中文版｜【蘭天律師專欄】IP開發多層次授權的眉角：原著、影視改編與衍生商品應用
“In recent years, IP development has become a prominent field in Taiwan’s cultural and creative industries, with industry leaders eagerly approaching and investments surging in. Amongst all, the motion picture industry is most proactive, and visual branding has also achieved remarkable results.
Lawyer Lan
However, a number of difficult disputes have arisen between the rights holders and the developers, and important legal issues are also joining the line. The author will introduce the business collaboration models that have emerged in response to IP development domestically and internationally, analyze the multi-level licensing structure, and explore practical and common issues such as attribution of copyright ownership in IP derivative works.”
In recent years, IP development has become a prominent field in Taiwan’s cultural and creative industries, with industry leaders eagerly approaching and investments surging in. Amongst all, the motion picture industry is most proactive, and visual branding has also achieved remarkable results. For example, the video game “Detention”(返校) produced and released by Red Candle Games (赤燭) in January 2017 was subsequently adapted into a novel (2017), a movie (2019), a TV drama (2020), and a real-life-experience exhibition (2020), becoming the best recent practice of IP development.
And thanks to the marketing strategies and online distribution, which are proven to thrivingly attract public attention, images have become the goldmine of global IP development. There are a lot of successful exmaples. Like the whole world is captivated by Pokémon through its comics, animation and AR games; Pili Fantasy launched its first-ever NFT digital collectibles of Su Huan-Jen (素還真, a famous character in Taiwan’s centuries-old puppet culture), and the steady increase in sales value of Disney cartoon characters. None of this can motivate the cultural and creative industries any less.
The process of IP development has given rise to many new creative works. It has shaped new market mechanisms and opened up new horizons and territories for the cultural and creative industries. However, a number of difficult disputes have arisen between the rights holders and the developers, and important legal issues are also standing in the line. The author will introduce the business collaboration models that have emerged in response to IP development domestically and internationally, analyze the multi-level licensing structure, and explore practical and common issues such as attribution of copyright ownership in IP derivative works. Furthermore, by analysing business collaboration models and contractual terms, the author would like to provide the most appropriate mechanism for combining IP development with business, art, and law.
Why IP Development?
“IP” refers to “Intellectual Property,” which includes images, literary works, original stories, scripts, characters (fictional characters/roles, artists, internet celebrities, KOL), songs, etc. Once further developed, these items can be adapted into stage plays, musicals, dances, TV dramas, movies, web dramas, documentaries, video games, and animations, having endless business opportunities.
In the IP development process, there is a distinction between materials that are part of the IP itself and those that are only source materials. For example, photos, videos and news reports of social events or historical events documented in historical texts and archives are source materials for IP development, but not the IP itself.
In order to establish an industrial chain for IP development, we have to note the distinctions in IP development, such as the IP subject and the development unit; moreover, we need to know the various types of licensing and collaboration modules in the IP adaptation process, and the respective duty of the IP owner and the developer.
From the perspective of intellectual property rights, IP development is a process of a series of “adaptations.” Pursuant to subparagraph 11 of paragraph 2 of Article 3 of Taiwan’s Copyright Act, “adaptation” means to create another work based upon a preexisting work by translation, musical arrangement, revision, filming, or other means. It is understood that the Copyright Act values and encourages adaptations, so it includes provisions to regulate the authorization requirements for adaptations and to protect works derived from adaptations. The adaptor (i.e., the developer or the person hired to adapt) must use a specific method to “create a new item.”
According to the interpretation of the Taiwan Intellectual Property Court, “when a new item is created based on the original work, if the new item contains the creative spirit of the creator to the extent that it meets the minimum creativity required by the Copyright Act, it is considered an ‘adaptation’; if the new item contains the same content as the original work and lacks the creative spirit of the adaptor, it is considered a ‘reproduction'”. The Court also points out that “adaptation is the creation of a new thing based on the original work; such adaptation may be expressed by presenting the identical substance in different forms, or by adding new elements to the original content”[1]. Examples are movies adapted from the screenplay, TV series adapted from comics, and VR films adapted from animations.
