A copyright licence agreement is a contract in which the owner of copyright gives another person permission to do something with a creative work that would otherwise be an infringement of the copyright, such as reproducing, publishing or communicating it. The licence holder gets the right to use the work, but the owner keeps ownership of the copyright itself.
That one distinction, between permission and ownership, is the whole concept. This article covers:
- what a copyright licence is and the rights it touches
- how a licence differs from an assignment of copyright
- the difference between exclusive, non-exclusive and implied licences
- what a written licence agreement should cover, and where moral rights fit in
- the misconceptions that most often cost small businesses money
Permission, not ownership
Copyright in Australia is automatic. As soon as an original literary, dramatic, musical or artistic work is created and recorded in material form, copyright subsists in it under Part III of the Copyright Act 1968 (Cth), without any registration, fee or application. A separate category of protection under Part IV of the same Act covers subject matter other than works, including sound recordings, cinematograph films, broadcasts and published editions.
What the owner actually owns is a bundle of exclusive rights. Under s 31 of the Copyright Act, the owner of copyright in a literary, dramatic or musical work has the exclusive right to reproduce the work in material form, publish it, perform it in public, communicate it to the public and make adaptations of it. For artistic works the core rights are reproduction, publication and communication to the public.
A licence is permission to exercise one or more of those rights. The owner, called the licensor, grants the licensee the right to do a defined act, or set of acts, that would otherwise be an infringement. Copyright law treats this as a straightforward proposition: if you use a work in a way that falls outside the permission, you infringe, whether or not you paid for the work.
The contrast with an assignment makes the point. Copyright is personal property, and under s 196 of the Copyright Act it can be transferred by assignment, by will or by devolution by operation of law. An assignment moves the ownership itself, and it has no effect unless it is in writing and signed by or on behalf of the assignor. A licence, by contrast, leaves ownership where it is and simply authorises particular uses. A useful way to think of it: a licence is like renting a right, an assignment is like selling it.
Exclusive and non-exclusive licences
Licences come in two basic forms, and the difference matters commercially.
An exclusive licence is defined in s 10(1) of the Copyright Act as a licence in writing, signed by or on behalf of the owner or prospective owner of copyright, authorising the licensee, to the exclusion of all other persons, to do an act that the owner would otherwise have the exclusive right to do. Two features stand out. First, an exclusive licence must be in writing and signed; a verbal promise cannot create one. Second, the word "exclusive" means the licensee is authorised to the exclusion of all other persons, which includes the owner themselves. An exclusive licensee also has the same rights of action against infringers as the owner would have, under s 119, so they can sue in their own name if someone copies the work without permission.
A non-exclusive licence allows the licensee to use the work, but the owner remains free to use it themselves and to licence the same rights to other people. Non-exclusive licences are far more common in everyday business, and they do not need to be in writing. An email, an invoice, even a course of dealing can create one.
Courts have long accepted that a licence can be implied from the circumstances. In Beck v Montana Constructions Pty Ltd [1964-65] NSWR 229, the court held that engaging a person for reward to produce material capable of being the subject of copyright implies permission for the person giving the engagement to use the material in the manner and for the purpose contemplated between the parties at the time. The classic example is an architect engaged to design a building: the client gets an implied licence to use the plans to build on that site, even though the architect keeps the copyright. The New South Wales Court of Appeal applied and discussed that principle in Torpey Vander Have Pty Ltd v Mass Constructions Pty Ltd [2002] NSWCA 263, and confirmed that the writing requirement in s 196 applies to assignments, not to licences.
The practical consequence cuts both ways. A licence that is implied, or set out in a one-line email, is only as wide as the purpose that was contemplated at the time. If your business later wants to do something different with the work, the implied permission may not stretch that far, and you are back in infringement territory.
What a written licence agreement should cover
A written agreement turns an unspoken understanding into a defined set of rights. The essential clauses, and the questions they answer, are:
- The material: which works are covered, identified precisely by title, version and date.
- The rights granted: which acts are permitted, for example reproduction, publication, communication to the public or adaptation.
- Territory: whether the licence covers Australia only or extends worldwide.
- Duration: how long the licence runs, and what happens to existing uses when it ends.
- Exclusivity: whether the licence is exclusive or non-exclusive, and any limits on the owner licensing the same rights to competitors.
- Fees and royalties: upfront payment, per-use fees, how royalties are calculated, and any right to audit sales figures.
- Sublicensing and transfer: whether the licensee may pass the rights on to another business, or use subcontractors.
- Warranties and indemnities: the owner warrants they own the copyright and that the work does not infringe anyone else's rights, and each party agrees who bears the loss if something goes wrong.
- Moral rights: written consents dealing with attribution and treatment of the work.
- Governing law and disputes: which law applies and how disagreements are resolved.
Each of these is a place where ambiguity turns into a dispute later. A licence that says a business may "use" a photograph, without saying where, for how long and on what terms, has not really fixed anything.
