What is Licensing?
If you are unfamiliar with the concept of merchandise licensing, the following brief outline may assist.
Copyrights is a merchandise licensing agency and we represent, as agent, companies and individuals who own intellectual property rights such as copyrights and trademarks. On behalf of these owners we approach manufacturers around the world and promote the idea that they feature our clients' copyrights and trademarks on their products. For details of the properties we represent please see the Portfolio section of this site.
If a manufacturer agrees that one of our properties could be successfully used on their product range, then we will enter into a licence agreement with that manufacturer, granting them the necessary licence to utilise the copyrights and trademarks on their product. The licence agreement will normally contain the following terms and conditions:
1. Period of Licence: The licence will normally be granted for a two or three year period depending on the nature and life cycle of the product. It will then be renewable by mutual agreement between Copyrights and the manufacturer.
2. Territory: The licence will permit the manufacturer to sell the licensed products in a particular territory. Within the European Union all licensees automatically have the right to fulfil orders received from other countries within the European Union. Licensees sometimes ask us why they cannot sell freely overseas. That is because we seek to maximise the royalty income due to our client by licensing on a territory by territory basis, and there may therefore already be licensees in overseas territories which have been granted exclusive rights to a particular product category.
3. Royalty Rate: Manufacturers will pay to us a royalty calculated upon their net sales of the licensed product. Net sales mean the gross value of all sales made, less returns and quantity-based trade discounts that the manufacturer may give its customers. The royalty rate will vary from market to market and from product category to product category.
4. Advance and Guarantee: Licences normally provide for payment of an advance sum upon signature of the licence agreement which is on account of the royalties that the manufacturer will pay during the period of the licence. A licence will also normally provide for a minimum guarantee of the amount of the royalty that the manufacturer must pay over the term of the licence agreement. This guarantee will be negotiated bearing in mind the anticipated and forecast level of sales of the licensed product by the manufacturer.
5. Accounting: Royalties are normally accounted quarterly 30 days after the end March, June, September and December. A royalty return must be sent to Copyrights which lists the sales of each product within a licensed range of products and the amount of net sales upon which the royalty is then calculated. The licence agreement also provides that Copyrights has the right to inspect the books and records of account in order to verify the accuracy of the royalty report.
6. Product Development: At the commencement of the manufacturer’s product development, Copyrights will provide a style guide relating to the property or other art reference and reproduction material that is necessary to enable the manufacturer to design their range of product featuring the character or art that has been licensed. Copyrights' art and approvals departments are available to assist in selecting the most popular or suitable pictures for a product range. To ensure that the licensed product produced by the manufacturer properly reflects the quality and spirit of the property that has been licensed, the manufacturer must submit the designs of their product range for the approval of Copyrights and the owner of the property at three stages:
a. Initial concepts – we like to see initial outline concepts for a range to make sure that the manufacturer is on the right track. Any mistakes or art that may have been overlooked can easily be corrected or taken into account at this stage and will minimise later disruption to the manufacturing process.
b. Finished artwork – when the concepts have fully been worked up into finished artwork ready for production, they will be reviewed for quality of art and for inclusion of trademark and copyright notices.
c. Pre-production or Proof samples – Copyrights will review these to ensure that colour and other reproduction is faithful to the art.
At each stage of the approval process we attempt to turn submissions round with a minimum of delay to the manufacturer. Our normal processing time for an approval is less than five days from receipt of materials.
7. Marketing: Copyrights assists manufacturers with the marketing and sale of their licensed product. We undertake regular meetings with major retailers and will inform them of new products coming onto the market and encourage them to purchase these. We produce both printed and email newsletters providing information on new product launches, and will put licensees in touch with one another in order to develop joint presentations to retailers and assist with displays at retail.
8. Expiry of Licence: At the end of the licence period, if the licence is not mutually renewed then it will expire, and the manufacturer will have a period of 90 days within which to sell any remaining stock of the licensed product. There are restrictions about selling such stock at discount prices, or in other ways that might harm the image of the licensed property.
Copyrights is the point of contact for all aspects of the licensing relationship as outlined above. On behalf of our clients who are the copyright and trademark owners we will monitor all aspects of the licence agreement and arrange to collect all payments due under the agreement. For the services provided, we charge our clients a commission calculated upon all royalties, advances and guarantees.
If you are a copyright or trademark owner, and would like further information on the services that Copyrights provides please contact Nicholas Durbridge, CEO.