Digital Signature Legality for Photo Licensing Agreement in United States

How to eSign a document: digital signature legality for Photo Licensing Agreement in United States

(energetic Spanish guitar music) - Stephen Key here, guess what? We're on our next adventure to, Lake Titicaca? Am I pronouncing that correctly? I'm not quite sure, but it's gonna be a great time. Please, join us on this adventure. Hey, Stephen Key here, and Janice, and guess what? We're on our next adventure, heading off to where? - We're at Lake Titicaca, an amazing name to be sure, and we're going to visit the Floating Islands today. These islands are built completely on reeds and they float on the water. We're going to meet the indigenous people who live there. See some local customs and eat local food. - Clearly Janice does this much better than I do. - Of course. - So, stay tuned. (energetic Spanish guitar music) Alright, here are a few fun facts about Lake Titicaca. It's a hundred miles long, and how wide? - 37. - Well, that's a big lake, and it's how high? - I believe we're above 13,000 feet. - Hah! - Which makes it, the highest navigable lake in the world. There are other lakes, maybe up in the Alps, or you know, high mountains, but, they're small. They're just little Alpine lakes, and this one is very large, and so, it can be boated on, used for transportation, - And. - Fishing, all that stuff. - And, very cold too. - Definitely. (energetic Spanish guitar music - Okay, Stephen Key here, and today I want to talk about how to negotiate a winning licensing agreement, and of course I'm at Lake Titicaca, in Peru. (energetic Spanish guitar music) Okay, you've done everything right. You made that sell sheet. You created a great product that a company wants, and now you're waiting for that licensing agreement to come on over to you so you can start negotiating. But, I'm here to tell you negotiation starts way before you get the contract. Most people don't understand that. Let me try to explain. Number one, the way you file your intellectual property, and the way you structure your intellectual property, has a lot to do with leveraging a winning licensing agreement. Also, your marketing material is extremely important too. How it looks and how it feels, and if you've taken away, well, not taken away but let's say you've got a strong point of difference. And the third thing is, identifying the right company to reach out to, and making sure you're in the right category. Which, there are a few, hopefully more than a few, inventor-friendly companies. So, you negotiating licensing agreement starts very early on. Not when you actually get a licensing agreement. (energetic Spanish guitar music) People ask me all the time, how did I learn to negotiate so well? Well, first of all, as you know, I started my career selling things I made at street fairs and county fairs, and state fairs, all through California. And I learned a lot about people. I learned a lot about how to negotiate. The other thing I wanted to mention, people are always asking me, "Well Steve, how did you learn to deal with these big companies now and licensing agreements? "Especially when they're so large, and technically you're a little bit smaller than they are?" I tell everyone it's called, Survival 101, trying to get paid - that's how I learned. Most of all about people. In the United States, people are really not comfortable with negotiating any type of, contract, or even, doing a little bartering back and forth, at a flea market. They're just uncomfortable with it, but you have to learn to have a good sense of humor. You have to learn to leverage your strengths, so you can get the best possible deal. And most people, are just not good at this, but I'm gonna give you a few tips, to make it easier for you. (energetic Spanish guitar music) Here's the first tip I'm going to give you. And, we see this actually all the time. When a licensing agreement does come over, it has the company's name, the licensee, but the licensor, which is you, is actually sometimes in your name, and should never be in your name. It should be in some type of business entity, and I prefer a LLC, personally, because you need to protect your own assets. Okay, a licensing agreement is gonna take a long time, and some of the issues are pretty straightforward. And, if you're working with a company that's done a lot of licensing agreements, it's a little easier, let's put it that way. If you're working with a company that's never done a licensing agreement, it's gonna be a little more difficult. Here's a tip, if they ask you the licensor, the inventor, to supply a licensing agreement. Tell them no. It never works out well, because they really need to know what they need to be successful. So, the licensee needs to write their own contract, and it's gonna be awful. When the first one comes over, and most likely it's going to be a boilerplate, they're kind of testing you to see how much you know. And even though you've talked on the phone, or even if you've gone through email on some of the issues, when you first see that boilerplate it's gonna be so ugly you're gonna want to run, but it does get better. With a little bit of time, a little bit of experience, you can change most of the terms in your favor, or at least get it balanced. (energetic Spanish guitar music) There's gonna be many hard issue to negotiate, and I'm gonna go through with just a few of them. I think one of the hardest things to negotiate, or, basically comes up in a lot of contracts, and we're seeing a lot of it lately, is that company wants to own your intellectual property, in exchange for a royalty rate. And then, later on in the contract, they want to be able to control the filing of that intellectual property, but also in that contract it states that they don't have to file at all, if they don't want to. Well, that's a big conflict, because here they're saying they want to own the intellectual property, but then they're saying that they're gonna take care of it, and then they say, basically we don't have to do anything. That's huge problem and you need to negotiate out of that situation, or you're gonna end up, maybe with intellectual property, of course, that you don't own, and guess what? They don't do anything with it. And, guess what? You don't get paid. Alright, here's another issue that comes up all the time. Improvements, there's going to be improvements. I can guarantee it, and most of the licensees want to own all of those improvements. Here's the problem. If they own those improvements, and for some reason the contracts breaches, and you get it back. You're gonna have to either license those improvements from the company, and that can present a big problem. Alright, here's another issue. Let's say, somehow, someone, infringes on your intellectual property, and some of these contracts your licensee wants you to defend it. You never want to be able to, or have to, or be required to defend any type of lawsuits, that could get extremely expensive. It should be balanced. You should have the