10 questions before you try to earn from or share your IP

Someone wants to use what you made. Perhaps the offer is exciting; perhaps you are the one wondering whether a song, a design, a course or a useful invention could pay for your next project. Or you want people to share it freely. Money and generosity both raise the same questions: who may use the work, who controls it, and what happens later.

Answer these ten questions for yourself first, then read the answers below. They are not a test of business knowledge. They show you the assumptions you would otherwise carry into a deal unexamined.

The ten questions

1. Do I feel that work only becomes valuable when someone pays for it?
2. If I let someone use my work, do I imagine that it stops being mine?
3. Am I assuming that a good relationship means we never need to discuss who controls the rights?
4. Would the word exclusive make an offer feel flattering before I considered what I would give up?
5. Would I automatically prefer the offer with the higher royalty percentage?
6. Do I think a short friendly agreement cannot contain a serious commitment?
7. If I publish something for free, do I assume people will know how I want them to reuse it?
8. Would a large valuation make me believe I could sell the rights or borrow that amount tomorrow?
9. Do I imagine royalties will arrive without anyone needing to look after the arrangement?
10. Have I thought about who could understand the rights if I stepped away from the project?

The answers

1. Do I feel that work only becomes valuable when someone pays for it?

Payment is one result worth wanting, not the only one. A free resource can help a community, introduce people to your practice or open the door to future collaboration. WIPO lists three ways to put IP to work: use it yourself in your own products and services, license it while you keep ownership, or sell it outright. 1 Pick the arrangement that serves your aim. A free guide with clear reuse permission and a carefully priced commission are both deliberate choices.

2. If I let someone use my work, do I imagine that it stops being mine?

No. A license lets someone use the work while you keep ownership; an assignment is a sale that transfers ownership. 1 You can let a company print your illustration on one product without selling every right in it. Watch the word exclusive: under U.S. copyright law an exclusive license counts as a "transfer of copyright ownership", just like an assignment, while a nonexclusive license does not. 8 Ignore the reassuring title on the document. Read what uses it grants, what you keep, and whether you can still make the decisions that matter to you.

3. Am I assuming that a good relationship means we never need to discuss who controls the rights?

Friends and collaborators can remember an informal understanding differently without anyone meaning to deceive. A project can also contain contributions that one person cannot license alone. Under U.S. law the authors of a joint work are co-owners of its copyright, an employer is treated as the author of a work made for hire, and each exclusive right can be transferred and owned separately. 2 Talk about ownership at the start, while everyone is on good terms. Three questions get the conversation going: which parts belong to each of us, what are we allowing others to do, and how will we decide on a future opportunity? Write the answers down.

4. Would the word exclusive make an offer feel flattering before I considered what I would give up?

An exclusive license lets a single party use the IP and often stops you, the owner, from using it yourself. 3 Exclusivity can cover everything you own, one market or one field of use, so limit it to the field and territory the partner will actually work in; WIPO's advice is "don't give away more than necessary". 3 Imagine giving a company exclusive rights to a pattern for all products when it only plans to make notebooks: you lose fabrics, phone cases and prints it will never produce. Check that the scope, the duration, the payment and the partner's own obligations make sense together. Have a lawyer who handles IP licensing read any exclusive license or assignment before you sign it, because under U.S. law both transfer copyright ownership. 8

5. Would I automatically prefer the offer with the higher royalty percentage?

No. A percentage means nothing without its base. Ten percent of one figure can be less than five percent of another. Royalties can be a percentage of gross or net sales, a fixed amount per unit sold, a minimum periodic payment owed regardless of sales, a rate that changes with sales volume, or an upfront fee. 4 Before you compare offers, get each one to define exactly how royalties are calculated and reported, and ask for a worked example using the proposed terms. 4 You should be able to follow the money from a single sale to the amount you receive.

6. Do I think a short friendly agreement cannot contain a serious commitment?

Length and tone tell you nothing about effect. In the U.S., a transfer of copyright is valid with only "a note or memorandum of the transfer" in writing, signed by the owner. 2 A few words about all media, future uses, exclusivity or sublicensing can change how far a permission reaches. WIPO's licensing guidance treats scope, each side's obligations, payment, duration and termination as connected parts of one agreement. 3 Clear terms do not accuse your partner of anything. They help both of you remember what you intended when a new employee, a bigger opportunity or a disagreement arrives.

7. If I publish something for free, do I assume people will know how I want them to reuse it?

A free download does not tell anyone whether they may translate, adapt, sell or redistribute it. A public license does. Before you apply a Creative Commons license, confirm that you own or control the copyright; if you made the work for your job, you may need your employer's permission. 5 Then decide whether you allow adaptations, whether you allow commercial use and whether adaptations must be shared alike, and use Creative Commons' license chooser to find the matching license. 5 Mark the work with the license name and a link to the license deed, placed where people can see what it covers. 5 Choose carefully: CC licenses are irrevocable and last until the copyright expires, so taking the license down later does not cancel permission already given. 5

8. Would a large valuation make me believe I could sell the rights or borrow that amount tomorrow?

No. A valuation is an estimate of monetary value produced by a method: the income the IP is expected to earn, prices paid for similar assets, or the cost of recreating it. Price is what a buyer is actually willing to pay in an arm's-length deal. 6 Borrowing is harder still. WIPO calls IP financing "growing but still largely nascent", and a lender that takes IP as security can attach conditions that limit your freedom to license or transfer it. 7 Lenders look for IP that can be valued separately from your business, stays valid through the repayment period and can be sold if you default. 6 Evidence about ownership, demand, income and risk matters more than the size of one number.

9. Do I imagine royalties will arrive without anyone needing to look after the arrangement?

A deal creates continuing work: supplying documentation, checking that the licensee meets the agreed quality standards and auditing how the IP is used. 3 Write these duties into the agreement instead of leaving them to whoever remembers first. Set out how royalties are calculated and reported, and include audit rights and a way to enforce payment. 4 Picture a designer who receives a quarterly payment but no statement of which products sold. The question is not only whether the payment looks generous, but whether the arrangement gives both of you enough information to check it.

10. Have I thought about who could understand the rights if I stepped away from the project?

Your files, your business and the rights in your work can end up with different owners. In the U.S., copyright can be transferred in whole or in part, left by will, or pass under the rules of intestate succession, and owning an object is separate from owning the copyright in it. 2 Keep a record of each work: who owns which rights, the signed agreements and the contact details of every licensee. When you assign copyright or grant an exclusive license, record the document with the Copyright Office through its online Recordation System; the fee calculator is on the same page. 9 A recorded document gives everyone legal notice of the transfer once the work is registered, and can decide which of two conflicting transfers wins. 2 A buyer or family member will need that paper trail as much as a password.

You do not need to want the largest possible deal. You need to understand the deal well enough to know whether it serves what matters to you.