White Paper: Legal Basis, Framework, and Structure Explained

This website serves as a tool to provide intellectual property monetization through copyright licensing. Users can benefit from this website, a bespoke system that is part of a unique legal arrangement that automates, streamlines, and optimizes the process of intellectual property rights clearance.

Basically, an owner of a creative work has copyright in the work. Copyright is a bundle of rights. The bundle includes the rights to use, make copies, publish, distribute, display, etc. The copyright owner not only exclusively enjoys all of these rights, but can even license (i.e., give others a written permission to enjoy) one or more of these rights. The license can also be granted by an agent of the copyright owner. The owner or the agent can also prescribe a manner in which these rights can be acquired and used.

This website helps to connect the original copyright owners with an intellectual property lawyer as their authorized agent, and through the latter, with the licensees. The system of monetization explained here involves a nonexclusive worldwide distribution license agreement. Certain intellectual property rights are transferred to users upon acquiring a special copyright license. Users can then exercise these rights to realize profits.

This white paper explains the legal basis and the legal framework for this system, i.e., the special legal arrangement. It also contains a detailed explanation of how this system works and how this website operates.

Table of contents:
1. Legal basis
    1.1 Copyright licensing in the digital environment
        1.1.1 What is intellectual property?
        1.1.2 What is copyright?
        1.1.3 What rights does copyright provide?
        1.1.4 The right to distribute
        1.1.5 ‘Copyright in the work’ distinguished from ‘copy of the work’
    1.2 Transferring and trading copyright: licensing and assignment
        1.2.1 What is a licensing agreement?
        1.2.2 Assignment, licensing, and franchising: a comparison
        1.2.3 Copyright licensing
        1.2.4 What is a nonexclusive license?
        1.2.5 What is a non-sublicensable license?
        1.2.6 Difference between agency and licensing
        1.2.7 End-User License Agreements (EULAs)
    1.3 Intellectual property monetization
        1.3.1 What is royalty?
        1.3.2 How are royalties different from license fees?
        1.3.3 Profit from publication
2. Legal Framework
    2.1 Special legal arrangement
        2.1.1 Salient features of the terms and conditions
        2.1.2 Legal liabilities
        2.1.3 Debut featured collection
        2.1.4 Distribution in the prescribed manner
    2.2 Pecuniary liabilities
        2.2.1 Executory consideration (promise to pay)
        2.2.2 Distribution for profit
        2.2.3 Profits compared with other forms of pecuniary benefits
   2.3 Legality of the arrangement
        2.3.1 Legal devices used in the special legal arrangement
        2.3.2 Comparison with other arrangements
        2.3.3 Is this arrangement a scheme?
3. Structure of the website
   3.1 Site map
   3.2 License acquisition form
   3.3 Account page and transactions tab
   3.4 Account wallet
   3.5 Privacy, security, and compliance

1. Legal basis
Licensing agreements are often used by licensors to commercialize the intellectual property that they own. These agreements grant the licensees specific rights in the licensed intellectual property such as the right to use the trademark, patented technology, or the right to produce and/or sell goods. In exchange, the licensees typically pay upfront fees and/or royalties to the licensors.

Although this practice has its advantages like the licensors’ ability to utilize licensees’ distribution channels and reach foreign markets, lower costs, and generate passive revenues through royalties; while licensees gain access to established intellectual property, enter the market more quickly, and reduce research and development costs; there are certain disadvantages to it at the same time. For example, licensors might lose control of their intellectual property, or it could be exposed to the threat of theft, unauthorized use, or piracy, and the licensors have to depend on the skills and abilities of the licensees who themselves could feel the pressure of production and distribution, timely payment of upfront fees and royalties, maintaining accounts, so on and so forth.

These disadvantages can be reduced by a special legal arrangement (see 2.1 infra) through which the original copyright owners are able to transfer some of the interests in the copyright to licensees through an intellectual property lawyer who acts as their authorized agent, the right of distribution being among these interests. Although distribution involves four stages i.e., offer to sell, acceptance of the offer, receiving the price, and delivering a tangible copy of the intellectual property’s subject matter; through this arrangement, licensees (distributors) only make offers to sell, while a legal entity receives payments and delivers items on behalf of the licensees (distributors) as their authorized agent, so they don’t personally have to.

The benefits of this arrangement are that firstly, it is convenient for all the concerned persons – the artists, creators, attorneys, agents, users, customers, license holders, and third parties; secondly, it is easy for users to carry out copyright transfers; thirdly, each and every transaction of rights clearance is recorded in a centralized database, so it is traceable; fourthly, because it is centralized, all the data is handled by professionals working behind the scenes; fifthly, it is time efficient and cost efficient because all the heavy lifting is handled by the website; sixthly, it counters piracy; and seventhly, it is legal, permissible, and can be carried out as of legal right.

This legal arrangement is based on the concept of copyright as recognized by domestic and international laws. Copyright is a bundle of moral and economic rights including, among others, the rights of publication, distribution, reproduction, public display or performance, and communication. Economic rights in intellectual property can be transferred, sold, and bought through legal devices such as licenses or assignments.

When license fees are paid for copyright or intellectual property rights clearance transactions, certain predetermined amounts of royalties, attorney’s fees, net profits, costs, expenses, and taxes have to be channeled. This website, through its administrator, connects several parties such as the original copyright owners, the commercial lawyers and professionals, the distributors or license holders, various third parties for storage, logistics, online payment services etc., financial institutions, and the concerned government agencies.

The arrangement relies on legal devices (i.e., tools or mechanisms used to achieve a specific legal outcome; legal instruments employed to manage rights, obligations, or relationships within the legal framework) permitted or created by international commercial law, common law, as well as the relevant statutory law and settled principles of intellectual property law.

The sources relied upon or referred to for justifying the legal basis for the arrangement include, among others, the Universal Copyright Convention, the WIPO Copyright Treaty, Berne Convention for the Protection of Literary and Artistic Works, Title 17 of the U.S. Code as well as other statutes and domestic laws, Intellectual Property Office of UK, judicial opinions by the U.S. Supreme Court, Black’s Law Dictionary, UpCounsel, Investopedia, and Encyclopædia Britannica. The sources also include various publications by the World Intellectual Property Organization, a specialized agency of the United Nations. It is the global forum for shaping international rules and policy, delivering global intellectual property services, cooperating with countries and partners to make IP work for development, and providing information and shared infrastructure.

This section of the white paper not only explains the legal basis for this arrangement but also explains the relevant legal terms and principles of international commercial and intellectual property law.

1.1 Copyright licensing in the digital environment
[The digital environment is facilitating copyright licensing by different means, including by helping to rapidly locate and identify licensors and licensees, providing virtual platforms for exchange, and automating contracts, payments, and the delivery of goods and services. In this regard, digital technology is greatly impacting the territorial and temporal framework for copyright licensing. Moreover, several new licensing practices are emerging in the new technological environment.

The proliferation of new licensing practices appears to reflect the development of collaborative creativity and a new, more dynamic position of the user in the network environment. Each user is now, thanks to readily available digital technologies and media hardware and software, a potential consumer, producer, creator, and distributor of creative work. While licensing is finely tuned for the analog world, the digital environment has changed how copyright content is marketed, distributed, delivered, and consumed, and this has had significant consequences for the upstream and downstream processes of rights clearance.]¹

[It becomes clear that there is a very large and growing marketplace for the products of the creative industries. In fact, the growth rate of this marketplace has been spectacular in recent years as the digital age has been extending globally. A very important characteristic of this recent growth is that it involves individuals and small business entities as well as the multinational companies that we would expect. The opportunity to exploit intellectual property rights has become much more individual and local than ever before.

There has always been an intersection between creativity and money. The famous artists of the Renaissance sought out patrons so that they could employ their talent. Then there was a period during which the creative industries were dominated by large enterprises. The publishing of a book required massive printing facilities and large distribution organizations that were only within the reach of large enterprises. Very much the same situation existed with respect to the music industry. Motion picture productions required large investment, huge physical plants, and a distribution organization. To reach the public of users and consumers, creators and authors depended on intermediaries with a large distribution network – publishers (books, music and video, film distributors, media companies, etc.).

