 6.

The agreement should be signed by all parties to it. If contracting with a corporation, the signature should be of an authorized corporate officer. That officer's name, title and the name of the corporation should be stated. It is also advisable to place the corporate seal on the agreement.

Although oral contracts may be legally binding in certain circumstances and in certain jurisdictions, this is not universally true, plus oral contracts are hard to prove as they are usually one person's word against another's. Written agreements are always advisable.

Before signing a contract, review the wording of your contract with great care to ensure that it means only what you think and intend it to mean. Ask the other party for any clarifications, and where feasible, consider consulting a copyright lawyer before signing on the dotted line.


The DMCA is an acronym for the U.S. piece of legislation called the Digital Millennium Copyright Act. This Act became effective on . Title I of the DMCA creates significant new remedies against the unauthorized circumvention of technological protection measures used to control access to, and protect exclusive rights in, copyright protected works. It also prohibits deliberate tampering with copyright management information. Title II clarifies the potential liability of Internet service providers (ISPs) for certain copyright infringements by their customers and others. Title IV permits libraries and archives to make digital copies of works for preservation purposes, and amends the ephemeral copy arrangements for the transmission of sound recordings under the U.S. Digital Performance Right in Sound Recordings Act of 1995. For further information, see

The DMCA is a U.S. law enacted in part to comply with the two WIPO digital copyright treaties. At the time of writing, many countries were in the process of amending their domestic copyright laws to comply with the WIPO treaties. All countries that join the treaties will therefore share the same minimum copyright protections for digital works and provide national treatment to other member countries.

Canada has no equivalent piece of legislation to the DMCA, and the types of provisions covered by the DMCA do not exist under Canadian copyright law. The Canadian copyright law is revised on an ongoing, as-needed basis. Circumvention of technological measures as well as tampering with copyright management information are issues in the revision process. It is important to stay updated on copyright reform proposals and amendments. For updates, visit:

International Issues

Licensing digital content by its very nature implies global licensing. This is because the content, for the most part, may be accessed from anywhere in the world, be it the physical premises of your museum or a computer on the other side of the globe. Also, museums license the content of others from within Canada and from around the world. As such, there are a number of global copyright and licensing issues of which you should be aware.

Governing Law

If you are licensing content with a non-Canadian content owner, you must first determine what laws apply to the licence agreement. For example, if your museum is in Nova Scotia and you are licensing content from a graphic artist or database publisher in Montana, should the laws of Montana and the U.S. or the laws of Nova Scotia and Canada apply to your agreement in the event of a dispute?

When negotiating a licence agreement with a content provider in another jurisdiction – whether in another state, province or country – you will need to determine, discuss and possibly negotiate which laws apply to the agreement. In the event of a dispute, it will then be clear to both parties which laws apply to resolve the dispute. You probably prefer to have the laws of your own jurisdiction to apply to the agreement, as they are likely more familiar to you. This is discussed in Governing Law”. In short, there are three areas of your licence where jurisdiction may be specifically named. This may be in relation to

  • the jurisdiction of law for the interpretation of the licence,
  • the jurisdiction of the court for submitting a claim against the other party,
  • the actual place of litigation (or in-person negotiation or arbitration).

International Treaties

Notwithstanding what the agreement states with your content provider, you also want to be aware of copyright law in countries where the licensed content might be accessed. It is possible that the laws of those countries may apply to the use of the licensed content. For example, disputes arising from your licence agreement will most likely be settled according to the laws of the country set out in the licence. However, if there are issues of non-authorized use by third parties, then you have to turn to copyright laws, as opposed to the licence, to resolve these issues. This is because the licence only governs the parties who sign the license and therefore not necessarily all persons who may have access to the licensed content.

So how does international copyright law work if the licence does not govern the use of the content? International copyright protection does not exist in any formal manner. Instead, each country has its own copyright laws. Although international copyright law does not exist per se, there are a number of international treaties that will help you understand how this area of the law works.

The leading international copyright treaty is the Berne Convention. It provides a minimum level of copyright protection. This level of protection is incorporated into the domestic laws of those countries that have joined these conventions. These treaties rely on the concept of national treatment. This means that each country that has signed the treaty has to provide authors from other signatory countries the same copyright treatment that it provides to its own citizens. For example, since both Canada and Australia are both signatories, Canadian authors will receive the same protection for their works in Australia as Australian authors would. The U.S. is also a signatory to both conventions. A list of member countries of the Berne Convention, is found at (locate the Berne Convention, then search for contracting parties to the Convention.)

Two new treaties were developed and drafted in 1996 under the auspices of the World Intellectual Property Organization (WIPO), the WIPO Copyright Treaty and the WIPO Performances and Phonograms Treaty. These treaties are designed to protect the rights of authors whose works are used on the Internet and in other types of new technologies. As of March 1, 2010, 88 countries are members to the Copyright Treaty. As of March 1, 2010, 86 countries are members to the Performances and Phonograms Treaty. Canada does not belong to either of these new treaties, however a high priority copyright issue of the Canadian government is to amend Canada's copyright laws so it can join these two treaties. For further information on Canada's position vis-à-vis these two treaties, see:

When licensing digital content with a party from another country, it is a good idea to determine what treaties are binding on your country, and those that are binding on the country of the other party. This will give a good indication of the level of copyright protection afforded to digital content outside the protection of the agreement.

Other Global Issues

Global licensing also involves negotiations and inclusion in your licences of currency of the copyright payments or license fees. You may also need to examine applicable taxes – under what circumstances, if any, must a non-Canadian organization or individual charge or pay the provincial sales tax (PST), the goods and services tax (GST) or the harmonized sales tax (HST)? Also, are there applicable taxes in the country of the other party that you may have to pay? As mentioned above, you may need to consider rights that may or may not exist in Canada but may exist in other countries. For example, moral rights for authors of copyright works are very strong in European Union countries and only exist minimally in the U.S. Canada has a "middle-of-the-ground" position on moral rights.

Another important aspect is your definition of territory, to which countries does the licence apply? Equally important is your definitions of such terms as authorized user, authorized site, and on-site use - these terms will help clarify whether a user may accessing your intranet from another country on a temporary basis (i.e., while travelling abroad), or through related companies, university campuses and/or libraries. These and other related issues are discussed in greater detail in the subsequent chapters.

Incorporating Language into your Strategy

As you journey into the world of digital licensing, you will come across many more concepts and terms than those discussed in this chapter. In fact, you will soon find that you have learned many new concepts, and perhaps developed a language of your own which relates to licensing digital content. Consider including these new concepts and terms and definitions into your Digital Licensing Agreement Strategy or as an appendix to it. This may help others in your museum better understand digital licensing. It may also help everyone in your museum more consistently apply your licensing policy and strategy to the various licensing situations you face.

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