1. ABA-IPL 29 th Intellectual Property Law Conference April 2-4, 2014 Characters And The Law: TRANSACTIONAL ISSUES AND STRATEGIES By Cydney A. Tune Pillsbury Winthrop Shaw Pittman LLP 705140084 © 2014 Cydney A. Tune. All Rights Reserved. 1 |

2. In the “converged” world, characters move in many directions and onto a number of media platforms – further increasing the complexity Possible sources include: Books; comics; TV; motion pictures; games; advertisements; etc. Possible media include: Traditional media: such as TV, film, books, home video, console games New media: such as social media, online streaming or downloading 2 |

3. There can be many contributors and the rights of each must be addressed. The artist, writer or other creator of the character The producers of projects that will incorporate the characters Distributors Creators of advertising and promotions with the characters Merchandise creators, producers and distributors Creators of derivative versions Technology providers  A web of contracts is involved 3 | KEY CONTRACT ISSUES AND TERMS

4. Carefully identify all of the content to be created or licensed. What does the work entail? What character is involved? Are there multiple characters?  Be very specific KEY CONTRACT ISSUES AND TERMS 4 |

5. RIGHTS OWNERSHIP Owner of character(s) needs to preserve rights Producer of project will want to own rights in the Project Who will own newly-created characters? Who will own other newly-created content? Who will own rights in merchandise that is created? Who will own rights in any spin offs? Specify credits 5 |

6. GRANT OF RIGHTS Character owners should carefully consider all potential exploitations and develop a strategy for each  Best done at the outset Consider potential target audiences and: distribution channels territories best platforms protection of “image” 6 |

7. GRANT OF RIGHTS Carefully delineate the limited rights being granted Carefully reserve all other rights to the owner  Producers typically seek: all forms of TV, home video interactive multimedia, advertising and promotions, soundtrack rights, merchandising and commercial tie-ins  Each party will want the right to use new characters owned by the other 7 |

8. TERM, TERMINATION AND REVERSION OF RIGHTS What should the term be? When can the agreement be terminated? A lot of financial and other resources invested by Licensee vs. Need of Licensor to protect its property and avoid wasting opportunities When should rights revert? What if Licensee is not exploiting continuously or tapping full potential? 8 |

9. 9 | CLEARANCES, REPRESENTATIONS AND WARRANTIES Each party should “stand up for” their contributions Representations and warranties must be carefully crafted Each should indemnify the other for breach of representations and warranties and for material breach of any obligations Clearances must be done carefully and diligently Responsibility should be clearly allocated Ownership and licenses are often complex but need to be sorted out

10. Owner(s) need to protect and enhance character’s image Include detailed approval processes; at various stages Include Quality Control provisions Avoid tarnishment by association Address rights enforcement – specify obligations, costs and processes 10 | APPROVALS AND CONTROL

11. 11 | FINANCIAL TERMS Always hotly negotiated Usually royalty-based, but can be fixed fee (e.g., artwork). Amounts vary depending on type of use and leverage of the parties. Advances and recoupment in some circumstances. Be sure to define key terms, such as “net revenue.”  Include a well-crafted audit provision

12. ABA-IPL 29 th Intellectual Property Law Conference April 2-4, 2014 Good luck! Cydney A. Tune Pillsbury Winthrop Shaw Pittman LLP cydney.tune@pillsburylaw.com