As I walked through the aisles of Toys R Us, surrounded by an endless supply of Nickelodeon and Disney Junior toys, puzzles, costumes, and more, all I could think about was merchandising clauses. In particular, I thought about how to ensure that the creator’s and producer’s rights don’t overlap in order that a producer’s investment in his or her property is protected.
Merchandising rights generally fall under the broad definition of ancillary rights, which are a film or TV property’s supplemental rights – separate from the primary right to exhibit or reproduce the film or TV show.
Merchandising rights are frequently defined in an agreement as “so-called ‘merchandising’ rights as the term is used in the film and TV industry.” It might be further defined as including the manufacture and sale, or other exploitation of apparel, posters, games, toys, etc. based on the property. If merchandising rights are to be shared with, for example, the original work’s author, or your co-producer, distributor, or broadcaster, be clear and specific in the agreement as opposed to relying on a broad definition.
If you’re a producer optioning, for example, a comic book from an author (click here for our blog about option agreements), you generally need to obtain rights in and to the property, necessary to develop, produce and commercially exploit a series of animated episodes and its ancillary products – from merchandising to future seasons.
If the author retains rights (called reserved rights) in the merchandising of the original book, and you, the producer, are granted merchandising rights for the TV series based on the book, there is a high risk of conflict and overlap. At the core, the merchandising rights provided to you and the author are based on the same elements – characters, setting, themes, stories, etc.
To ensure your investment is protected, from the fees paid to the author to the funds allotted to promotion, ensuring there’s interest for merchandise from audiences, you should have exclusive control of all merchandise based on the book and the audio-visual property; the film or TV show. If you’re producing t-shirts and backpacks featuring characters in your show, it will hurt your sales and generally cause confusion among retailers if the book’s author is also selling merchandise featuring the same characters.
Therefore, before spending resources on a project based on existing material, ensure that all the rights you need are granted, and that the rights granted don’t overlap with the author’s reserved rights.
Solutions are situation specific but may include a compensation formula for all parties, with control held by one party, ideally by you as producer.
If you never walk into a Toys R Us the same way again, I apologize. If you look at merchandising clauses with a new perspective, mission accomplished.
Edwards PC, Creative Law is a boutique law firm provides legal services to Music, Film, Animation, TV, Digital Media, Game, Software and Publishing industry clients. For more information and blogs, please visit www.edwardslaw.ca
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* This blog is for general informational purposes only and is not to be construed as legal advice. Please contact Edwards PC, Creative Law or another lawyer, if you wish to apply these concepts to your specific circumstances.