Today, a book can be written on a home computer, self-published and distributed via the Internet. A video clip can be captured with a smartphone and again, distributed via the Internet. So there is a much larger body of people who would benefit by exposure to the law and economic principles associated with the successful exploitation of intellectual property rights.]³³

1.1.1 What is intellectual property?

[Property is defined as that which is peculiar or proper to any person; that which belongs exclusively to one; in the strict legal sense, an aggregate of rights which are guaranteed and protected by the government. The word is also commonly used to denote everything which is the subject of ownership, corporeal or incorporeal, tangible or intangible, visible or invisible, real or personal; everything that has an exchangeable value or which goes to make up wealth or estate.]²

Generally speaking, anything that can legally be owned can be considered property. Property can be categorized as tangibles and intangibles. The former can be further categorized as real property and personal property, and the latter includes intellectual property, goodwill, reputation, brand recognition, and certain other intangibles such as geographical indications. [While tangible assets can result from intellectual property, the intellectual property itself is intangible.]³

Intellectual property (IP) refers to any valuable asset that is proprietary and intangible, like creations of the mind, such as inventions, literary and artistic works, designs, symbols, names, and images used in commerce. Also, creative ideas, knowledge, and expressions of the human mind that have some form of commercial value, are protectable under trademark, service mark, trade secret, patent, or copyright laws from dilution, infringement, and imitation. The definition of the term intellectual property covers a lot of intangible assets. These are intangible interests that have been defined and have protection under common or statutory law.

Examples of intellectual property or intangible assets include:

• Patents or technical inventions.
• Trademarks, such as brand logos, slogans, jingles, catchphrases, etc.
• Copyright and related rights that creators have in their literary, artistic and scientific works, such as written materials, illustrations, images, paintings, sculptures, comics, computer codes, melodies, videos, motion pictures, recorded audio, podcasts, etc.
• Designs, such as industrial designs of products.
• Trade secrets or methods of doing something known only to certain individuals or organizations.
• Geographical indications, i.e., signs used on products that have a specific geographical origin and possess qualities or a reputation that are due to that origin.
• Domain names, which are website addresses.
• Others, such as a company’s goodwill and reputation.

[Essentially, intellectual property rights such as copyright, patents and trademarks can be viewed like any other property right. They allow the creators or owners of IP to benefit from their work or from their investment in a creation by giving them control over how their property is used.]⁴

[Intellectual property rights are a subset of intangibles. Among the distinct properties of intangibles is that their use and application are not limited to one user or a single place of use. Intangibles can generate scalable benefits, and modern technology (audio-video recording, internet, broadcasting) can boost the scalability of benefits.

One of the very important differences between intellectual property rights and other forms of property is that intellectual property rights are not fixed in a geographical location or exclusively attached to some particular industry, product, or service. That is, intellectual property rights can be exploited by multiple parties for multiple purposes. There is a unique versatility associated with intellectual property that contributes substantially to its value.]³³

1.1.2 What is copyright?
[Copyright (or author’s right) is a legal term used to describe the rights that creators have over their literary and artistic works. Works covered by copyright range from books, music, paintings, sculpture, and films, to computer programs, databases, advertisements, maps, and technical drawings.]⁵

[Copyright (is) the exclusive, legally secured right to reproduce, distribute, and perform a literary, musical, dramatic, or artistic work. (Copyright) supplies the holder with a limited monopoly over the created material that assures him of both control over its use and a portion of the pecuniary benefits derived from it.]¹⁴

[(Copyright is) the right of literary property as recognized and sanctioned by positive law. (It is) an intangible, incorporeal right granted by statute to the author or originator of certain literary or artistic productions, whereby he is invested, for a limited period, with the sole and exclusive privilege of multiplying copies of the same and publishing and selling them.]²²

[Copyright prevents people from copying your work, distributing copies of it, whether free of charge or for sale, renting or lending copies of your work, performance, showing or playing your work in public, making an adaptation of your work, and putting it on the internet.]³²

[The copyright is an exclusive right to the multiplication of the copies for the benefit of the author or his assigns, disconnected from the plate or any other physical existence. It is an incorporeal right to print and publish the map, or, as said by Lord Mansfield in Millar v. Taylor, 4 Burr. 2396, ‘a property in notion, and has no corporeal tangible substance.’”]¹⁷

Under common law, copyright protection is reserved for creative works such as art or writings. The kinds of work usually covered by copyright include, but are not limited to, books, anthologies, compilations, plays, scripts, articles, blog posts, computer codes, software, podcasts, website designs, clothing and jewelry designs, graphic designs, architectural drawings, works of art, sculptures, curations, musical works, lyrics, motion pictures, and choreography.

1.1.3 What rights does copyright provide?
After researching the international, domestic, and customary laws on the subject, including the [Universal Copyright Convention]¹⁵, the [WIPO Copyright Treaty]¹⁶, the [Berne Convention for the Protection of Literary and Artistic Works]²⁷, [Title 17 of the U.S. Code]²⁸, more particularly § 106, publicly available information on the [website of the Intellectual Property Office of the UK]²⁶ as well as information from the [Encyclopædia Britannica]¹⁴ and definitions from the [Black’s Law Dictionary]²², it becomes obvious that the universally recognized concept of copyright is not confined to the right to produce copies. Copyright is a bundle of rights encompassing all the exclusive rights granted to copyright owners that allows them to control how their work is used and exploited.

[There are two types of rights under copyright:

• Economic rights, which allow the rights owner to derive financial reward from the use of their works by others; and
• Moral rights, which protect the non-economic interests of the author.]⁵

[Copyright includes both economic and moral rights. Essentially, economic rights involve the right to control the distribution of a work. In other words, a copyright owner can stop anyone from copying or using a work without permission – including, for example, by translating it, reproducing it, performing it or broadcasting it. Exactly how the owner enforces these rights will depend on the national laws of the country concerned, but countries often provide a mixture of civil and criminal penalties for copyright infringement.]⁴

[Most copyright laws state that the rights owner has the economic right to authorize or prevent certain uses in relation to a work or, in some cases, to receive remuneration for the use of their work (such as through collective management).]⁵

The exclusive rights commonly associated with the copyright bundle include 1) the right to reproduce or make copies of the copyrighted work, 2) the right to create new works or derivative works based on the original copyrighted work, 3) the right to distribute copies of the copyrighted work to the public, for or not for profit, 4) the right to rent or lend copies of the work to the public, 5) the right of public performance, i.e., to perform the copyrighted work publicly, 6) the right to display the copyrighted work publicly, 7) the right to transmit or communicate the copyrighted work electronically, 8) the right to import copies of the copyrighted work, and 9) certain moral rights related to the work’s authorship, i.e., the right of paternity or attribution and the right of integrity or reputation.

[Economic rights give the opportunity to make commercial gain from the exploitation of copyright. This is usually achieved by licensing others to use the work, or by selling the rights. […] Moral rights protect non-economic interests, therefore, copyright works need to be protected in ways that are different to traditional forms of property. Unlike economic rights, moral rights over literary, dramatic, musical and artistic works and film, as well as some performances, that include the right to attribution, the right to object to derogatory treatment of a work, the right to object to false attribution, and the right to privacy of certain photographs and films cannot be sold or otherwise transferred, although the rights holder can choose to waive these rights.]²⁶

[Examples of widely recognized moral rights include the right to claim authorship of a work and the right to oppose changes to a work that could harm the creator’s reputation.]⁵

1.1.4 The right to distribute
Black’s Law Dictionary defines publication as “the offering or distribution of copies of a work to the public”. 17 U.S.C. § 101 defines the word “publication” as [the distribution of copies […] of a work to the public by sale or other transfer of ownership, […]. The offering to distribute copies […] to a group of persons for purposes of further distribution, […] constitutes publication. […]. “Copies” are (defined as) material objects, […], in which a work is fixed by any method now known or later developed, and from which the work can be perceived, reproduced, or otherwise communicated, either directly or with the aid of a machine or device. […]. As per this section, “copyright owner”, with respect to any one of the exclusive rights comprised in a copyright, refers to the owner of that particular right. It defines a “compilation” as a work formed by the collection and assembling of preexisting materials or of data that are selected, coordinated, or arranged in such a way that the resulting work as a whole constitutes an original work of authorship. […] While “Pictorial, graphic, and sculptural works” include two-dimensional […] works of fine […] art, photographs, prints and art reproductions […]. § 102 states that copyright protection subsists, in accordance with this title, in original works of authorship. […]. Works of authorship include […] pictorial, graphic, and sculptural works […]. And § 103 (a) states that the subject matter of copyright as specified by section 102 includes compilations […].]²⁸

While interpreting the law on this subject, the [U.S. Supreme Court has opined that “[…] it is evident that to secure the author the right to multiply copies of his work may be said to have been the main purpose of the copyright statutes. […] In order to secure this right it was provided in that statute, as it has been in subsequent ones, that the authors of books, their executors, administrators, or assigns, shall have the ‘sole right and liberty of printing, reprinting, publishing, and vending’ […].”]¹⁸

Regarding the right of distribution, Article 6(1) of the [WIPO Copyright Treaty states that “Authors of literary and artistic works shall enjoy the exclusive right of authorizing the making available to the public of the original and copies of their works through sale or other transfer of ownership.”]¹⁶

It is pertinent to reproduce Article VI of the Universal Copyright Convention:
[“Publication”, as used in this Convention, means the reproduction in tangible form and the general distribution to the public of copies of a work from which it can be read or otherwise visually perceived.]¹⁵