Once adapted, the new work is a derivative work as defined in Article 6 of the Copyright Act: “A creation adapted from one or more pre-existing works is a derivative work and shall be protected as an independent work.” This is why the adaptor enjoys the copyright in the derivative work, and the arranger enjoys the right to arrange a musical work -with the prior consent of the original rights holder (the lyricist and composer) – as the law also provides that “the protection of a derivative work shall not affect the copyright in the pre-existing work,” meaning that the original work (lyrics and music) remains unaffected and can be used freely.
The legislative protection of derivative works demonstrates that the act of adaptation can create new rights and provide economic benefits. By licensing the works, the licensor not only earns the loyalty from the licensee (i.e. the developer), but also shares in some of the revenues generated by the licensee’s value-added use. Therefore, when it comes to adaptation in IP development, no one in the cultural and creative industry can afford to ignore such competitiveness.
What Is in IP Development?
When initiating IP development, one of the top priorities is to choose the source material wisely – graphic characters, original stories, literary works, historical facts, social events, famous figures, and so on. These are the examples of trendy and practical materials that have a profound potential for development. Good materials carry full of creative ideas and nurture a wide range of business opportunities. Thus, cultural and creative spin-offs transformed from various IP materials have promoted the cross-industry collaboration and innovated business models.
1. Characters
Graphic characters, covering real people or fictional figures, act as a “brand,” and they can generate commercial value and economic benefits. Examples such as Pokemon, Harry Potter, Su Huan-Jen, Bored Ape Yacht Club, and Cherry Maruko are all typical character IP.
For example, LINE Friends’ well-known illustration character IP “Brown”(熊大). As the owner of the artistic copyright, LINE Corporation has developed stickers featuring Brown and other characters in the illustration set. In 2017, the company granted a license to collaborate with the collection by South Korean designer Park Seung Gun, founder of the fashion brand pushBUTTON. In 2019, the company also partnered with Netflix to produce the original animated series “BROWN & FRIENDS” in 3D [2]. Regarding the right of fashion collection and design related to Line characters, the adaptor, South Korean designer, enjoys the artistic copyright of fashion design. As for the 3D animation, the adaptor – Netlfix – should obtain such audiovisual copyright. And don’t forget, If the company – the licensor of LINE friends – wants to share the rights or revenues with the adapters, an agreement on the allocation of rights or a profit-sharing agreement should be on the agenda.
Due to their expired copyright protection, literary works or artworks enter the public domain and become free for anyone to exploit. Here we can reference Article 43 of the Copyright Act: “Except as otherwise provided by this Act, any person may freely exploit a work for which the economic rights have been extinguished.”
An example of multi-level development is Disney’s animation character IP, “Mulan”, which is derived from the legendary character in the ancient Chinese poem “The Ballad of Mulan”. Disney adapted the character into an animated film in 1998, and owns the copyrights to its artistic, oral and literary, and audiovisual works. This was followed by the Mulan character IP being adapted into the 2020 action film “Mulan,” and of course, Disney again enjoys copyrights to its audiovisual works, demonstrating a typical model of multi-level licensing.
As for whether the character shaped by IP is protected by copyright law, there is almost no doubt when it comes to graphic design, including characters like Cherry Maruko, Hello Kitty, Pui Pui Molcar, and Mickey Mouse. This was also answered by the Intellectual Property Bureau of the Ministry (TIPO) of Economic Affairs, who is the competent authority to interpret the Copyright Act in Taiwan. “Comics or cartoon characters have originality and creativity, and are therefore protected under copyright law as Artistic works” (TIPO’s Email, No. 1090319b, 2020).
But how about the main characters in TV and film series, such as Superman, Spider-Man, Harry Potter, Sherlock Holmes, and Justice Pao(包青天)? Are the characters’ traits individually protected, or do they need to be combined with the story plot to become the object of copyright? Over the years, this issue has been coming with the different views in practice. TIPO opined that “when looking at the character’s name alone, the mere ‘name’ does not enjoy copyright protection; however, it remains controversial when it comes to the character itself – does the character belong to the ‘idea’ or the ‘expression’? Only the latter is protected by copyright. Although there is no consensus in Taiwan’s court practice, we can still come up with a general outline of how to decide whether the character is considered expression: When the content embodied by the writer in the work is more sufficiently developed and clearly portrayed, and has a more established character, then the character is regarded more as an expression, and there is less room for others to use the same material (idea) for their expression. For example, we can find well-established characters in Jin Yong’s novels(金庸小說), such as Ling Wu Chung(令狐沖), Yang Guo(楊過), Xiaolongnü(小龍女), and Wei Xiaobao(韋小寶). Therefore, if a separate creation is made by exploiting a character who has a well-known personality and exist in a plot familiar to the public, such creation would involve the act of ‘adapting’ a pre-existing work. Since authors of works have the exclusive right to adapt their works into derivative works, except for the fair use specified in Articles 44 to 65 of the Copyright Act, an adaptation without the consent or authorization of the copyright owner of the work is considered an infringement. See another referential precedent: Taiwan High Court Civil Judgement 93 Zhi-Shang-Yi-Tzu 14, which deals with the infringement case of “Slam Dunk”(灌籃高手), a work by Japanese manga artist Takehiko Inoue” (TIPO’s Email, No. 1050823b, 2016).
