In the middle of the last decade, you would have probably heard the general public speak with awe about the potential of the web to change almost every facet of our lives. Now that the decade is drawing to a close, that same awe has turned into fear. The rapid pace of change in the information technology sphere has left ordinary citizens uneasy about what the future might hold.
The widespread fear is justified. While the world of technology has undoubtedly benefited humankind, it has also created significant challenges. One of the more prominent of these is the problem of online cash flow. Namely, even though you may have a PayPal account, you may not have a steady stream of easy earnings flowing into it. Or, if you do, it may not be enough to cover your monthly expenses. Or, if it is, then it won’t be accessible to you unless you spend a considerable amount of time working at it. Alternatively, you could find yourself overwhelmed by the number of online payment processors into which you must enter the details of each and every transaction. That is a staggering amount of effort for a rather small income. It’s just too much pressure for a small business owner who is already stretched thin by the demands of day-to-day operations.
For these and other reasons, many entrepreneurs have decided to opt for a different route. Namely, they have chosen to forego the convenience of online cash flow in favor of a slower but more reliable way to make money – resale rights.
What Are Resale Rights?
Resale rights are the copyright and trademark protection associated with an artwork, photograph, or computer program. In plain English, they give the original creator of a product the exclusive right to sell the product (or derivative works thereof) themselves. For example, if you create a photograph and register it with the Copyright Office, you have given the photographer the exclusive right to sell their photographs to advertisers or anyone else for that matter.
In contrast, you retain the right to use the copyrighted work for your own personal or business purposes. For instance, you could decide to use the photograph for online banner placement or to sell prints of the photograph at art galleries or museums. In both cases, you would be acting as a broker, merely facilitating the sale of the copyrighted work.
The Federalist Papers refer to resale rights as “the marriage of convenience” because it combines the benefits of a partnership – combined effort, limited liability, and shared profits – with the safeguards of a sole trader – lack of partnership obligations, and the ability to operate without the usual restrictions imposed by a business corporation. Although these two distinct types of entities (a corporation and a partnership) are governed by different sets of legal rules, they are often found to operate in parallel, especially when it comes to resale rights. As a result, even small businesses have the benefit of limited liability protection because they can limit their personal exposure by using a sole proprietorship (a business owned by one person) or a limited liability company (a business formed by one or more individuals who are personally liable for the debts of the company but who are protected from personal liability up to a certain amount of money).
The Advantages of Resale Rights
The advantages of resale rights are myriad. To begin with, they provide a method for establishing and maintaining a source of income in the event that the project you are working on falls short of expectations. In that case, you can always look to your portfolio of registered works and sell the rights to any of them. This is often a preferable option to someone who is concerned about sudden stops in the cash flow stream. Since you are not personally liable for the debts of your company, you can establish and maintain a business account without the worry of running out of funds. Furthermore, the income generated by resale rights provides you with a steady source of cash to fund future projects. In many instances, it is easier to register resale rights than it is to establish a traditional business entity.
How Do I Get Resale Rights?
Depending on the size and resources of your business, you will determine how you intend to go about getting resale rights. If you are just getting started, you may wish to opt for a simple and straightforward approach. Namely, you could contact the copyright owners of any of the works you have created and ask them if they would be interested in the asset (copyright/trademark) for compensation.
If you created the work yourself, you have the option of applying for a utility or residual patent. A utility patent provides the inventor with the right to exclude others from making, using, selling, or offering for sale the invention you have invented. Residual patents are similar to utility patents, except that they allow you to continue to sell or license your invention to others rather than requiring them to pay you for the right to use your invention. Residual patents are acquired in much the same way that utility patents are – by applying for a trademark registration coupled with an invention registration.
The Requirements To Get Resale Rights
To qualify for resale rights, your work must meet all of the following criteria:
- it must be a work of authorship;
- it must be original material that you have created;
- it must be a fixed, tangible product;
- it must exist in a form that can be registered; and
- it must be the kind of work for which you can obtain copyright or trademark protection.
The Timing And Procedure To Register Resale Rights
It’s important to note that you have to register your resale rights within three months of its accrual. Furthermore, you must do so in either the United States Copyright Office or the United States Patent and Trademark Office (USPTO). If you fail to do so, you lose the right to use the work for any purpose whatsoever. In that case, you will need to start over again with a new project.
Ideally, you should take the time to register your work now. Waiting until later to do so can mean losing out on potentially lucrative opportunities. Furthermore, you must register each project individually, so be sure to file an application for each work you create, whether you intend to sell the rights to that work or not.
Make Sure You Have Everything You Need
Before you begin the registration process, it is a good idea to make sure you have everything you need. First and foremost, you will need the written consent of the owner of the rights you are trying to register. In the majority of cases, this will be the creative director or the publisher of the organization that owns the rights to the work you intend to register. Depending on the type of work, you may also need the permission of the composer, the lyricist, or the performer of the music.
In addition to the written consent of the rights owner, you will need a copy of the work in its original form. In the case of a photograph, you will also need a high-quality version that meets all of the following criteria:
- it must be a recent photograph;
- it must be in focus;
- it must be representative of the original vision; and
- it must be suitable for reproduction.
In the case of a musical composition, you will need a recording that accurately reflects the original work (see above for details).
The Benefits of Copyright And Trademark Registration
Once you have registered your resale rights, you can use the copyright and trademark registration to your advantage. By doing so, you put yourself in a better position to negotiate with potential buyers or sellers of the rights. Remember, you retain ownership of the work as you saw it at the time of registration. However, you also grant the company the right to use the work in the manner specified by you. In other words, you are giving the company the right to reproduce, distribute, and sell your work as long as they play by the rules you set forth. These rules can include determining how many copies to make, and at what price point. In the event that the company violates your rules, you have the right to terminate their use of the work and prevent them from making any more copies or selling any more of their products that utilize the work. In these cases, you would seek compensation in the form of a cash payment or a replacement work.