option if you want to defend it or not, or they should have the second option if they want to go forward or not. So, don't get boxed in that you have to defend your intellectual property. It could be extremely expensive, and you're not gonna like it. (lively pan flute music) (rhythmically playing drum) Here's another thing I see in licensing agreements all the time. The company, of course, wants you to file intellectual property, and they list all the countries they want you to file it in. And, you're required to file it in all those countries. Holy smokes, that can get extremely expensive. What you want to do, is stay away from this contract, this licensing agreement. That really states, that it's all about patents, it's all about claims. You want to make it broad enough. It's really about your product. You want to license your product, not your intellectual property. Indemnification, this is really interesting. Typically both sides want to indemnify each other. In other words, the company is going to indemnify you over any type of loss, or any type of exposure financially, and they should because they're doing all the manufacturing, selling, and distribution. But, when they want you to indemnify them, if there's a third party lawsuit, that's asking quite a bit. Especially, because you're only collecting a royalty. So, you have to negotiate around that term. (lively pan flute music) (rhythmically playing drum) Audit clauses, I see 'em all the time. Sometimes they're pretty vague. There needs to be more clarification. Typically you can audit them once a year, but if there is a discrepancy they usually pay for it, then they'll pay for the audit, and sometimes they'll even pay the interest on that money. So, make sure you have an audit clause that specifies all these little details. Don't make it too vague, because they try to make it very vague. Insurance, they have to have insurance, and you want to be named on the policy. It's pretty standard. All retailers require insurance. So, if there's no product liability insurance, make sure it's in there, and you're on the policy, and make sure it's in the millions of dollars. (lively pan flute music) (rhythmically playing drum) How do we get the highest royalty rate? I hear this all the time. You can, but you have to have a few things in place. You have to take a little bit of risk away to negotiate a higher royalty rate. But, there's one thing I heard from Richard Levy, the famous toy inventor, and he told me one of the best ways of getting a higher royalty rate is: Just ask. Minimum guarantees. Yes, you need a performance clause, to make sure they're selling your product. It has to be in there. If you give someone an inclusive, which all the companies want, and there's no minimum guarantees. Guess what? They don't have to sell one unit, they completely own it without selling one. So, you have to negotiate minimum guarantees. Most companies hate this. There is a strategy to this. (sighs) It takes a little bit of time, but make sure there's some type of performance clause, and I prefer minimum guarantees, and that's related to sales. (lively pan flute music) (rhythmically playing drum) Bankruptcy clause. Oh geez, if you're dealing with a company potentially, especially a small company that can, or potentially can go in bankruptcy. You better have some good language in there that states if they go into bankruptcy, they have to give everything back to you. That breaches the contract. So, you don't get caught up in court with some licensing agreement with some company, that you can't get it back. And here's one of the last things. A lot of these contracts don't have definitions, and I don't really like that. Definitions really make it very clear, what the words mean. So, if you can, make sure your licensing agreement has definitions with all the terms. (energetic Spanish guitar music) As I said this before, this is not easy to do, and I've been doing it for over 30 years. So, you're going to need someone. If you need us, contact us, but make sure you have someone that knows the business terms. Before you sign any licensing agreement, make sure you have a licensing attorney review it. I believe you do that at the very end so you can save some money, but you're gonna need someone that can help you, because this is not easy. Like I've said, I've been in it for over 30 years, and it's still difficult for me. I'm currently writing a book on this, it's called One Simple Idea: How to Negotiate a Winning Licensing Agreement, and if you're interested when that comes out, please send me your email and I'll make sure to notify you. It's gonna take a little bit of time. There's a lot of topics, and I'm gonna cover every topic in every category, and how to negotiate around those difficult terms. So, you can come out on top, or at least make it a pretty balanced licensing agreement. (energetic Spanish guitar music) Incredible, I'm on a floating island. Where there's five families that live here, and they explain how they build these floating islands. I'm completely blown away. (sighs) What a great experience. (energetic Spanish guitar music) I cannot believe I am here on Lake Titicaca. I started my career doing arts and crafts sculpture, and I saw this wonderful piece, of a young lady on one of the boats that they make, and I just fell in love with it. And here is the artist, here, and I just have to bring it home. What a treasure. (energetic Spanish guitar music) (group laughing) Janice and I are taking a little boat ride. Okay we're heading home. We've had a great day on the lake, and we found a lot of things. First of all, we visited, an island, and we got to meet some amazing people, and also. - Well we had lunch on a different island and it's called Pachamanca, and it's where they cook the food in the earth, with hot stones, and they cook it in layers. So, there were potatoes, on top that was chicken, followed by fish, followed by bananas, that were cooked, and it was delicious . - But Janice, just getting to the restaurant, we had to walk through a farm, and kind of a cow patty situation going on. - Well we we're stepping around some, significant items that you wouldn't want to step on. - But, the food was fantastic, and then we ended up going to this wonderful floating island. Spent some time with five families on that floating island, and then we got in this, kind of special little boat that we took a little ride in. - Absolutely, and we saw how they made these floating islands out of cutting reeds, and stacking them. How they made their boats. How they use them to hunt birds, and collect eggs, and of course go fishing, since they live in a lake. Very different lifestyle, but they do have solar panels now. - And, I think they have a cell phone too. - I don't know, but there were light bulbs inside their little tents. So, it was an unusual mix of technology and nature. - So, we had a great day on Lake Titicaca, what a name, and we're heading back to the hotel. So, thank you everybody for watching this video. (energetic Spanish guitar music)