We can also take a current US infringement case involving the James Bond character from 007 movie series. In the 1994 Honda Motor Co. commercial, a handsome, tuxedo-clad white man and his female companion are chased by a villain in a sports car. The white man skillfully maneuvers the car at high speed to avoid the attack. Metro-Goldwyn-Mayer Inc. alleged that Honda’s commercial infringed its copyrights and filed suit in U.S. District Court in California to block the car commercial.
Relying on the “Distinct Delineation Test,” the U.S. court analyzed the characteristics of the James Bond character developed in the 007 series. The court found that James Bond possesses a unique masculine appeal through his impeccable marksmanship, superior physical skills, involvement in dangerous car chases, flirtatiousness and witty banter that appear in every 007 film. The court concluded that these characteristics have become an integral part of the character. James Bond character is so unique that the certain qualities remain constant in spite of different actors playing the role over the years. What attracts the audiences watching different series of movies is to see how the distinctive qualities of the James Bond character are being presented. The character is not simply a tool to tell a story, instead, the series’ story is the tool for presenting the unique qualities of the James Bond character, which passes the so-called “Story Being Told Test” [3].
Moreover, in the court’s analysis, the plaintiff did not allege that the defendant had infringed the James Bond character itself; rather, the plaintiff alleged that the defendant had infringed the plaintiff’s James Bond character as expressed and delineated in plaintiff’s films. Thus, the judge concluded that the plaintiff owned the copyrights to the James Bond character as expressed and described in the movie series. Finding great similarities in theme, plot, mood and characters between the James Bond films and the Honda commercial, the court ruled in favor of the plaintiff and blocked the Honda’s car commercial. See Metro-Goldwyn-Mayer, Inc. v. Am. Honda Motor Co. – 900 F. Supp. 1287 (C.D. Cal. 1995).[4]
2. Literary Works
An example of multi-level licensing of IP development in the form of a TV series adapted from a literary work is the writer Jiang E’s prose collection, “The Making of An Ordinary Woman.” Her work was licensed to the Chinese Television System and adapted into a TV series of the same name. The TV series, which aired in 2019, took the audience by storm, leading the production company to produce and premiere the second season in 2021.
We all know that when the production company intends to adapt literary works into TV series, the production company is usually expected to obtain the author’s permission to adapt the proses or novel. But sometimes, if the author has transferred all copyrights in his or her proses (including the right to adapt the s into films and TV series) to the publisher, the production company should seek license from the publisher or copyright agent.
As we can see that all the storylines, character settings, interactions and relationships that appear in the first season of “The Making Of An Ordinary Woman” are based on the original proses, a proper authorization from the author is definitely a prerequisite for the production. After the first season aired, the production company continued filming the second season, which followed the roots of lead actress Chen Jian-Ling from childhood to adulthood. Due to the use of flashback scenes from the first season and identical character settings, story foundation and locations, the production company again had to obtain authorization from the novelist/copyright agent for adaptation.
So, in the multi-level licensing process of the literary work, what about the novelist, the copyright agent, or the first season’s screenwriter and production company being entitled to licensing fee for the filming of the second season of the TV series? How should the royalties be distributed among the associated parties?
For these issues, the Film and television industry is currently struggling with a comprehensive debate or view as there are no specific legal provisions regarding the method of distribution of royalties. While Taiwan is still developing its commercial practice of IP development, when it comes to deciding royalties percentage, it can still be determined based on the proportionate actual use of the original novel, screenplay and clips of the first season, which is usually reduced by half compared to Season 1.