1.1.5 ‘Copyright in the work’ distinguished from ‘copy of the work’
[Copyright belongs to the person who has created a literary or artistic work, such as a film or a computer program. […] Copyright protection is the exclusive (sole) right of the rights holder to dispose of the work or produce copies and so make the work or right available to the general public.]²⁴

The right vested in the copyright owner to publish, distribute, or sell copies of the copyrighted work is not the same as the right vested in the owner of a particular copy of the work to sell that very copy. It is a universally recognized principle of copyright law that ownership of copyright is distinct from ownership of material objects. 17 U.S.C. § 202 states that the [ownership of a copyright, or of any of the exclusive rights under a copyright, is distinct from ownership of any material object in which the work is embodied. Transfer of ownership of any material object […] does not of itself convey any rights in the copyrighted work embodied in the object; nor, in the absence of an agreement, does transfer of ownership of a copyright or of any exclusive rights under a copyright convey property rights in any material object.]²⁸

1.2 Transferring and trading copyright: licensing and assignment
[Generally, economic rights can be transferred and divided. A right owner may agree to let someone use a work under certain conditions (licensing), or they may give or sell the rights to someone who then becomes the new owner (assignment).]⁴

[The owner of copyright in a work is generally, at least in the first instance, the creator of a work, i.e., the author. […] The laws of many countries provide that the initial right owner may transfer all economic rights in a work to a third party […]. Copyright rights are divisible, so it is possible to have multiple right owners for the same or different rights in the same work.]⁶

1.2.1 What is a licensing agreement?
Intellectual property gives its owners and licensees various ways to earn money. In some cases, licensing may be preferable to an outright sale. Distributing intellectual property such as videos, apps, or e-books is an example of licensing instead of selling. The information contained in a book or video isn’t really sold since it involves no transfer of ownership. Instead, the customer purchases a license to use that information.

A licensing agreement is a legal contract that allows the licensors, and in some cases the licensees, to earn money from intellectual property, like a patent, copyright, or trademark. With this type of agreement, the licensors or the persons owning the intangible assets get a license fee or royalty for letting the licensees use their intellectual property. [A licensing agreement will clearly define how the IP may be used by the licensee and how the licensor will be compensated for it.]¹²

[Licenses can also be thought of as contracts. These contracts are used to determine what licensees are able to do with the intellectual property in question.]¹¹ [The licensor may be allowed to monitor the actions of the licensee, while they use their IP.]⁷ [For the licensee, this agreement is a method to obtain something of value that the licensee cannot create but may have expertise in that area to generate revenue. The agreement will also spell out all the financial terms, detailing how the grantor of the license will be paid for the use of the IP. A licensing agreement is a legal contract with rights and responsibilities for all involved. If a copyright is licensed, the purpose is limited; the licensee may not use the IP as he or she wants. It must be used in accordance with the agreement. Payments are generally paid on a percentage structure, but other arrangements can be made if desired.]⁸

1.2.2 Assignment, licensing, and franchising: a comparison
Here’s a brief comparison of assignment, licensing, and franchising:

• With regard to the transfer of rights and ownership, assignment is a complete transfer of all ownership rights in all or part of a specific intellectual property (IP) asset like copyright, from the holder (assignor) to another party (assignee). The assignor no longer retains any ownership rights or control over the assigned portion of the asset. To the contrary, licensing is the granting of permission (license) to another party (licensee) to use specific rights of an IP asset like a copyright, for a defined purpose and period. The licensor retains ownership but grants the licensee certain rights, like reproduction or distribution. Franchising on the other hand is a specific type of licensing agreement that grants a franchisee the right to operate a business using the franchisor’s established brand, business model, and intellectual property like trademarks and trade secrets. The franchisee operates under the franchisor’s brand and standard guidelines, and pays fees for the right to use the franchise.
• With regard to the level of control, in an assignment, the assignor relinquishes all control over the assigned asset while the assignee assumes full control over the assigned portion of the copyright, including the right to use, sell, or license it further. In a licensing agreement, the licensor retains significant control over the licensed work, often specifying the scope of use, duration, limitations, and the terms and conditions outlined in the license agreement. In franchising, the franchisor exercises extensive control over the franchisee’s operations, ensuring consistency with the brand, franchise model and quality standards. This typically involves detailed manuals, training, and ongoing support and this level of control is usually more extensive than in licensing.
• With regard to the purpose or suitability, an assignment is often used for transferring ownership rights permanently or for a long duration, especially when the assignor no longer needs the copyright or wants to monetize it through a one-time sale. Licensing, in contrast, is used to grant specific usage rights for a limited time or specific purpose. This allows the licensor to control how their work is used and potentially generate ongoing revenue. It is suitable for generating income and allowing others to use the IP asset in controlled ways, while still retaining ownership and control. However, franchising is primarily used to expand a business model and brand quickly, leveraging the franchisee’s investment and local market knowledge. The franchisor benefits from royalties or fees while maintaining control over the brand and operation. It is suitable for expanding a successful business model quickly by allowing others to operate under established systems and branding, while maintaining control over quality and consistency.

1.2.3 Copyright licensing
[Licensing means that the copyright owner retains ownership but authorizes a third party to carry out certain acts covered by the economic rights, generally for a specific period of time and for a specific purpose. For example, the author of a novel may grant a publisher a license to make and distribute copies of the novel. At the same time, the author may grant a license to a film producer to make a film based on the novel.]⁶

The World Intellectual Property Organization, in its Guide on the Licensing of Copyright and Related Rights recognizes that [the model – or at least the basic structure – of individual licensing of copyright and related rights is relatively simple. The owner of rights authorizes the use of the work or object of related rights against the remuneration and under the conditions fixed by himself.]²³

[It is for the copyright owner to decide whether and how to license use of a work. A (license) is a contractual agreement between the copyright owner and user which sets out what the user can do with a work. Any (license) agreed can relate to one or more of the rights granted by copyright and can also be limited in time or any other way. Contractual agreements are important to help exploit the copyright work, negotiate the sale or other transfer of the copyright, agree a (license) with someone who wants to use the copyright work, or for a collecting society to administer some or all of the economic rights.]²⁵

The law applicable to the debut work on this website, provides that [the owner of the copyright in any existing work or the prospective owner of the copyright in any future work may grant any interest in the copyright by license in writing signed by him or by his duly authorized agent.]²⁹

1.2.4 What is a nonexclusive license?
[Licenses may be exclusive, with the right owner agreeing not to authorize any other party to carry out the licensed acts; or nonexclusive, which means the right owner may authorize others to carry out the same licensed acts.]⁶ This is because [copyright rights are divisible, so it is possible to have multiple right owners for the same or different rights in the same work.]⁶

[The exclusive rights of a copyright owner may be licensed on an exclusive or nonexclusive basis. A copyright exclusive license is one in which ownership in one or more rights is transferred by the copyright owner. A copyright nonexclusive license occurs when the owner retains ownership of the copyright and/or may license the same right to others.]³¹

1.2.5 What is a non-sublicensable license?
Under a non-sublicensable license, the licensee (i.e., recipient of the license) is not allowed to grant further licenses (i.e., sublicenses) to others. This means they cannot legally authorize someone else to use the licensed material in the same way they are allowed to. The right to use, modify, or distribute the licensed material cannot be further granted to someone else, so the licensee is restricted from acting as a middleman and creating a sublicense to share the rights. This protects the control of the licensors over who uses their intellectual property, restricts the licensed rights to the licensees only, and leaves the licensors solely and exclusively competent to grant licenses.

On the other hand, if a license is sublicensable, it means that the licensee can grant a secondary license (or sublicense) to a third party (sub-licensee), granting them permission to use the licensed material or allowing them to access some or all of the rights outlined in the original license or to use the intellectual property in a way authorized by the original license.

1.2.6 Difference between agency and licensing
Agency agreements focus on representation and acting on behalf of another. An agent acts in the principal’s name and binds them in contracts with third parties, so the principal is generally liable for the agent’s actions within the scope of their authority. On the other hand, license agreements focus on granting permission to use specific intellectual property. A licensee is liable for their own actions related to the licensed IP, while the licensor (owner of the IP) retains liability for any inherent defects or problems with the IP itself.

The Hague Conference on Private International Law has adopted the Convention on the Law Applicable to Agency which provides a framework for resolving conflicts of law in international agency relationships. It [determines the law applicable to relationships of an international character arising where a person, the agent, has the authority to act, acts or purports to act on behalf of another person, the principal, in dealing with a third party. […] (It extends) to cases where the function of the agent is to receive and communicate proposals or to conduct negotiations on behalf of other persons.]³⁷ An agency agreement grants authority to one party (the agent) to act on behalf of another party (the principal) in legal or business matters. The agent acts in the principal’s name and creates a contractual relationship between the principal and a third party. An agency agreement is often used for selling goods, representing clients in negotiations, or providing professional services.

