Who owns the copyright in A.I.-generated works?

 

A.I.-generated works have been in the news for some time, and they are currently generating a lot of interest—both positive and negative. There are a lot of complicated issues with A.I.-generated works, and I am not going to discuss them all here at the moment, partially because the law is still evolving around them. However, there is one topic I briefly want to discuss: authorship and copyright protection.

In most instances, ownership of a copyrighted work initially belongs to the author of the work, and it is the owner of the copyright who can enforce those rights against others. If a work is not eligible for copyright protection, such as if it lacks creativity, is functional, or is in the public domain, then there is no copyright, and others cannot be prevented from using the work via copyright law.  

                In my opinion, one of the biggest issues that will determine how A.I.-generated works will impact creators is if copyright protection applies to these works. If an A.I.-generated work cannot be protected by copyright, then it will lack value for many companies. Without copyright protection, it would be incredibly difficult, if not impossible, to protect the work from use by others.

                When asked about this previously, my response has been that, based on the law as it stands, A.I.-generated works are not protected by copyright. Recently, the Copyright Office has issued two notices that provide further insight into how A.I.-generated works will be viewed.

                In the first memo, the Copyright Office clarified how copyright ownership would be applied to a graphic novel, Zarya of the Dawn, created using images from Midjourney.[1] The Copyright Office stated that Kristina Kashtanova would receive copyright protection in the text she wrote and the “selection, coordination, and arrangement of the Work’s written and visual elements.” The images generated by Midjourney, however, would not be protected by copyright because they were not created by a human. Essentially, Kashtanova owns the rights to the text and the overall appearance of the graphic novel, but not to the underlying images.

                In the second, the Copyright Office is proposing how it would treat applications for copyright protection of works created using A.I. The Copyright Office has stated that the determination of copyright protection will vary on a case-by-case basis. However, works generated purely by A.I. without addition or revision by a human author will not be entitled to copyright protection, and for works where a human author has used A.I.-generated work to create something else, the human author would receive copyright protection for the “human-authored aspects of the work…” or for the entire work if it is sufficiently creative enough to constitute “an original work of authorship.”[2]

                These two pieces appear to be in line with the current state of U.S. copyright law. A copyrighted work must be created by a human, but the amount of creativity needed to obtain a thin amount of copyright protection can be minimal. For instance, I can take a selection of public domain works, compile them into a book, and I would likely receive copyright protection for the book based upon the selection and arrangement of the works. Others are free to use the works independently, but using the same public domain works in the same arrangement as I selected could be a violation of my copyright.

                Fighting over authorship and copyright ownership is likely to be a major topic going forward. In order for A.I.-generated works to have true value, akin to traditionally human-authored works, then some form of copyright protection will be needed. The current state of the law affords A.I.-generated work minimal or no protection. The only way this will change is through litigation, and I find it hard to believe courts will diverge too far from the Copyright Office’s current interpretation of the law, or through lobbying to change the law.

                Personally, I would prefer a bright line rule of law prohibiting protection for A.I.-generated works. The primary reason for my view is because this technology will likely result in the loss of jobs for countless artists, writers, and other creatives. Second, I just don’t see the benefit of rewarding these types of works with copyright protection as they don’t really have artistic merit, and finally, because if A.I.-generated works are entitled to protection, the amount of litigation or threatened litigation that would ensue would be astronomical due to the ease with which A.I.-generated works are created and the amount of works that will be generated.

                Only time will tell how these issues will resolve, but I will be closely following the law as applied to A.I.-generated works very closely.  

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[1] https://copyright.gov/docs/zarya-of-the-dawn.pdf

[2] https://www.federalregister.gov/documents/2023/03/16/2023-05321/copyright-registration-guidance-works-containing-material-generated-by-artificial-intelligence

The Basics of Option Agreements - Part 4

 

Editor’s Note: This is part 4 on my series discussing option agreements. You can find parts 1, 2, and 3 at the links.

            In order to wrap up my series on option agreements, I want to discuss compensation other than the initial option fee and purchase price, and I want to briefly discuss shopping agreements.