If the proportion of actual use of each party’s material cannot be determined, we may decide the percentage by applying to the co-ownership provision provided in paragraph 1, Article 41 of the Copyright Act, where each of the material right holders shares the royalties equally, i.e. the novelist, copyright agent, screenwriter and production company each have a 25% share.
Another example is Luo Yi-Jun’s (駱以軍) prose collection “My Little Boys”(小兒子) (2014), full of life and joy. His writing aroused public interest, making one of the best sellers in Taiwan. Dreamland Image (夢田文創) was granted the license to develop the IP for “My Little Boys.” From 2017 to 2020, they developed derivative works including animation, picture books, stage plays, themed bookstores, TV series, documentaries, children’s songs and musicals [5]. The content and forms vary.
In this case, who acquired the copyright to the derivative works? Dreamland Image or the adaptor? According to the Copyright Act, the person adapts the original work under commission has the right to the derivative work. However, parties may enter into an agreement stipulating that the right belongs to Dreamland Image or the third commissioning party.
Still another question that follows is whether the originator, Mr. Luo, is entitled to share in the profits of the various types of derivative works of “My Little Boys,” and how much it would be. This shall depend on how the terms of the agreement determine such relationship and ratio. If there is no provision for profit sharing, what the parties should be concerned about is whether the copyright of “My Little Boys” has been transferred – If it has been merely licensed, the originator will be entitled to a licensing fee and a share of the profits generated in the future; if the IP has been transferred to someone else, the originator will not be entitled to the revenues generated by the IP development.
3. Comics
The classic Korean comics “Along with the Gods”(與神同行) has shown a complete picture of the various stages of IP development, serving as an excellent model. Korean comic artist Joo Ho-Min created the comics “Along with the Gods: Gods’ Judgements” in 2011, which was serialized in a Japanese comic magazine. In 2017, it was serialized on the Korean web-comic platform “LINEWEBTOON”. The Seoul Arts Company adapted the comics into the musical “Along with the Gods: Road to the Death” (premiered in Korea in 2015), and Korean director Kim Yong-Hwa adapted it into the big screen as “Along with the Gods: The Two Worlds” (released in Taiwan in 2017). In 2018, the comics was translated from Korean into traditional Chinese and released on Taiwan’s “LINEWEBTOON,” and the sequel film “Along with the Gods: The Last 49 Days,” produced by Kim Yong-hwa, was also released in the same year. In addition, a Taiwanese movie distributor collaborated with a mobile game company to incorporate the image of the “Messenger from Hell”(陰間使者) from the movie into the character design of the mobile game Royal Priest (Gojinshi/御神師).
The list is getting longer. The movie studio proceeded to collaborate with a VR game company to develop the “Along with the Gods: Escape from Hell” – a VR movie escape room game, which was released online in 2018. In the game, VR technology recreates the seven hells and related plots from the film “Along with the Gods,” and to escape from hell, game players must complete timed, collaborative puzzle-solving tasks via online chat [6].
In this example, the VR game production company needs to secure license of the artistic and audiovisual works from the comic artists and the movie studio. If the mobile game company only uses the character designs and settings from the movie to create its game characters, it should also obtain such license from the copyright holders of the original comic book.
On this matter, we see IP development require rich imagination, market sensitivity, and knowledge in contract laws; otherwise, the production company may have a hard time convincing the copyright holders to collaborate, stuck in a deadlock.
Comic “Yong-Jiu Grocery Store” (用九柑仔店) by Taiwanese comic artists Ruan Guang-Min(阮光民) was first adapted into TV series and then musicals. To produce a stage play with the same story content, character roles, and set design as the original comic book and television series, there must be the licenses from the comic book publisher and the television production company.
In 2019, TV show “The World Between Us”(我們與惡的距離), which resonated with a large audience, was adapted into a stage play by Story Works(故事工廠), and its second season also began production in 2022. In order to produce Season 2, the TV show producer must acquire the copyright license in the first season’s script or teleplay so that the plot line can be connected. Thus in this case, to bring a well-established play to the stage, the stage play producer have to obtain the license of TV script and drama from the TV show production company and the TV station.