Moral rights survive the licence
Licensing the economic rights in a work does not deal with the author's moral rights, which are protected separately under Part IX of the Copyright Act. These include the right of attribution of authorship, the right not to have the work falsely attributed, and the right of integrity, which protects the work from derogatory treatment.
Moral rights are personal to the author. Under s 195AN(3) they cannot be transmitted by assignment, by will or by devolution by operation of law, so the author keeps them even after the copyright itself is sold or licensed. They also cannot be waived, but an author can consent in writing to particular acts under s 195AWA. A licence that says nothing about moral rights leaves them intact, which is why well-drafted agreements include a written consent clause dealing with attribution, cropping and modification of the work. If moral rights are infringed, a court can grant an injunction, award damages, order a public apology or order that a false attribution or derogatory treatment be removed, under s 195AZA.
A licence in practice
A concrete example shows how the pieces fit together. Beacon Coffee Roasters, a Melbourne roastery, commissions photographer Maya to shoot a set of product images for its website and social media for $2,500. Nothing is signed. Maya owns the copyright: the author is the first owner of copyright under s 35(2) of the Copyright Act, and the exception that gives ownership to a commissioner applies only to photographs taken for a private or domestic purpose, portraits and engravings. A commercial product shoot does not qualify, so Beacon has only whatever permission Maya gives it.
Beacon later asks for the images to appear on its packaging and in a national advertising campaign, and the parties sign a licence agreement. It is an exclusive 12-month licence covering the website, social media and packaging, for Australia only, signed by both parties. Because it is in writing and signed, it satisfies the definition of an exclusive licence. During that year, Maya cannot sell the same images to Beacon's competitor, and Beacon cannot use them outside the agreed channels or take the campaign to New Zealand without a variation. If Beacon runs a television commercial using the images without amending the licence, it infringes, because a television broadcast is a communication to the public that falls outside the scope of the permission.
When the 12 months end, Beacon renews. This time the parties add a broadcast right for television and online video, an ongoing licence for the packaging, a written moral rights consent so Maya's attribution can be handled consistently across formats, and a clause confirming Maya owns the copyright in the images. Everyone now knows what each side can do, and the business can plan campaigns without a lawyer having to reconstruct the deal from a thread of emails.
Common misconceptions
The same misunderstandings recur in almost every licensing dispute involving a small business:
- "I paid for it, so I own it": Payment buys the work, not the copyright. Under s 35, the author is the first owner of copyright in most cases. The exceptions are works made by an employee in the course of employment, where the employer owns the copyright, and commissioned private or domestic photographs, portraits and engravings, where the commissioner owns it. A logo, website copy, marketing photos or a jingle commissioned from a contractor all stay with the creator unless the copyright is assigned in writing.
- "A handshake deal means I have nothing": A non-exclusive licence can be created orally or implied from conduct, as Beck v Montana establishes. The trap runs the other way: an exclusive licence must be in writing and signed, and an assignment must be in writing and signed. A business that believes it has bought the copyright outright, on a handshake, will find it owns nothing if the document was never signed.
- "Copyright needs registration, or a © symbol, to exist": Neither is required in Australia. Protection is automatic on creation, and the © symbol is optional notice, not a condition of protection. What registration does apply to in Australia are trade marks and designs, which are different rights.
- "Crediting the creator is enough": Attribution is a separate moral right, not a substitute for permission. Using a work without a licence is infringement even with a prominent credit line, and cropping or altering a work can breach the right of integrity even where the economic use was licensed.
When a lawyer should review your licence
A copyright licence agreement looks simple, but the commercial damage from a badly drafted one is usually done long after the signature. A lawyer's role is to make the permission match the business plan. That means identifying what intellectual property actually exists and who owns it, which is often murkier than the business assumes, and then drafting the scope of the licence so the permitted acts, territory, duration and exclusivity line up with how the business intends to use the work.
A practitioner also handles the points that routinely get missed. These include the moral rights consents, warranties that the owner actually owns the material and has not already licensed it to someone else, and the effect of s 196(4) of the Copyright Act, under which a licence binds every successor in title to the copyright. That provision matters when a business is sold: a licence granted by the old owner continues to bind the new owner, which is exactly why purchasers need a proper intellectual property audit, not just a signed transfer form. And when the relationship breaks down, or a competitor appears to be copying licensed material, a lawyer can assess whether the use falls inside the scope of the licence and what remedies are available for infringement.
The question your licence should answer
The misunderstanding that causes the most real loss is scope. Businesses assume the permission they have is wider than the words they agreed to, and they find out otherwise when a campaign is already running, a product is already on shelves or a business is being sold. After reading this, you should be able to answer one question about your own situation: for every piece of content your business uses, can you point to the document that says what you are allowed to do with it, and does that document cover what you are doing with it today? If the answer is no, the fix is a written licence that says exactly what is permitted, because the law will hold you to what you agreed, not what you intended.