When negotiating an option agreement, the initial focus will be on the option fee and the purchase price. These are important, but additional forms of compensation should be offered by the studios, and if not, then should be requested. If you are lucky enough to have a work that is optioned before it has been released, then you should request bonuses if the book is on any best seller lists or wins any awards. For a TV series, creators typically receive a royalty for each episode. It is also common to receive a bonus if the series is sold or runs for a set number of episodes. Creators also receive a small percentage of the overall minimum adjusted gross revenue of the work and a percentage of merchandise sales as well. These are just a few of the other forms of compensation creators can receive when a property is optioned and produced, and creators should make sure they are included.

Another form of compensation is consultant or producer roles. This tends to be a stickier point for studios than other forms of compensation, but creators should seek them out. As I mentioned in a previous post on executive producer credits, they can be prestigious, and they can be a nice source of additional income. Depending on your role, you can receive additional payments and bonuses based  on the success of the adaptation and contributions you provide.    

Finally, I want to briefly talk about shopping agreements. Shopping agreements are most often used when a third-party has interest in adapting your property and wants to see if they can drum up interest in it. If they are successful, then they will have the ability to either adapt the work or participate in the adaptation. Often, these will include a small fee, or no fee, paid to you. These are also typically shorter than option agreements. I tend to be wary of these types of agreements, particularly if there is no fee paid to the creator, but they can be useful in developing a project that might not have gone anywhere otherwise.

The ins-and-outs of option agreements and, to a lesser extent, shopping agreements, can be overwhelming. However, having a basic idea of what to expect, and knowing what you might want out of the deal, will go a long way toward making the process easier for you, and it will hopefully allow you find a deal that will satisfy you.

The Basics of Option Agreements - Part 3

 

Editor’s Note: This is part 3 on my series discussing option agreements. You can find part 1 and part 2 at the links.

                Previously in my series on option agreements, I discussed the basics of what an option entails, rudimentary numbers, and some of the intricacies around the rights being granted. This post will discuss termination and reversion. Simply put, termination is when the agreement ends or is terminated  and reversion is when the rights being granted revert back to you. Sometimes these terms may be used interchangeably, but there is a meaningful difference.

As I mentioned in my first post, an option is usually granted for 12-18 months with the ability to extend. This would be the Term of the agreement, and if the option is not exercised, the agreement would terminate. There may also be language allowing either party to terminate an agreement early if certain things occur, usually involving a breach of one of the party’s obligations.

A reversion is when rights that have been granted to a third party revert back to you, which would only occur if the option had been exercised which means the third party has acquired the rights to adapt your work. It is usually viewed differently than an early termination because no party is in breach of the agreement or has otherwise violated the agreement. Often, it means that time has run out to develop the work, or the work has stopped being exploited.

Key elements of a reversion are when it takes place, what is included and how much money is the third party entitled to for the reversion.

It is common for reversion to take place if development has not occurred within a set amount of time, or if production has not started on a project within two years from the exercise of the option. It can also revert if a pilot is produced but not picked up, and if a series was started and then cancelled.  

It is also important to address what is included. Sometimes it is a complete reversion, and you now own everything the studio worked on. Sometimes, it is just a reversion of underlying rights, and the materials the studio developed will be frozen, with neither party able to use them. This latter part is more common with developmental materials if the option is not exercised than if it is. However, it’s still important to be aware of it.

If the property is subject to reversion, then it is common for the third party who exercised the option to request to be repaid all money it has spent on the property plus interest, a royalty payment, and a future percentage of backend. This can vary depending on who is requesting it, but you will see it in most option agreements. The figure can also vary depending on how much time has passed.

My next post will wrap up this series and will address other types of consideration and a brief mention of shopping agreements.

Aftershock filed bankruptcy. What now?

 

NOTE: I do not generally practice bankruptcy law, and, as stated elsewhere on this blog, the below does not constitute legal advice or create an attorney-client relationship. Consult with your attorney to address your specific legal needs.               