4. Picture Books
In Taiwan, a great example of how IP can be successfully developed are the picture books of everyone’s favorite illustrator, Jimmy Liao (幾米), who has charmed the island with his timeless works. His illustration book “Turn Left, Turn Right”(向左走向右走) has been continuously staged as a play in the theater in 2008, 2010, 2016, and this year (2022). The picture book “Subway” published in 2001 was adapted into a movie and a musical in 2003. Later on, the musical was reinterpreted and performed by different teams in 2012 and 2017 respectively. The TV adaptation of the book was also released in 2006. What’s more, the characters in Jimmy’s picture books have become iconic installations at various tourist spots in Taiwan, and needless to say, this kind of reproduction or adaptation cannot be done without the license from the author.
How Does TV or Movie Adaptation Happen?
The key to developing motion picture adaptation lies in the “script.” Once a production company locates a good script, it will have to acquire the adaptation right by paying the licensing fee, and then it may develop the screenplay to secure funding or grants. At this point, there is still a long way to go before filmmakers can “get it made”, and very often it is a heavy financial burden as a development cost for production companies to purchase the copyright license for the screenplay. Therefore, how to reduce the financial burden of the licensing process has become one of the challenges that IP developers work hard to solve.
1. How Does An Option Agreement Work?
In an effort to reduce development costs during the pre-production stage of film and television production, the Taiwanese film and television industry has recently adopted Hollywood’s long-standing practice – Option Agreements. This contract is between the production company and the script rights holder. Entering into an option agreement gives the production company the right to option the script adaptation during the option period at a lower royalty (the first phase), which is approximately 10% of the full license fee. Once the option agreement is entered into, the production company can do all the preparation such as raising funds and conducting field surveys to see the possibility of making this movie. Once the preparation is done, the production company can exercise the “option” during the option period, then the full adaptation license and a higher license fee will follow (the second phase).
If the production company, based on its evaluation of preparation, decides not to exercise the option, the script rights holder is not required to return the royalty received in the first phase. On the contrary, if the production company notifies the script rights holder of the exercise of the option during the option period and pays the amount for exercising the option, then the camera can be officially rolled on!
If the production company exercises the option and makes the full payment, but does not start shooting the series within a certain period of time after exercising the option, the granted license rights may automatically revert to the licensor; however, such reversed content does not include productions, profits, scripts or other materials as the output of the production company during the development and pre-production of the series.
Sample clauses (Party A: the Script rights Holder, Party B: the Production Company):
Party B agrees to pay to Party A $1,000,000 NTD (including tax) as the Total Licensing Fee for the production of one season of a television series. Upon the execution of the Agreement by both parties, Party B shall pay to Party A $100,000 NTD (the Option Price) as to obtain the exclusive right to develop the TV script.
Within a period of two (2) years after Party B enters into the Agreement (the “Development Period”), Party B shall develop the Script and exercise the Option. Upon exercise of the Option, Party B shall purchase from Party A the right to adapt the Script for the amount of $900,000 NTD (including tax), which is equivalent to 90% of the Total License Fee.
If Party B fails to develop the Script within the above mentioned two (2) year period, Party B agrees to pay Party A and Party A agrees to accept the amount of $100,000 NTD to extend the Development Period for another year. If, in the proposed Development Period, Party B fails to pay the full amount of the Total Licensing Fee for the production of one season of a television series, and Party B decides not to exercise the Option, then all rights in the Literary Work to develop the Script shall revert to Party A, and the amounts paid by Party B to Party A as the Option Price shall not be refunded.
2. When the Licensee decides not to exercise the option
Once the right reverts back to the licensor, the licensor does not need to return the sum of the Option Price. Although, before the reversion of the rights in the script to the script rights holder, the production company have the rights to the derivative works created under this option agreement, the production company shall cannot exploit such rights to the derivative works after the reversion due to lack of authorization.
To make the most of the outputs, during the Preparation Period, or after the production company exercises the Option and yet no movie is made from the Script, if the script rights holder considers that there is still value in the semi-finished products or materials adapted by the production company, the script rights holder may negotiate with the Production Company for a reasonable purchase price over the products or materials. Under this circumstance, it is important to specify in the contract the ownership of the rights to the adapted semi-finished products or materials, as well as the buyback rights of the script rights holder/licensor, so that their interests can be well protected.
Sample Clause (Party A: the Script Rights Holder, Party B: the Production Company)
It is agreed that all copyrights in the materials originally created and adapted by Party B from the Literary Work during the Option Period (the “Development Materials”) will be deemed vested in Party B; provided, this does not apply if the material contains copyrighted content owned by Party A.
