Friday, March 24, 2023

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.  



Tuesday, February 28, 2023

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.

Monday, January 30, 2023

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.