Unlike an agency, a license agreement grants permission to one party (the licensee) to use another party’s (the licensor’s) intellectual property (IP) in a specific way. The licensee gains limited rights to use the IP, such as a trademark, copyright, or patent, while the licensor retains ownership. The scope of the license is clearly defined, including how the IP can be used, geographically, and for what duration. [The World Intellectual Property Organization (WIPO) administers international treaties on intellectual property rights, which set minimum standards for protecting IP and provide a framework for licensing agreements across borders.]²³

1.2.7 End-User License Agreements (EULAs)
Most of us often come across End-User License Agreements (EULAs). These are legal contracts between copyright owners (through publishers) and end-users. An EULA protects the copyright owner’s intellectual property and establishes clear expectations for users regarding how they can legally use the material. It helps publishers and authors protect their intellectual property and control how books or other copyrighted materials can be accessed and used. It essentially outlines the terms and conditions under which one can use the software, book, or other copyrighted material.

For example, it may limit what you can do with the material, such as copying, modifying, lending, translating, distributing, or reverse engineering it. It may specify how many devices you can use the material on or restrict usage to a specific device or platform, how you’re allowed to use it (personal use, commercial use, etc.), whether you can share it with others, e.g., distribute an ebook beyond a single device, or use excerpts, and it may limit how much content you can copy, paste, or print from the book.

An EULA typically states that the end-user is granted a license to use the software or book on a personal level, restricting further distribution, sharing, lending, or reselling the product to others. This prevents unauthorized copies from circulating and ensures that the artists, creators, authors, publishers, and copyright owners receive payment for each licensed user. EULAs for ebooks might not always be as prominent as those for software installations. You might find them embedded in the purchasing process, within the ebook file itself, or on the vendor’s website.

EULAs often include a clause specifically restricting further distribution of the material. A creative work might go through multiple stages of development and distribution, but the EULA establishes the conditions for the person using it at the end of the chain. EULAs are distinct from development or distribution agreements and are called “end-user” agreements because they focus on the rights and limitations of the final user who interacts with the material. EULAs act as the final leg in a chain of licenses.

1.3 Intellectual property monetization
[Today the most current understanding of monetize/monetizing is ‘to utilize (something of value) as a source of profit,’ or ‘to convert an asset into money or a legal tender.’ […] One of the very important differences between intellectual property rights and other forms of property is that intellectual property rights are not fixed in a geographical location or exclusively attached to some particular industry, product, or service. That is, intellectual property rights can be exploited by multiple parties for multiple purposes. There is a unique versatility associated with intellectual property that contributes substantially to its value. […] Intellectual property rights have little or no intrinsic value. They attain value by being successfully exploited. Exploitation can be internal – the IP owner can use the IPRs exclusively in his/her business in order to provide new products/services, enhance existing ones, gain premium prices, create barriers to competitive entry, and so forth. Or it can be external – the IP owner can sell, license or barter the IPRs to others in whole or in part.]³³

[Under some national laws, the exclusive right of the author or other right owner to authorize broadcasting is replaced, in certain circumstances, by a right to equitable remuneration, although this type of limitation on the broadcasting right has become less common. […] Most copyright laws state that authors or other right owners have the right to authorize or prevent certain acts in relation to a work. […] Many laws include a right to authorize the distribution of copies of works. The right of reproduction would be of little economic value if copyright owners could not control distribution of copies of their works made with their consent.]²³

[The act of using intellectual property to generate revenue is known as IP monetization.]¹⁰ It creates various streams of income for various rights holders such as the income received by the owner from multiple licensees, the income received by the owner in self-exploitation, and the income received by the licensees from their own exploitation. These are commonly known as royalties, license fees, and profits.

1.3.1 What is royalty?
[Royalty income is a type of payment for an intangible work or other intellectual property that is patented, trademarked, or copyrighted.]⁹ For example, when an author signs a publishing deal with a publisher, the publisher sells the book, and the author receives royalties. [Authors may transfer the economic rights in their works to individuals or companies best able to market them, in return for payment. Such payments are often made dependent on actual use of the works and are referred to as royalties.]⁶ [Authors of original works of art are entitled to a royalty each time one of their works is resold through an art market professional.]³⁰

1.3.2 How are royalties different from license fees?
[Royalties are ongoing, usage-based payments for the right to use an asset or a property. They are generally calculated as a percentage of gross revenue or net profit. […] Licensing fees, by contrast, are usually a fixed, predetermined amount, paid for the right to use intellectual property, such as patents, trademarks, or copyrights, owned by another person or entity. […] A licensing fee can also refer to a sum paid to use intellectual property of various kinds, such as a copyrighted work, like a photograph or a logo, that is owned by someone else.]¹³

1.3.3 Profit from publication
At common law, an author has a property in his manuscript and may have redress against anyone who undertakes to realize a profit from its publication without authority of the author. Reference may be made to Wheaton v. Peters, the first U.S. Supreme Court ruling on copyright, in which a majority of the bench opined that [the protection for a limited time by the aid of penalties, against the violators of the right, proceeds upon the ground that the author, within that time, can so multiply his work and reap such profits therefrom as to enable him to rest upon his common law right without the extraordinary aid of penal laws […] (and) that an author at common law has a property in his manuscript, and may obtain redress against anyone who deprives him of it or by obtaining a copy endeavors to realize a profit by its publication […].]¹⁹

The World Intellectual Property Organization recognizes that [(as) an alternative to damages, the plaintiff may be entitled to recover any profits made by the defendant through the infringing activities.]²¹

It would not be out of place here to cite an extract from the opinion by the [U.S. Supreme Court in Sheldon v. Metro-Goldwyn Pictures Corp.:
“The Circuit Court of Appeals, reversing the District Court, found and enjoined the infringement and directed an accounting. […] Thereupon the District Court confirmed with slight modifications the report of a special master which awarded to petitioners all the net profits made by respondents from their exhibitions of the motion picture. […] The Circuit Court of Appeals reversed, holding that there should be an apportionment and fixing petitioners’ share of the net profits[…]”]²⁰ The US Supreme Court affirmed the verdict of the Circuit Court of Appeals. It can therefore be deduced that what a copyright holder realizes from the exercise of his economic rights in the copyrighted work is referred to as “profit”.

Certain activities might not be considered publication if the copies are distributed for a limited purpose unrelated to commercial exploitation, like sharing drafts with colleagues or submitting work for review. However, distribution for profit can be a factor in determining whether an act qualifies as publication.

2. Legal Framework
The legal framework referred to here is a set of cross-referenced documents that provide a basis for this website to serve as a tool to provide intellectual property monetization through copyright licensing. This framework is a foundation that establishes a legal structure and creates certain contractual rights and obligations. It also covers policies, procedures, and other aspects of the website’s daily operations. The purpose of the legal framework is to provide a structured and organized approach to ensure that the website operates lawfully, ethically, and responsibly within the broader legal environment.

The documents that make up the legal framework are the publishing contract, the terms and conditions, the extended license, a license acquisition form, various policies and notices, transaction tables, user account page and dashboard, various email templates, a web page that spells out the prescribed manner for distributions, and various contracts with third parties for utilizing their professional services such as payment processing, banking, accounting, printing, manufacturing, packaging, logistics, web hosting, etc.

This section of the white paper will explain the special legal arrangement in detail and how it uses the legal framework, placing reliance on the legal principles discussed in the previous section. It will shed light on the salient features of one of the most important constituents of the legal framework, i.e., the terms and conditions of the contract between a legal entity and the website users. It will discuss the legal rights and liabilities of all the people who have a role to play in the arrangement, as well as their pecuniary rights and liabilities. It will introduce the subject matter of the arrangement, i.e., the debut featured collection. It will explain legal concepts like executory consideration and distribution for profit in a prescribed manner, and how these are employed in the arrangement. It will also show a comparison of profits with other forms of pecuniary benefits.

2.1 Special legal arrangement
We can see in 1.2.7 supra that EULAs act as the final leg in a chain of licenses, specifically restricting further distribution of the licensed material. However, this is not a compulsion under the law. Copyright owners have a legal right to choose any type of license through which they may grant others the permission to use their intellectual property by transferring any (one or more) of the several interests in the copyright that they have over their intellectual property (see 1.1.3, 1.1.4, and 1.2.3 supra). As of legal right, copyright owners can even grant permission to licensees to distribute the licensed material for a fixed and predetermined amount of net profit (see 1.3.3 supra and 2.2.2 infra).

It must be noted here that the licensees would not be buying stocks of tangible items to resell, they would rather acquire a bundle of rights in the pre-existing intellectual (intangible) property, under a copyright license (see 1.1.5 supra). But a mechanism for intellectual property monetization through recordation of every instance of distribution of the licensed creative work is obviously necessary to be formulated. The absence of such a mechanism could lead the license holders to distribute the licensed material without intimation to the original copyright owners, potentially depriving them of royalties. This mechanism is a special legal arrangement, the subject matter of this white paper and of which this website is a necessary part, that has been set up to streamline and automate the process of intellectual property rights clearance by employing certain legal devices (see 2.3.1 infra).