Party B may not exploit or develop the Development Materials before exercising the option. If Party B decides not to exercise the option, Party A has the exclusive right to acquire the Development Materials, and the proposed purchase price for the Development Materials shall be negotiated and agreed upon by both parties.
How to Draft a Motion Picture Adaptation Agreement?
We have seen a wave of Korean film and television culture sweep through Taiwan in the past decade, with examples such as the successful Taiwanese remakes of Korean films “Woman More than Blue” and “Man in Love”. However, there are still not many popular Korean or Japanese TV shows that have been remade into Taiwanese versions in recent years.
Now, the situation started to change. Around two years ago, Taiwanese film production companies have accelerated the pace of adapting Japanese and Korean dramas into local series, such as the famous TV series “Itaewon Class,” which was licensed by South Korean entertainment to Taiwanese company DaMou Entertainment (台灣大慕影藝公司) for adaptation [7]. Japanese manga artist Junji Ito has authorized Miracle Pictures, a Taiwanese production company, through Asahi Shimbun Publishing, to adapt his works “Tomie”(富江), “Blood-Stained Tree”(血玉樹), and “Slug Girl”(蛞蝓少女) into a live-action series called “Bloody Smart”(聰明鎮) [8]. Needless to say, the associated parties should not overlook the importance of having clear provisions in their license agreement, including the scope of the adaptation, the duration of the license, the royalties and the profit-sharing of the product franchise.
1. Licensing Model of Transnational Adaptations
Let’s take a look at what’s behind the transnational adaptation of Taiwan’s TV drama – for example, if a Korean production company wants to make their local version of a Taiwanese drama, what copyright license do they need to obtain? These licenses will have to cover the oral and literary copyright in the Taiwanese TV script, audiovisual copyright in the TV series and the oral and literary copyright in the original script. It gives rise to the question whether Taiwanese TV stations have the right to directly grant a license of the copyrights in the Taiwanese drama script to a Korean company? If the screenwriter has agreed to TV station’s sub-license right, then TV station may license such a remake; otherwise, the Korean version cannot hit the ground without the screenwriter’s consent.
If the TV station intends to secure the sub-licensing right in the script license agreement with the screenwriter, and this makes the screenwriters reluctant to agree due to the concern of impairing their rights and interests, the parties may refer to the sample clause below:
“Party A (the TV Station) shall not be entitled to sublicense any of its rights in the Screenplay without the written consent of Party B (the Screenwriter) ; PROVIDED, however, that Party A shall be entitled to grant a license to a third party to adapt the Television Series, along with Screenplay, into other media works. Without prejudice to Party B’s right, Party A may grant a license to a third party to distribute the Television Series.” Such a term may help minimize the screenwriter’s concerns and increase flexibility in the TV station’s use of the script, providing both parties with the protection of rights and interests.
It leaves one to wonder, what copyright licenses are required if the Korean motion picture studio plans to make their local adaptation of Taiwanese literary works? Well, suppose its proposed Korean adaptation is directly based on the original work, the company have to obtain the license from the original literary work. Another condition is, when the Korean adaptation is based on the Taiwanese TV series, then the company shall seek the license from both the original work and the Taiwanese TV series (including the TV screenplay).
It inspires contemplation that how we can distinguish whether the Korean adaptation is based on the original work or the Taiwanese TV series (TV screenplay)? An easy way to distinguish the difference is to see how the adapted Korean version incorporates its elements. If the Korean version only uses the content of the original work and does not include any characters, dialogues, scenes, events, etc. from the Taiwanese TV series, then we can consider the adaptation to be based solely on the original work.
Another question follows is, will the original work’s author be able to share the profits if the Korean adaptation is based on the Taiwanese TV series? Since the Taiwanese TV series is actually an adaptation of the original work, the Korean production company would still be required to obtain the license for copyrights of the original work. Thus, the author is entitled to a pro rata share of the Korean series’ revenues.
In practice, failure to contract clear terms regarding the scope of the license risks disputes in IP development and even gets tied up in a legal battle, so a well-planned licensing contract can never be overemphasized.
2. Licensing Scope of Motion Pictures Adaptation
The adaptation agreement should clearly specify the projects/items and scope of IP development. The parties also need to identify the rights reserved to the licensor so that the developer is fully aware of the limitations, avoids breach of contract, and has a more accurate assessment of royalties and profit sharing.