The news recently broke that Aftershock Comics filed for chapter 11 bankruptcy. Contrary to the opinion of many, this does not mean that Aftershock Comics will be immediately going out of business. Chapter 11 bankruptcy is primarily used by businesses to hold off creditors, reorganize their debt, and continue operating. That is the intent, anyways. If it is unsuccessful, then the company may end up selling off its assets to pay back creditors or otherwise be dissolved.

Unfortunately, the bankruptcy process can take some time to complete. Those who are owed, or likely to be owed, money (the creditors) should be receiving official documents regarding the bankruptcy and relevant deadlines. Once received, creditors should review them carefully.

In addition to being lengthy, the bankruptcy process can also be incredibly frustrating. There are going to be things that will seem unfair and anger many. For instance, now that Aftershock has filed for bankruptcy, they cannot assign property in exchange for waiving debt without the court’s permission, and creditors cannot knowingly harass the company for payment. Some people who have recently received payments may be asked to return them. There is also the possibility that some people may be required to continue working with the company even though they haven’t been paid. Finally, even though someone might be owed money, there is still a strong chance that they will (i) receive less than what they are owed or (ii) receive nothing at all.

There are likely to be a lot of twists and turns to this, and every creditor will have to decide how involved they want to be. Some questions to ask are:

1)      Do you want to just follow along with the process and see what happens?

2)      If eligible, do you want to be actively involved and try to influence and shape the reorganization process?

3)      How much time and money do you want to spend on this? Is it worth it versus what is owed?

While we wait for more information, if you think you are owed money, make sure you are listed as a creditor. If you are listed, then verify that the listed information is accurate. If you are not listed, then you will need to file a claim before the relevant deadlines. Now is also a good time to review your contract and gather all relevant information and evidence regarding any claims you may have against Aftershock.  Finally, it may make sense to consult with an attorney to evaluate your options.

The Basics of Option Agreements - Part 2

 Editor’s Note: This is part 2 on my series discussing option agreements. You can find part 1 here.

If you are approached about having a work optioned, the first thing you need to understand is if you have the rights to grant the option. Who else may have an interest in the rights to your work and will need to be consulted? Do you have to involve any of your co-creators? If you did not do all of the work yourself, or you did not acquire all of the rights for yourself, then you will need to involve them. Do you have an agent? Do they have the right to negotiate media deals on your behalf? If they do, you’ll need to get them involved. Also, do you still have the right to negotiate or grant the option? You will have to review your publishing agreement. Some publishers leave media rights with the creators. Some publishers merely want a cut of any option money you receive. Some want to negotiate it on your behalf and have the contractual right to do so. Worse yet, some have acquired the rights to negotiate and dispose of it without your involvement. You’ll need to see who else you need to involve and what rights you currently have.

When optioning a work, it is important to specify what is being included in the option. It is important to clarify if it just includes the main comic book or a specific series, or if it also includes any future works developed relating to the main comic book. Ideally, as a creator, you want to limit it as much as possible, as it gives you more opportunities to exploit the work and profit from it. However, most studios will want the right to incorporate or develop direct sequels into media adaptations. It is important to make sure it is addressed, and if needed, the compensation adjusted to account for the inclusion of additional works.

                The next key element of an option is what rights are being granted. For most production houses and studios, they want the right to almost everything. They will usually want film and TV rights, theatrical, radio, publishing, etc. Sometimes, however, a third party may only be interested in acquiring the rights for one thing, such as film or theatrical. Usually this is done because it is often cheaper to acquire limited rights, and the third party may not have the ability to exploit a full set of rights.

When granting rights in an option, anything you are able to reserve might be able to be licensed later on for additional money. These are called reserved rights. If possible, you should try and retain theatrical, radio/podcast, or games/video game rights. Another lucrative right is merchandising. Most studios will want the right to make and sell merchandise, and you will usually receive a separate royalty for these goods. Sometimes, you may be able to retain some limited merchandising rights to create goods based upon the original work (think goods based on a comic versus goods based on the movie).  This is something creators should push for, as it gives you an extra revenue stream. Every situation and studio is different.  With very few exceptions, creators should almost always retain publishing rights.

