Memo: Licenses, Exclusive Licenses, and Copyright Ownership

Section 106 of the Copyright Act gives “the owner of copyright under this title . . . the exclusive rights to do and to authorize”a number of things: reproducing the copyrighted work in copies (§106(1)), creating “derivative works based upon the copyrighted work,”(§106(2)), etc.

Note the right “to authorize.” Copyright owners may authorize others to do the things that the statute gives them (the copyright owners) the exclusive right to do –the owner of copyright in a literary work can authorize someone (e.g., a publisher) to distribute copies of the work, the owner of copyright in a musical work can authorize someone (e.g., a record company) to reproduce the work and to distribute copies of the work to the public, and can authorize someone else (e.g., a radio station) to “perform the work publicly,”etc.

Conventionally, we call these authorizations “licenses”–permission to do something that would otherwise subject the licensee to liability (because it is within the copyright holder’s exclusive rights).

Licensing is a critical feature of all of the copyright industries. It is sometimes easy to forget, because we focus so much on litigation and the copyright owner’s causes of action, that thousands and hundreds of thousands of licenses are executed every day (while litigation is a relatively infrequent occurrence). In many ways, licensing is the “point”of the whole copyright system –the way that copyright enables authors to receive compensation for their creative efforts and thereby “promotes the progress of Science.”.

Two important points to notice. First, defendants in infringement actions will often raise an authorization/license defense: Yes, the defendant may say, copyright subsists in the work, and you own the copyright, and I publicly displayed it in apparent violation of your rights under §106(5) –but you (or someone else who was the copyright owner at the time) authorized me to do that.

Second, authorization (a “license”) from the copyright holder is not the same as ownership of the copyright. This is a critical distinction that can be quite confusing, though it is also central to copyright (and patent/trademark) law and practice. If I give you a license to distribute copies of my work, you don’t thereby “own”any part of the copyright. You have a right to do something that you wouldn’t be able to do absent the license (e.g., to distribute copies of my work), but you do not have an exclusive right – and owning an exclusive right to do something is what it means to “own the copyright.”

[This is precisely equivalent to the “ownership”of real property. When the movie theater gives you a “license”to enter onto its property (which would, absent the license, constitute a violation of the theater’s rights [“trespass”]), you don’t, obviously, own the movie theater property or any part of it.)

Things get a little more complicated because the copyright owner, sometimes, grants third parties an “exclusive license.” If I grant you an exclusive license to distribute copies of my work, you now have what I used to have under §106(3) –the exclusive right to distribute copies of the copyrighted work. You have become, in effect, the owner of copyright –not the entire copyright (I still have the exclusive right to reproduce the work, to create derivative works based upon it, etc.), but one piece of the copyright.

This is reflected in the Copyright Act, and has very important implications for copyright practice. We saw earlier that, under §204(a), a “transfer of copyright ownership not valid unless an instrument of conveyance, or a note or memorandum of the transfer, is in writing and signed by the owner of the rights conveyed or such owner's duly authorized agent.” “Transfer of copyright ownership,” in turn, is defined in §101 to mean

“an assignment, mortgage, exclusive license, or any other any conveyance, alienation, or hypothecation of a copyright or of any of the exclusive rights comprised in a copyright, whether or not it is limited in time or place of effect, but not including a nonexclusive license.”

Putting these sections together: A grant of an exclusive license is a transfer of ownership, and must be in writing and signed by the grantor; a grant of a nonexclusive license is not a transfer of ownership, and therefore it need not be in a signed writing. Or to put it differently –nonexclusive licenses can be granted orally, or implied from conduct; exclusive licenses cannot.