Sample clauses (Party A: the Screenwriter, Party B: the Production Company):
Party B shall own the right to adapt the Literary Work into television series (the “Series”), movies, web series, stage plays, online games, animations and comics, and shall own the right to copyright such works of adaptations. Party B shall own, throughout the universe, all right, title and interest in the Series and any Derivative Work thereof, including all the movies, television shows, clips, images and texts, books, and the media, any mediums (whether before or now known or hereafter devised to broadcast, transmit or distribute) and any derivative products of above mentioned productions, subject to the comic book rights and screenplay book rights, which are specified in Paragraph 2 of Article 2 below. Party A (the Screenwriter) reserves the publishing rights in adaptation from the Literary Work into comic books and screenplay books.
Restrictions on Adaptation:
Party B has been granted the right to create the derivative work by adapting the literary work and producing the motion pictures based on the adaptation. The core value of the Derivative Work shall be consistent with the central ideas and worldview of family values and emotions in the Literary Work and shall not be modified without the prior written consent of Party A.
Party A has the right to participate in the selection of directors and casting; Party B has not right to reject Party A’s participation.
Licensing Fee Model 1 (Party A: the Writer, Party B: the Production Company):
In consideration for the licensing of the “Literary Work”, Party B shall pay a Licensing Fee totaling $_________NTD (excluding tax). Party B agrees to pay Party A the Initial Signing Fee equal to 50% of the total Licensing Fee in the amount of $_________NTD, due and payable on the Effective Date.
If Party B proceeds to make a film adaptation based on the “Literary Work”, Party B shall notify Party A in writing or electronically after the creative team is in place (i.e. the director, producer, principal cast, executive producer, screenwriter and cinematographer are all appointed) and pay 50% of the total Licensing Fee for Party A within 5 days of such notification.
Party B shall pay and distribute the profit share to Party A in the amount of 1% of the net revenues, which means the film revenues (i.e. the film distribution royalties) less the costs.
Licensing Fee Model 2 (Party A: the Screenwriter, Party B: the Production Company):
Within 2 weeks of the execution of this Agreement, Party A shall deliver the storyline, character backstories, teleplay outlines and script for first episode. Party B agrees to pay Party A the Initial Signing Fee equal to 30% of the total Licensing Fee, in the amount of $300,000 NTD (excluding tax).
The Second Period begins no later than April 30, 2023. Party B shall pay Party A 40% of the total Licensing Fee, in the amount of $400,000 NTD (excluding tax), within 7 days after Party A delivers complete scripts for 10 episodes.
Before the official filming start date, Party B shall pay Party A Final Payment Fee equal to 30% of the total Licensing Fee, in the amount of $300,000 NTD (excluding tax), within 7 days after finalizing all the scripts from Party A.
With respect to Party B’s share of any revenues derived from or generated by any IP development based on the Script under this Agreement, the Parties shall negotiate other contractual terms in addition to this Agreement.
Licensing Term (Party A: the Author, Party B: the Production Company):
Party A shall grant Party B the movie adaptation right of the Novel for a fixed period of 3 years until _________, 2025 (the “Licensing Term”). During the Licensing Term, Party B shall have sole and exclusive movie adaptation right throughout the world. Party B shall commence on the filming of the movie or TV series based on the Novel within a period of 3 years from the date of the execution of the agreement. If Party B breaches the above provision by failing to commence filming, Party A may rescind or terminate this Agreement without any obligation to refund any payment received from Party B.
Adaptation Work Allocation (Party A: the Author, Party B: the Production Company):
Party B shall engage the screenwriter(s) for the adapted teleplay or screenplay, which includes, but not be limited to, treatment, synopsis of the teleplay for each episode, scene outline for each episode, and the script for the entire series, as well as translations of the foregoing into all languages.
Party B shall engage the visual arts and crafts professionals for the visual development, including but not limited to the posters, character model design, prop and model design, scene design, action design, etc.; the form of the foregoing is not limited to 2D, 3D or dynamic images.
Party B shall consult with and retain the services of the appropriate director and producer. Party B shall be in charge of the business negotiations and the execution of the contract with the media platform, the investors and the co-producers.
During Party A’s tenure as a consultant for the series, Party A shall be responsible for providing creative ideas, explaining the background, assisting in confirming the content of the script, acceptance, and table read. Party A will provide his or her name, portrait, autobiography and other materials to assist in the promotion, and will write articles and publish them on social media and cooperate in the promotion activities.
