By Sepideh Nassabi (Partner and Chair - Intellectual Property Group) and Carol Liu (Student-at-Law)
What do children’s book authors and pop music stars have in common in the afterlife? Both groups rank among the highest-paid dead celebrities from 2020 to 2021, according to the annual list published by Forbes.
This year, Roald Dahl, the author of Charlie and the Chocolate Factory, beat out Prince and Michael Jackson for the top spot. Netflix reportedly paid the Roald Dahl Story Company $684 million as part of its deal to produce a series of animated shows based on characters created by Dahl, such as Willy Wonka. This massive payday in the hundreds of millions put Dahl head and shoulders above most other dead celebrities on the list, who only received humble sums in the tens of millions.
As Forbes suggested, the competition for licenses to use classic, failsafe content for the development of new shows or movies is starting to look like an “arms race.” You may wonder, how have the owners of these beloved stories and characters that continue to hold the enduring affection of the public been able to cash in with content powerhouses like Netflix?
How licensing works
The answer to the question above lies in the licensing process. Take, for example, Netflix’s licensing deal with Dr. Seuss Enterprises, which led to the animated series, Green Eggs and Ham. Its second season premieres on November 5, 2021. Currently, the first season has an approval rating of 100% from critics on Rotten Tomatoes. Netflix, the licensee, obtained the permission from Dr. Seuss Enterprises, the licensor, to use, advertise, and display the licensor’s trademarks and brands in Netflix’s development of shows based on Dr. Seuss’ stories. The two parties would have entered into a licensing agreement, setting out in detail the terms of usage and how the licensor would be compensated via royalty rates and payments. Thanks to these payments, Dr. Seuss came in at #5 on Forbes’ ranking.
Licensing trademarks in Canada
Section 50 of the Trademarks Act sets out the legal framework for how licensing deals work under Canadian trademark law. If the owner of a trademark gives a licensee permission for the trademark to be used in Canada, then the use, advertisement, or display of that trademark by the licensee will be treated as having the same effect as if the owner has used, advertised, or displayed it themselves. To the extent that the public is put on notice that the use of the trademark is licensed, the presumption at law is that the use is licensed by the owner and under the owner’s control.
The trademark ownership does not change hands via a licensing deal. Rather, for deals regarding valuable trademarks and brands that are time-tested hit makers, both parties would undertake extensive negotiations to ensure that the licensor and the licensee can get into business together. These would include making sure their respective business concerns are sufficiently addressed and the longevity of the marks soundly protected. For example, the licensor may be concerned about exclusivity in order to stave off competition, while the licensee may have conditions about the social influence of content that the trademarks and brands will be seen with or linked to in mass distribution. Since a license granted via contract is essentially a permission to use, the contractual terms of the licensing agreement would govern the subject of acceptable and unacceptable uses. Even though Canadian courts have recognized the validity of oral licensing agreements, the best practice is to set out the terms of any licensing deal in writing.
If you have questions regarding your trademark or intellectual property or any material mentioned in this post, please contact us while you are alive as it might be a challenge for us to provide you with legal advice in the afterlife. Please contact Registered Trademark Agent and Litigation Lawyer Sepideh Nassabi at firstname.lastname@example.org.