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What would you do next when you see "all rights convey to the licensee" in a contract...

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alliels | (Level 1) Honors

Posted April 1, 2013 at 4:37 AM via web

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What would you do next when you see "all rights convey to the licensee" in a contract negotiating the sale of your intellectual or other goods, and what are your reasons for doing so?

Scenario

You have created your first board game, registered your copyrights, and submitted the title of the game for trademark protection. You have also contacted several toy companies to see if they are interested in your game idea. After about two months, you receive a call from an executive from one of the companies, Mr. John Rubrik. You set up an appointment to meet with him and discuss your project over lunch.

Several days later, you meet Mr. Rubrik at his very impressive office. Mr. Rubrik-John as he's asked you to call him-is very nice. He gives you a full tour of the manufacturing plant, shows you some of the latest projects they are working on, and even gives you a few toys to take home for your daughter. After that, he drives you over to a very nice restaurant for a delicious meal.

Over lunch, John tells you that his company is very interested in your idea, that they think it will be a big success, and that they would like to license it from you. You are, of course, interested and begin negotiating.

As it turns out, John is really easy to negotiate with. He agrees with just about all of your conditions and offers a larger than expected advance on royalties with modest royalty payments after that. He even asks you if you think the playing pieces would look nicer in antiqued metal or cast glass.

By that afternoon, you have reached an agreement on every possible detail and shake on it. John says he will send a copy of the licensing agreement to you the next morning. As soon as you sign and return it, the company will issue a check for your advance.

Well, you are so excited that you barely sleep that night. At ten o'clock the next morning an overnight delivery package arrives at your door with the contract and a prepaid return envelope. There is a friendly note from John suggesting that you might consider a job with them and asking that you come to them with any new ideas first. Then, you take a look at the contract.

You read through it. It looks great. Everything is laid out as you discussed over lunch, the money and everything else, right down to the playing pieces being made of polished glass. Then you notice a single line toward the end of the contract that says, "all rights convey to the licensee." You think to yourself, "it's just some standard legal jargon" as you pick up your pen, but you hesitate before signing.

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Michelle Ossa | College Teacher | (Level 3) Educator Emeritus

Posted April 1, 2013 at 12:56 PM (Answer #1)

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The key phrase in this scenario is "all rights convey to the licensee". This is when any creator of any item must hire a copyright/trademark law attorney to go over the following:

  • roles
  • duties
  • expectations
  • responsibility
  • compensation

If the creator of the game is now an official employee of John Rubrick's company, then every single creation is not property of the company, and not necessarily the creator. This is when the lawyers will draw the distinction of who is who, placing the interests and the rights of the creator above those of John Rubrick.

Since no contract  has been signed, it means that nothing is official yet. Therefore, the game creator may want to consult with his lawyer exactly what will be his role as an employee at the Rubrick company, what duties are expected, what his boss wants him to do, and whether he will get paid like a regular employee or if he is also getting a commission for the sales of his particular creation.

Most importantly, who will the licensee be now that there is a chance to be an employee at Rubricks's? Is it now Rubrick, the company, or is the creator to keep his rights and get extra compensation for being the mastermind behind a great game? These are all aspects of trademark law that need to be spelled out and discussed because the game is intellectual property that deserves the same protection as any other creation or possession for every individual.

Refer to Carl Geffken's article "Protecting Your Intellectual Property: Understanding Your Rights Regarding Patents, Copyrights, and Trademarks Is Vital in Protecting Your Company's Offerings across the Globe" published in Global Cosmetic Industry (2004) for additional information.

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