One of the ways for a copyright owner (i.e., a licensor) to execute a license agreement with a client (i.e., a licensee) is to ask a lawyer for a license agreement to be prepared that would set out the terms and conditions for the use of the intellectual property. Under this license agreement, the original copyright owner grants a nonexclusive and non-sublicensable, worldwide distribution license. Ownership and title over the intellectual property is not transferred, as it is a license and not an assignment (see 1.2 and 1.2.2 supra). The right to produce copies and modify or create derivatives and subsequent editions stand reserved by the original copyright owner; and the right to view, possess, store, print, and make copies of the materials containing the licensed work for personal use, and to distribute copies of the licensed work for a fixed profit in the prescribed manner are transferred to the licensee non-exclusively.

As discussed earlier, copyright owners can authorize an agent to grant such licenses on their behalf (see 1.2.3 supra). The law makes it permissible for such licenses to be nonexclusive (see 1.2.4 supra). The licenses can also be non-sublicensable so that the clients (i.e., the users) can only obtain these through the authorized agent (see 1.2.5 supra). In this arrangement, the original copyright owner’s IP lawyer updates and maintains records such that every instance of distribution of the licensed work is recorded and assigned its unique number. A particular manner is prescribed for licensees in which to exercise their right of distribution. This is significant for keeping track of every distribution (more on this in 2.1.4 infra). The benefit of this arrangement is that whenever a copy of the licensed work (subject matter) changes hands, the distributor receives the net profit, while the original copyright owners receive the royalties, and professional fees are paid to the attorney (more on this in 2.2 infra).

In the terms and conditions, some agency clauses have been included that authorize a legal entity (the first party) to receive payments on behalf of the distributor (the second party) and also to deliver the work (subject matter of the contract) to the distributor’s clients (see 1.2.6 supra and 2.3.1 infra). As for executory consideration (see 2.2.1 infra), the license contains a clause of promise to pay the fee for the use of the license and another clause rendering the license revoked if the promise to pay the license fee is not fulfilled within a stipulated time. Licensees can make payment of the license fee for their use of the extended license by purchasing a copy of the licensed work (see 2.2.1 infra) for a certain price from the website’s shop section, and can receive payouts of their net profits from successful distributions as per the payout policy.

This special legal arrangement is based on the premise that intellectual property rights can be bought and sold (see 1.2 supra), and such transfer of rights can take place under a copyright license granted through an agent of the original copyright owner. The legality of this arrangement is discussed in 2.3 infra. Legal and pecuniary liabilities of all the persons involved in the arrangement are discussed in 2.1.2 and 2.2 infra respectively.

2.1.1 Salient features of the terms and conditions

• The terms and conditions are a contract between a legal entity namely Art Patron (SMC-Private) Limited (first party) and a user who creates an account (second party), but users inter se are not parties to any contract through the website. Consent is given when a user agrees to the terms at the time of creating an account.
• Standard and extended licenses are defined in a section of the terms and conditions but users do not automatically get an extended license, they have to apply in the prescribed manner to get it (see 3.2 infra). The license fee is the executory consideration for the contract (see 2.2.1 infra).
• There are terms and conditions providing for the creation, deletion and termination of accounts, and official email communication between the website and users.
• There are various sections in the terms and conditions that deal with products, their prices, methods of payment and purchase, delivery, cancellation, return, refund, account wallet, payouts, obligations, warranty, limitation of liability, service availability, indemnity, waiver, disclaimer, amendment of the terms, arbitration, governing law, definitions, and general clauses.

2.1.2 Legal liabilities
The extended license obtained through this website is a nonexclusive, non-sublicensable, worldwide distribution license. The license has no geographical limitations. Subject to terms regarding revocation, it grants the licensees the rights to view, possess, store, print, and make copies of the materials containing the licensed work, and to distribute copies of the licensed work for a fixed profit in the prescribed manner. All residual rights stand reserved by the licensor. The fee for this license is paid in shape of the price paid to purchase a copy of the licensed work (see 2.2.1 infra).

The legal framework for this copyright licensing arrangement creates certain roles and interests. Following are the roles of the persons who have legal rights and liabilities in respect of this special legal arrangement:

• The original copyright owner is the person who has the title over, and owns the intellectual property which forms the subject matter of the license. They could be the artist who painted the work of fine art, an owner of the artwork who attained ownership of it, or a compiler or curator. They, as the principal, have a distinct contract with their intellectual property lawyer who acts as their agent and uses this website to display their art. The original copyright owner gets a percentage of the sale proceeds as royalty.
• The intellectual property lawyer has the role of granting licenses to users on behalf of the original copyright owner as an agent. The lawyer gets a professional fee for every distribution of the licensed work that takes place.
• The website administrator, who is also the webmaster and data controller is neither a distributor or a seller himself, nor is he a sublicensor or an agent, and he does not reserve any share of the profits, however, his reimbursement is derived from the residue, as we will see in 2.2 infra.
• The legal entity is the first party to the terms and conditions of the contract of which the website users form the second part. It is also the agent of the licensees under the extended license, authorized to receive payments from the licensees’ clients and to deliver their purchased items.
• Users, who are defined in the terms and conditions as persons who visit the website, create an account, place orders, or obtain licenses, are the second party to the terms and conditions of the contract. Users who obtain an extended license in the prescribed manner are referred to as licensees. Licensees who exercise their right of distribution in the prescribed manner are referred to as distributors. Users who obtain licenses upon offers to sell in the prescribed manner by distributors, are referred to as clients of those distributors. Users who place an order on the website are referred to as customers.
• Third parties like professionals, teams, firms, companies, and entities involved in the entire arrangement include the IT specialists, data analysts, freelance professionals, advisors, accountants, various other outsourced roles, internal management, contractors, payment service providers, merchants of record, outsourced delivery services, etc. have their necessary roles in the arrangement. Without them, these international commercial and intellectual property transactions would not be possible.

It is necessary to point out here that there is a transfer of legal rights and liabilities under licenses but not so under agency clauses (see 1.2.6 supra and 2.3.1 infra). It must also be noted here that in the entire process of transfer of legal rights and liabilities in this special legal arrangement, no type of marketing is involved and no right to market, publicize, or advertise anything is offered, transferred, or authorized (see 2.3.2 infra).

There is the presence of buyers and sellers in this arrangement and there are items being sold on this website. However, the original copyright owners are not the sellers because they are not entitled to receive the net profits; they only receive the royalties. The legal entity is taking payments from, and delivering items to, the customers, i.e., the distributors’ clients, but not in its original capacity, but as an agent of the distributors, so it too is not the seller. The website administrator is not the seller either. The website itself is only showcasing the product line, but it is not an entity selling anything that it owns; it only acts like a store, therefore it is not the seller. When a sale is made and the distribution gets complete, it is the distributors (users exercising their right of distribution as licensees) who made the offer to sell, and as such, legally and technically speaking, they are the sellers.

2.1.3 Debut featured collection
The first ever featured collection, The Manifest, is showcased in the shop section in the form of a product line consisting of an art book in hardcover, a digital downloadable version of the art book, and framed art posters of the works of art featured in the art book.

The Manifest is a celebration of the human spirit, a token of gratitude to those who have brought beauty, wonder, and inspiration into our lives through their art. It invites us on a captivating journey through the ages, weaving together the masterpieces of renowned artists who have left an indelible mark on the world of art. Among them, are legendary artists like Alphonse Maria Mucha, Claude Monet, David Roberts, Edgar Degas, George Barbier, Georges Seurat, Gustav Klimt, Jacques–Laurent Agasse, John Singer Sargent, Katsushika Hokusai, Odilon Redon, Paul Cézanne, Piet Mondrian, Vincent van Gogh, Wassily Kandinsky, and Winslow Homer.

This exquisite art book unveils a kaleidoscope of 330 remarkable works of art, each carefully curated to celebrate the rich diversity and profound creativity of human expression. It takes us on a mesmerizing journey through the evolution of art, spanning various movements that shaped the 19^th and 20^th centuries. These movements include Abstract Art, Art Nouveau, Cubism, Fauvism, Futurism, German Expressionism, Impressionism, Modernism, Nabis, Neoclassicism, Pictorialism, Pointillism, Post-Impressionism, Realism, Secession, and Symbolism, among others. Through each turn of the page, we encounter landscapes that beckon us to distant shores, cityscapes that evoke the hustle and bustle of urban life, and intimate portrayals of people and animals that capture the essence of their existence.

