Understanding Your Copyright License Agreement

When you own a copyrighted work, such as a book, article, play, or song, you have the right to decide if and how anyone else can use it. Giving permission to do so is called granting a license, which is a written contract giving the user authorization to use the work, usually in exchange for payment.

Types of copyright licenses

A copyright license can be nonexclusive or exclusive, also known as limited and unlimited, respectively. When an exclusive license is given, the licensee, or person receiving authorization, is the only entity with the right to use the copyrighted work for the length of the licensing agreement. With a nonexclusive license, other people or companies could also be authorized to use the work at the same time.

Another kind of copyright license applies only to open-source software, or a computer program that allows anyone to use, modify, or distribute the software. An example of an open-source program is the web browser Mozilla Firefox, which allows contributors to add new software features through plugins and code changes.

Copyright license agreement

A copyright license agreement outlines the entire licensing contract made between the copyright owner and the licensee. The license should include the following provisions:

• The names of the parties and the name and description of the work being licensed
• A statement of ownership acknowledging who holds the copyright
• Effective dates of the agreement
• The geographic areas where the license applies, such as in the United States or worldwide
• Whether the licensee can license third parties to use the work (a process known as subsidiary licensing)
• The amount, schedule, and type of payments to be paid to the owner of the copyright and whether minimum sales are required to trigger payment
• Whether the license is exclusive or nonexclusive
• How the licensee may use the work and any restrictions or qualifications that are to be applied
• Nondisclosure agreement, which prohibits either side from disclosing trade secrets
• Noncompete agreement, which might restrict the copyright owner from selling another work that would directly compete with the work being licensed
• When and how the agreement can be terminated

It's a good idea for a copyright owner to register a copyright before entering into a license agreement.

Royalty fees vs. copyright fees

Many license agreements include information about royalties, or a percentage of the income earned from the use of a copyrighted work. For example, an author gives a publisher a license to publish, distribute, and sell her book in exchange for regular royalties, calculated as a percent of the total sales.

Note that a royalty fee is not the same as a copyright fee. The latter is the price someone pays to buy a copyright license from the creator of the work.

A copyright license is important because it is the complete agreement that gives a licensee the right to use a work. It's important that the license be detailed and accurate so that all parties have their rights fully protected and spelled out. To create a copyright license, you can work with an attorney or use a copyright license agreement template.