Joint Right and Share (Party A: the Novel Author, Party B: the Production Company):
Party A and Party B will jointly develop the adaptation of the Series and the Movie, as well as other IP development, including but not limited to comics, animations, stage plays, audio books, merchandises, licenses of images and photography, cross-industry integration of IP, video games and music products, for the purpose of maximizing the profits derived from the motion picture adaptations.
It is acknowledged that the development is a joint work completed by both parties; therefore, _____% of the copyrights in the Series and the Movie shall be owned by Party A, and the rest of the percentage (_____%) allocated to the parties shall be based on the proportion of each party’s financial contribution (including grants received from the government by Party A, Party B or third party and their respective investments). Party B hereby grants Party A a royalty in the amount of _____% of the revenues derived from the distribution, sale or sub-licensing of the Derivative Works.
Conclusion
In recent years, Taiwan’s Film and television industry has found that multi-level licensing a major challenge to the cultural and creative IP development in the cross-border motion picture adaptations. IP development can go a long way if the materials are chosen properly, and good sources of materials include original stories, literary works, historical facts, social events, famous figures, and so on.
Being a developer who can plan ahead and sell the collaboration to the originator or rights holder requires a complete picture of the developing materials, an understanding of the core value, a lot of imagination, market sensitivity and legal knowledge of contract law. Licensing literary works, screenplays, TV series, movies and soundtracks at multiple levels can raise complex issues, and as a result, original rights holders may find it necessary to not only protect their existing rights, but also to seek rights for adapted works in the course of licensing. As for developers, they will need to invest resources to derive new rights and establish a mechanism to share copyrights and profits to form a good working relationship with cultural and creative IP holders and extend the life cycle of IP. This will ensure that works of art continue to thrive and that everyone in the industry achieves mutually beneficial outcomes.
Footnote
[1] See Taiwan Intellectual Property Court Criminal Judgement 102 Xing-Zhi-Shang-Yi-Tzu 107, Taiwan Intellectual Property Court Civil Judgement 109 Min-Zhu-Su-Tzu 101, and Taiwan Supreme Court Judgement 106 Tai-Shang-Tzu 1635.
[2] Sandy, New Fashion Icon! LINE FRIENDS Spot Brown Bear and Cony Rabbit in pushBUTTON’s Collection for Fashion Week, Vogue, 28 March 2017. CTS News and Info, Brown and Cony in 3D, Hopping on Netflix! 12 December, 2019.
[3] For further elaboration of the meaning and use of “Story Being Told Test”, please see Chang Jian-Hui, How US Courts Protect Copyright of Fictional Characters with Story-Being-Told Test – An Analysis of Comics v. Mark Towle by Ninth Circuit, Intellectual Property Right Journal No.227, November 2017.
[4] Li Zhi-An, Second Life for Fictional Characters: How Copyright Law Protects Fictional Characters, Intellectual Property Right Journal No.169, January 2013.
[5] Journalist A-Lu, Comic Couple’s “My Little Boys” Book Launch Party Was Hosted by Gaea Books and Dreamland Image, GNN News, 27 January, 2021. See Dreamland Image’s official website here.
[6] Taiwan Musical Forum, Korean Original Musical “Along with the Gods: Road to the Death”, 22 December 2017. Mina Wu, This Is How You Feel in the Hell – Korean “Along with the Gods” in VR version, 28 November 2018.
[7] Amber Chan, “The World Between Us” Team Starts Shooting Taiwanese Version of Itaewon Class – Cross-border Adaptation in Taiwan Style, 22 February, 2021
[8] Junji Ito’s “Tomie” Comes in Live-action Series! Kick Off the Fundraising for “Smart Bloody” to See 8 Classical Horror Scenes, Crowdwatch, 26 October 2022.
黃秀蘭（Huang Shiu-Lan）( 12篇 )翰廷法律事務所主持律師，文創產業法律實務經驗豐富，擔任國家影視聽中心、創意設計／音樂／編劇／影像製作公司、唱片集團、知名導演長年法律顧問及文化部影視產業專業顧問。任教於國立臺北藝術大學及國立臺南藝術大學，講授【智慧財產權與合約談判】課程，出版《如何面對合約》系列法律著作，演講教學寫作不輟。