The art book itself is an anthology as defined by the Berne Convention for the Protection of Literary and Artistic Works in clause 5 of Article 2 read with clause 1 thereof, which states that the [collections of literary or artistic works such as encyclopaedias and anthologies which, by reason of the selection and arrangement of their contents, constitute intellectual creations shall be protected as such, without prejudice to the copyright in each of the works forming part of such collections, (and that the) expression ‘literary and artistic works’ shall include every production in the […] artistic domain, whatever may be the mode or form of its expression, […]; works of drawing, painting, […] and lithography; […]; works of applied art; illustrations, […].]²⁷

Collections or compilations form a separate work distinguishable from the works used in them. This is an internationally recognized concept and is best described in [17 U.S.C. § 103(b) as, “The copyright in a compilation or derivative work extends only to the material contributed by the author of such work, as distinguished from the preexisting material employed in the work, and does not imply any exclusive right in the preexisting material. The copyright in such work is independent of, and does not affect or enlarge the scope, duration, ownership, or subsistence of, any copyright protection in the preexisting material.”]²⁸

The copyright term for all the works of art used in The Manifest has expired, so all of these are in the public domain. Moreover, the images of all these works of art have no copyright reserved, as these are available from Rawpixel (https://www.rawpixel.com/) under the Creative Commons CC0 1.0 Universal license. The debut art book constitutes a distinguishable compilation work, creating new copyright interests independent of the artistic works and images that it incorporates. These interests vest in the original copyright owner who can choose which of these to be licensed and in what manner (see 1.2.3 supra).

The hardcover art book and framed art posters are priced at €149 and €299 respectively, including worldwide shipping at no extra charges (except for certain territories listed in the delivery policy), and the digital version of the art book is priced at €49. These prices are justified. The physical items are premium and luxury products that have to be printed or assembled, stored, packaged, and transported with care, while the downloadable item consists of large digital files in 11 volumes (approx. 800 MB in total) that need server space etc. Besides, import duties have to be paid, distributors have to be paid their profit, and a margin has to be left for various costs and expenses like management etc. (see 2.2 infra).

Although the purpose of the special legal arrangement, and more particularly of this website, is to connect the original copyright owners with their agent, and through the latter, with the licensees; unlike subsequent collections, the debut collection featured in the first product line has been created by this website’s administrator, to kickstart the system. Therefore, there is no legal representation of the original copyright owner through an agent as regards the debut featured collection. The website administrator, curator of the collection and author of this white paper, is the original copyright owner himself. Rest of the roles in the arrangement (see 2.1.2 supra) remain the same.

2.1.4 Distribution in the prescribed manner
We can see in 1.1.4 and 1.2.3 supra that [authors of literary and artistic works […] enjoy the exclusive right of authorizing the making available to the public of the original and copies of their works through sale or other transfer of ownership]¹⁶, and [the owner of rights (can authorize) the use of the work […] against the remuneration and under the conditions fixed by himself]²³, and that [it is for the copyright owner to decide whether and how to license use of a work]²⁵. This means that the copyright owner has a legal right to prescribe a particular mode and manner for the licensees to use and distribute copies of the licensed work. Likewise, the copyright owner has a legal right to prescribe a particular method for the licensees to obtain the license and for the payment of the license fee to be made in a particular manner.

The special legal arrangement, of which this website is a part, provides a mechanism for publication i.e., [the reproduction in tangible form and the general distribution to the public of copies of]¹⁵ the licensed work. The debut art book is a compilation (or collection) of artistic works licensed by the original copyright owner to have its copies distributed by licensed distributors (see 1.1.4 supra).

The prescribed manner for obtaining the license is to visit the website’s home page while logged in, and click the ‘Get license’ button. By doing so, the transaction is recorded in the database (see 3.2 infra). The primary purpose of the prescribed manner is to keep track of distributions by way of recordation. Payment of the fee for this license is made by purchasing a copy of the licensed work (see 2.2.1 infra).

2.2 Pecuniary liabilities
The monetary gain of licensees in their capacity as distributors can only be termed “profits”, more appropriately “net profits”, and not “license fees” because profit is an essential and defining ingredient of a distribution license agreement (see 1.3.3 supra and 2.2.2 infra), whereas a license fee is a sum paid to use intellectual property (see 1.3.2 supra).

When users fulfill their promises to pay the license fees by making payment of the price (see 2.2.1 infra) after placing their orders to purchase copies of the licensed work from the website’s shop section, a certain amount is charged by the bank or card network (if and whichever applicable), and an additional amount is deducted by the payment service provider as transaction fees and taxes thereupon. The remainder after all such deductions is the gross profit which is divided as:

• Costs of web hosting, production, assembly, packaging, storage, and transportation of products.
• Expenses for web development, banking, accounting, and other similar services.
• Royalties for the original owners of the copyright in the licensed works.
• Professional fees of the lawyer who helps carry out these international commercial and intellectual property transactions.
• Management service fees of the firms that handle internal operations.
• Agency fees of the legal entity that acts as the authorized agent.
• Net profits paid out to the distributors (i.e., licensees who exercise their right of distribution), subject to deduction of all applicable taxes.

The residue after all such expenditure is the administrator’s reimbursement, subject to all applicable taxes.

2.2.1 Executory consideration (promise to pay)
The legal definition of “consideration” is [a cause, motive, price, or impelling influence which induces a contracting party to enter into a contract.]² It is a [reason or material cause of a contract.]² Consideration can be “executed” or “executory”. [The former are acts done or values given before or at the time of making the contract; the latter are promises to give or do something in future.]² According to the law of contracts, consideration is essentially the price that one party makes in exchange for the other’s promise, and the person responsible for payment is the one who wishes the promisor to enforce the promise. For consideration to be valid in contracts, each party to the contract typically performs an act, agrees not to do something, or makes a promise to the other party.

Although an executory consideration is a promise to give something in the future, it is not merely a promise, but is good enough to give legal validity to the contract, just as good as executed consideration (something already given). We can see many examples of executory consideration all around us. When we use telephone or internet service, we get a bill to pay the following month. The service provided by the telecommunications company is the promise which it fulfills as the promisor, and we utilize the service against an executory consideration, i.e., our promise to pay. If we do not fulfill our part of the agreement, the company would be justified in disconnecting the service.

In the special legal arrangement carried out through this website, the right of distribution is transferred to licensees under a license against executory consideration, i.e., their promise to pay for the same. As discussed earlier, a license fee is a sum paid to use intellectual property, and the right of distribution is one of the interests in the copyright over the intellectual property that copyright owners and their licensees enjoy as a legal right. If a licensee (promisee) does not fulfill his/her promise to pay the license fee within a specified time, the license stands revoked (see 2.1 supra). This is because one can only sell that which they have bought for a consideration (or price) and a license fee is consideration.

Upon payment of the license fee, the licensee is allowed to enjoy all the rights, i.e., the right to view, possess, store, print, and make copies for personal use, and to distribute copies of the licensed work (see 2.3.1 infra) to the fullest extent under the license. This happens the moment the licensee makes payment of the price after placing the order to purchase a copy of the licensed work from the website’s shop section. In other words, the price is not merely a sum of money paid to purchase a tangible object, it is rather a fee paid for the license to use the intellectual property. Simply put, license fee is an executory consideration in the form of price.

2.2.2 Distribution for profit
We can see in 1.1.4 supra that “distribution” refers to the act of making copies of a copyright protected work available to the public by selling, renting, leasing, lending, or transferring possession and/or ownership through any other way. Under the law of contracts, an essential component of a sale transaction is payment of the price, i.e., sales are made for a commercial profit.

We can also see in 2.1.4 and 1.3.3 supra that a copyright owner can authorize the use of his copyright protected works against remuneration, [multiply his work and reap such profits therefrom as to enable him to rest upon his common law right]¹⁹, and also authorize making copies of the work available to the public, and that under international commercial and intellectual property law, such remunerations are considered profits that are realized by the copyright owners and they can license out this right like any other right within the bundle.

The right to distribute for profit is one of the rights that is licensed out in the special legal arrangement discussed in this white paper. It must be stressed here that no share, commission, prize, or reward is handed out under this arrangement; only net profits are handed over to distributors for their successful distributions (see 2.2.3 infra). As per the terms and conditions, a distribution is considered successful when the distributor offers to sell the licensed work in the prescribed manner under a valid extended license that does not stand revoked and for which the license fee has been paid; the distributor’s client has purchased a copy of the licensed work; orders of the distributor and the client are marked as complete; payments for both such orders are received in full; and the time limits for refund and chargeback for both the orders have expired without the same having been applied for.

