The Importance of an Assignment Clause

April 8, 2002

The Importance of an Assignment Clause

A recent case by the Ninth Circuit Court of Appeals makes clear why it is important to include an express provision allowing assignment when entering into an exclusive copyright license. The court held that a licensee cannot transfer its exclusive rights without the copyright owner’s consent.

The case concerned a cartoon character called AMC Teach, which was owned by Nike. Nike granted Sony an exclusive license to use the character in certain specified ways. The license did not address whether Sony could sub-license its rights. Sony subsequently transferred all its rights to a person who used the character on educational materials. Nike objected.

This case illustrates how important it is for production companies to obtain written consent to assign their rights when they license underlying works, such as books, scripts and music. Without an assignment clause permitting assignment, the production company may not be able to assign its rights to third parties. Moreover, if a production company goes bankrupt, its assets would include the right to distribute its productions. But if the rights to use the underlying works in those productions, such as music on the soundtrack, could not be assigned, then these motion pictures might be worthless. Gardner v. Nike, Inc., Download PDF

Craig Brewer wins Rockefeller Fellowship
Congratulations to our client writer/director Craig Brewer who has just been awarded a Rockefeller Foundation Media Art’s Fellowship. 22 Fellows were accepted this year. A list of the awards can be found at www.RockMediaFellows.org. The award comes with a stipend of $35,000. Craig’s The Poor & Hungry will be playing at the DGA theater on Thursday, May 9, 2002 at 7pm. The screening is open to the public.