When dealing with the distribution and acquisition of rights, it is also common for studios to request that certain rights are frozen or subject to a right of first negotiation/refusal. If rights are frozen, then that means that one or both parties cannot exploit the rights, typically for a set amount of time, without the other party’s permission. If any reserved rights are subject to a right of first negotiation, rights of last refusal, or something similar, it means the party optioning the rights has the ability to negotiate for any rights it has not previously acquired. 

            Next time, I will discuss reversion and termination.

Comic Book Recommendations - 2022

             It’s the end of another year, and it’s time to recommend some of the comic books I read this year. As I mentioned in 2020 and 2021, I tend to focus on creator-owned titles, these will mostly be graphic novels/trade paperbacks, and they may not all have been released this year.

            As always, I’ve provided links where I can. Links to Amazon will be affiliate links. Anywhere else is not. Even so, if you’re intrigued by these books, try to buy them from your local comic shop or book store. 

Touching Evil, vol. 3, by Dan Dougherty

I’ve been a fan of this series for years, and I believe it to be one of the more unique ideas in horror comics in a while. A satisfying end to the series, but here’s to hoping for more in the future.

 You can buy it here.

Wasted Space,  vols. 4 & 5, by Michael Moreci and Hayden Sherman

This series wrapped up its run this year, and you should be able to find a collected edition. Moreci seemed to have a lot on his mind during the course of the series, and he used it to explore topics of politics, religion, creation, and destiny. Sherman’s gritty and dynamic artwork helped bring this world to life.

 

Maggie the Mechanic: A Love and Rockets Book, Jamie Hernandez

Remember when I said I am sometimes woefully behind on comics? This is a prime example. These books have been around for 40 years, and this is the first time I’ve read a Love and Rockets book. Great art, interesting and entertaining story. Even though comics have been diversifying for some time, there’s still not much on the stands that looks and reads like this.

 

The Many Deaths of Laila Starr, by Ram V and Filipe Andrade

This is a book that will stay with you. It’s a fascinating exploration of life and death and destiny, and the art from Andrade is perfect for the story being told.  

 

Money Shot , vol. 2, by Tim Seeley, Sarah Beattie, and Rebekah Issacs

Volumes one and two of this very-much NSFW comic are incredibly entertaining if you don’t mind your entertainment being more risqué. If that’s you, definitely consider checking out.

 

Previous volumes of the books below have appeared on other years’ lists, but I felt like they deserved a follow up.

 

Something is Killing the Children, vol. 4

This volume starts a new arc for the series, and it continues to be superb. This series was definitely one of my favorites of the past few years, and I look forward to wear it goes.

 

The Good Asian, vol. 2

There were only two volumes to this book, and both are fantastic noir. You’re missing out if you don’t read the whole story set in San Francisco’s Chinatown in the early 1900s.

The Basics of Option Agreements - Part 1

                I recently did a presentation on option agreements for literary works, and, while I’ve mentioned them here before, I haven’t given much explanation as to what they are and what’s involved in them. So, it seems like a good time to give a brief primer on option agreements.

                At its core, an option agreement is an agreement that gives the Purchaser the right to buy the media rights to the seller’s comic book for a set amount – the purchase price. The reason it’s called an option is because often the Purchaser does not immediately purchase the rights to the comic book. They pay the seller a fee to reserve the exclusive right (the option) to purchase the comic book for a set period of time. Once that set period of time has ended, they must either (a) pay the purchase price to acquire the rights to the book, (b) pay an additional fee to extend the time to pay, or (c) allow the agreement to end and the seller can shop the media rights to the comic book to others.

                In general, the option period typically lasts between 12-18 months. The amount of the option fee can vary, but it often is equal to ten percent (10%) of the purchase price. If the purchaser exercises the option, the initial option fee is customarily included in the purchase price. For example, if the purchase price was $200,000 and the initial option fee was $20,000, then the amount paid by the purchaser when exercising the option would be $180,000. The fee paid to extend the option period, which is often for the same amount of money (or higher) and the same amount of time, is customarily not allowed to set off from the purchase price.

                Next time, I will discuss some of the key things you need to be aware of when negotiating an option.