2.2.3 Profits compared with other forms of pecuniary benefits
We can see from the settled principles of law that only “profits” can be realized from distributions (see 1.3.3 supra). Profits cannot be considered to be any form of share, commission, prize, or reward, because the legal and lexical definitions of, and the law relevant to, all of these terms make these specifically distinguishable concepts, such that:

• In the special legal arrangement (see 2.1 supra) the entire amount of the net profit from successful distributions, and not merely a portion of it, is handed out to distributors. Therefore, it cannot be termed as a “share”.
• It cannot be said to be a “commission” either, because the arrangement is not, and does not involve, a salesmanship contract, as discussed in 2.3.2 infra.
• It is not a “prize” because it is not an object won in a competition but a precisely defined amount of net profit for every distribution actually made, which the copyright owners would realize if they exercised the right of distribution themselves without transferring the right through the license.
• It can only be termed “profit”, for it is not a recompense for special or extraordinary services, special attainments or achievements, or some act resulting in the benefit of the public like useful inventions, discovery and apprehension of criminals, or recovery of stolen goods, therefore, it cannot be said to be a “reward”. Besides, this arrangement is not a scheme (see 2.3.3 infra).

2.3 Legality of the arrangement
In this subsection, we will see how the arrangement utilizes legal devices such as contracts, license agreements, and agency clauses to achieve a specific legal outcome. The exclusive or nonexclusive transfer of copyright or of any right under a copyright by grant of license is a copyright owner’s right guaranteed by the law. Licensing is recognized internationally as a legitimate way to monetize intellectual property (see 1.2.1 and 1.3 supra). This arrangement uses legal devices (i.e., tools, mechanisms, and legal instruments employed to manage rights, obligations, or relationships within the legal framework) including a nonexclusive worldwide distribution license agreement that has clauses of agency in the terms of the agreement. It is a legally permissible arrangement that makes use of legal devices created and permitted by international commercial law, common law, as well as the relevant statutory law and settled principles of intellectual property law. The parties involved in this arrangement utilize these devices as a matter of legal right.

It is pertinent to mention here the example of a particular legal arrangement for the management of intellectual property rights (including copyright and related rights) known as “collective management”. Just as collective management organizations are a legitimate and legal arrangement for managing and monetizing copyright and related rights, so is the arrangement discussed in this white paper, although it is not a CMO per se, but closely resembles one. [By authorizing or mandating professional CMOs to manage their rights, […] right holders can simplify the management of those rights. […] Typically, a CMO monitors when, where and what works are used; negotiates tariffs and other conditions with users; licenses the use of protected works on behalf of its members and of other rights holders it represents; and collects the fees from users and distributes these to the rights holders. […] This list of activities may be regarded as an indirect definition of “collective management”.]³⁵ [The CMO charges a fee for the license, from which it deducts an administrative charge before distributing the remainder as royalties.]³⁶

2.3.1 Legal devices used in the special legal arrangement
Primarily, the special legal arrangement makes use of three legal devices. These are:

• Contracts that lay down certain terms and conditions, and create rights and liabilities between the parties. The concept of contracts is as old as the law itself. A contract is a legal device that documents an agreement in writing, binds the parties to their respective commitments, and minimizes ambiguity.
• Nonexclusive licenses granting certain interests out of the bundle of copyright. A nonexclusive license transfers certain rights from the licensor to the licensee but not to the exclusion of the licensor (as opposed to an exclusive license), and therefore transfers legal liability from the licensor to the licensee.
• Agency agreements that do not transfer any rights or liabilities but create certain obligations to be discharged by an agent. Legal liability does not devolve from the principal to the agent, so the actions of the agent are deemed to have been performed by the principal.

The arrangement utilizes these devices in the following manner so that all the applicable laws are fully complied with and the entire transaction is legal:

• The contract used in the arrangement that comprises the terms and conditions of the website to which users agree, is the first legal device (see 2.1.1 supra to learn more about the salient features of the contract).
• The second device employed in this arrangement is a nonexclusive, non-sublicensable, worldwide distribution license, which you can learn more about in sections 1.1.4 and 1.2.3 to 1.2.5 supra. It is referred to in the terms and conditions as an ‘extended license’ and it gives information about its duration, revocation, geographical limitations, license fee and its structure, name and description of the licensed work, name of the owner of the licensed work, identification of the licensor and licensee, and the extent of the rights transferred under the license including the extent of the right to distribute, view, store, print, and make copies of the licensed work.
• Distribution involves the making of an offer to sell, acceptance of the offer, receiving the payment, and delivering the subject matter. This is where an agency agreement is utilized as a legal device in this arrangement. When the offer is made by the licensed distributor and it is accepted, a legal entity receives payments through this website as an agent and delivers the purchased item on behalf of the licensed distributor (the principal). This means that although both the latter acts are performed by the legal entity (agent); for determining the legal liability, the same are deemed to have been performed, and the entire distribution is deemed to have been executed, by the licensed distributor. This is because agency agreements and license agreements have a difference with regard to the transfer of liability (see 1.2.6 supra).

2.3.2 Comparison with other arrangements
This website does not promote or provide information regarding work from (or at) home, and the special legal arrangement is not a work-from-home offer or opportunity because firstly, this website specifically states in its disclaimer that it does not offer or promote a job or a work from (or at) home, remote work, or telework opportunity. Besides, in its entire legal framework, such an offer is not proposed. Secondly, not a single one of the defining ingredients that constitute a work-from-home arrangement match with those of the arrangement of which this website is a part.

To understand this better, let’s take into consideration the legal definition of “work from home”. In most jurisdictions, the focus lies on defining the nature of the work relationship rather than the physical location where the work is performed, so the term “work from home” itself isn’t explicitly defined or directly mentioned in many legal systems worldwide. However, some established legal frameworks and legal tests help determine whether an individual is considered an employee or an independent contractor engaged in work from home, remote work, or telework. Such frameworks are crucial in establishing rights, responsibilities, and legal implications for all parties involved in a work arrangement. For example, in the European Union, the [Framework Agreement on Telework]³⁴ adopted by the European social partners in 2002 outlines the principles and recommendations for establishing telework arrangements within the EU. While not legally binding, it provides a framework for member states to consider when developing national laws and regulations related to remote work.

In the light of such established legal standards, it appears that the essential ingredients for setting up a legally compliant work-from-home (or at-home) agreement are that:

• There must be a clear and documented agreement between the employer and employee regarding the work-from-home arrangement, creating an employer-employee relationship, outlining performance expectations, work hours and work interaction, response time-frames, evaluation mechanisms, responsibilities, employee privacy expectations, and limitations of both parties.
• There must be an eligibility criteria for employing a person who is qualified and allowed to work remotely. The employee must meet certain work requirements, adhere to work schedules established in the employment contract, and demonstrate professionalism in communication, interaction and conduct. A predetermined salary must be paid to the employee and additional insurance coverage must also be ensured to address potential liabilities arising from a work-from-home arrangement such as work-related injuries or illnesses sustained while working remotely.
• While the employee typically uses their home workspace, the agreement must clarify whether the employer provides or reimburses for specific equipment (e.g., computer, ergonomic furniture, home office supplies, internet bills etc.) needed for the job. Besides, the employer must ensure a safe working environment, even when the workplace is the employee’s home, and the employee must maintain a safe workspace.
• If the work is done by a professional providing their professional services from their home, the individual is likely classified as an independent contractor, not an employee. The contract between the professional and the client must clearly outline the scope of work, fees, payment terms, termination clauses, and professional liability insurance (also known as errors and omissions insurance). The professional might need to obtain relevant business licenses and comply with tax regulations as they are operating their own business.

Following are the points of comparison with other forms of arrangements:

• The method of licensing in this arrangement does not mean or imply that the licensee is selling or reselling copies of the licensed works that he would have previously purchased (see 1.1.5 supra regarding difference between copies of the work and copyright in the work).
• This arrangement is not franchising or assignment for the differences enumerated above (see 1.2.2 supra).
• It is not a partnership arrangement because there is no firm or partnership agreement between the parties and the essential ingredients of partnership are missing.
• It is not an employment contract and does not create any employer-employee relationship as discussed above.
• It is not a freelancing platform or opportunity because professional services are not being provided by users or licensees to anyone.
• It does not involve referrals, recruitment, or invitations to join or sign up for any programs, lists, or schemes.
• It is not a salesmanship contract due to the nature of transfer of liabilities; in this arrangement, the licensee acquires the right of distribution under a copyright license from the original copyright owner through an agent (in total legal compliance; see 1.2.3, 1.2.6 and 2.3.1 supra). Whereas in a salesmanship contract, no rights are transferred and the salesperson does not act as a licensee, rather acts as an agent of the real owner (i.e., the principal and the actual seller) of the merchandise.
• It does not have the ingredients that constitute a marketing contract, whether affiliate, network, multi-level, or of any other nature by whatever name called because the license used in this arrangement grants the right of distribution (see 1.1.4 supra) but does not grant the right of marketing or advertising, and it does not involve marketing of any kind (see 2.1.2 supra).
• No share, commission, prize, or reward of any kind is handed out in this arrangement; only the entire amount of net profit from successful distributions is received by the distributors, which is lawful, permissible under international and domestic laws, and in compliance with all applicable government policies, regulations, directives, etc. (see 1.3 to 1.3.3 and 2.2 to 2.2.3 supra).

2.3.3 Is this arrangement a scheme?
This arrangement is not a matrix, pyramid, Ponzi, or any other kind of chain system or scheme because firstly, in such schemes, nothing of value is exchanged and only the money obtained from previous recruits is handed down wholly or partly to subsequent ones. Whereas in our special legal arrangement, all the transactions take place under a valid and legitimate legal arrangement that uses permissible practices of rights clearance by using legal devices (see 2.3.1 supra). Secondly, in our special legal arrangement, only net profits from successful distributions are paid out to distributors unlike such schemes in which there is a claim of an opportunity to win a prize, reward, or commission.

The special legal arrangement discussed in this white paper is a distribution copyright license, not a matrix scheme or approach. Matrix schemes and distribution copyright licenses deal with completely different aspects of ownership and distribution. Matrix schemes are deceptive pyramid-like structures that exploit recruitment for profit. Distribution copyright licenses on the other hand are legal agreements that allow for controlled distribution of copyrighted material.

A matrix scheme is a business model that shares some features with pyramid schemes, and is often considered illegal. In such schemes, you pay money to join the scheme, typically receiving a low-value product in return. You’re also promised a chance to get a high-value product later, but there’s a catch. The way you supposedly get the better product is by recruiting other people into the scheme. As more people join, you move up a “matrix” and get closer to the high-value product. The problem is that these schemes are unsustainable. There simply aren’t enough people to keep recruiting new members forever. Eventually, the scheme collapses, and most people who participated end up losing money.

To the contrary, a distribution copyright license is essentially a permission slip granted by the copyright owner to someone else (the licensee) to distribute copies of their copyrighted work. It’s important to note that not all distribution is copyright infringement. A distribution copyright license provides a clear and legal way for someone to distribute another person’s copyrighted work. So, with a distribution copyright license, the copyright owner is essentially saying: “You can distribute my work, but only under these specific conditions.”

Here are the key differences:

• With regard to purpose, matrix schemes are designed to make money by recruiting new members, not by selling products. Whereas distribution copyright licenses grant permission to distribute copies of copyrighted work.
• With regard to the rights granted, in matrix schemes, no real ownership rights are granted and you might receive a low-value product, but the main focus is on recruiting. Whereas distribution copyright licenses grant specific rights to distribute the copyrighted work under defined conditions.
• With regard to monetary gain, in matrix schemes, members are promised some type of a high-value product or prize; whereas in distribution copyright licenses, distributors gain profits from distribution of the copyrighted work. In a matrix scheme, the scheme organizer is the actual seller to whom the sale proceeds flow, who then hands out a high-value product, prize, or reward to recruiters. Whereas in a distribution copyright license, the net profits legally belong to the distributors, who are the actual sellers (see 2.1.2 supra). These net profits are kept by the administrator only to be handed over to the distributors.
• With regard to who maintains control, in matrix schemes, the scheme organizer controls the structure and how members earn rewards. Whereas in distribution copyright licenses, the copyright owner maintains control over the work but grants specific distribution rights to the licensees.
• With regard to sustainability, matrix schemes are unsustainable due to reliance on constant recruitment, and eventually, the schemes always collapse. Whereas a distribution copyright license is a sustainable and legitimate business practice that allows for legal distribution of copyrighted work.
• As for legality, completely different sets of laws govern matrix schemes and distribution copyright licenses. Matrix schemes are often illegal due to their reliance on recruitment for profit, not product sales. Whereas distribution copyright licenses are legal agreements that clarify how copyrighted works can be distributed. Licensing is recognized internationally as a legitimate way to monetize intellectual property; matrix schemes on the other hand are not so recognized.

3. Structure of the website
We can see in the previous sections that the special legal arrangement requires a centralized database for recordation of clients’ transactions (i.e., distributions made in the prescribed manner). We can also see that the applicable laws do not require copyright licenses to be registered with any government body, do not require these to be notarized, do not require any stamp duty to be paid, do not require any witnesses to sign these, and do not even require the signatures of licensees to be legally valid. The only requirements are that the licenses should be in writing, should identify the licensed work by name and description, should state the rights being transferred, and should be signed by the licensors (copyright owners) or their authorized agents. This website is used as a tool as part of the special legal arrangement to fulfill all these requirements (see 3.2 infra).

This website has been so constructed that every distribution of the licensed work is reported and registered, every distributor has a dedicated account page to manage their account, and to view their transactions and distributions. The website serves as a digital replacement of a lawyer’s office where one can obtain distribution copyright licenses and view their records.

This section will explain the structure of this website and how it is used for the acquisition of licenses, fulfillment of requirements for the grant of licenses, identification of distributors and their clients, recordation for the purpose of keeping track of every distribution, payment of license fees, and the payout of net profits to distributors for their successful distributions.

3.1 Site map
The home page serves as a reception area where visitors can create accounts and learn what this website is about. In the shop section, users can place orders to receive copies of the licensed work and thereby pay the license fees. The FAQ section contains answers to almost all your questions. A support desk section has been added for logged-in users who want to ask a question but cannot find an answer in the FAQ section. There is also an account dashboard page (see 3.3 infra) where users can manage their account and view their orders, downloads, transactions, and link their accounts for receiving payouts.

The footer contains useful information about the website including quick links to Home, Account, Transactions, Downloads, Shop, FAQ, Support, About, and License. It also has links to various legal information pages such as Terms and Conditions, Privacy Policy, Cookie Policy, Delivery Policy, Payout Policy, Refund Policy, Disclaimer, Impressum, and Copyright Notice. Official email addresses for communication with the website’s administrator, support desk, accounts desk, sales desk, and a dedicated desk for artists can also be found in the footer area.

3.2 License acquisition form
Once logged in, users have access to the ‘Get license’ button on the home page, which they can click or tap to make a free request for an extended license. Applicants need to fill in a short form that asks them the user ID of the person distributing to them (i.e., offering to sell the licensed work).

Upon form submission, the applicant is notified by an onscreen message about the grant of the extended license. On the license page, the extended license is available in written form. It mentions the name and description of the licensed work, pinpoints the rights being transferred, and shows the signature of the copyright owner of the licensed work himself or his duly authorized agent, thus fulfilling all the legal requirements (see 1.2.3 and 2.3.1 supra).

3.3 Account page and transactions tab
Logged-in users can view all their distributions by going to their account page and clicking the transactions tab. These get updated when the users offer to sell the licensed work to their clients in the prescribed manner and the clients accept such offers. The transactions table chronologically displays the credited and debited amounts with a description including the names of clients of the logged-in user. Apart from viewing their transactions, logged-in users can also view their orders and downloads, and change their account login credentials on the account dashboard page.

3.4 Account wallet
A shortcut to the account wallet is displayed as an amount in a currency with a wallet icon that can be seen in the header, or if you are using a mobile device, it is in the menu, which can be accessed by tapping the menu icon in the header. The wallet amount cannot be utilized for making purchases on the website or elsewhere on the Internet directly from the wallet itself. Users also do not have the option of “wallet top-up”. The amount displayed in the account wallet is for account keeping and informative purposes only. This means that profits from successful distributions (see 2.2.2 supra) out of this amount can be paid out to an account, the details of which can be saved by users on the account page.

3.5 Privacy, security, and compliance
The website complies with General Data Protection Regulations and displays a cookie acceptance banner. It also uses SSL technology for secure and encrypted communication between users and the website, and TLS standard encryption for email communication. More details on security measures can be found in the privacy policy.

References:

1. Copyright Licensing in the Digital Environment – WIPO (https://www.wipo.int/copyright/en/activities/copyright_licensing.html)
2. Black’s Law Dictionary, 4th Edition, 1968. (https://heimatundrecht.de/sites/default/files/dokumente/Black’sLaw4th.pdf)
3. Is Intellectual Property an Intangible Asset: Everything You Need to Know (https://www.upcounsel.com/is-intellectual-property-an-intangible-asset)
4. What is intellectual property? 2020 edition by WIPO (https://www.wipo.int/edocs/pubdocs/en/wipo_pub_450_2020.pdf)
5. Copyright – WIPO (https://www.wipo.int/copyright/en/)
6. Understanding Copyright and Related Rights, Second edition, 2016, by WIPO, Geneva, Switzerland. (https://www.wipo.int/edocs/pubdocs/en/wipo_pub_909_2016.pdf)
7. IP Licensing: Everything You Need to Know (https://www.upcounsel.com/ip-licensing)
8. Types of Licensing Agreements: Everything You Need to Know (https://www.upcounsel.com/types-of-licensing-agreements)
9. Royalty Income: Everything You Need to Know (https://www.upcounsel.com/royalty-income)
10. IP Monetization: Everything You Need to Know (https://www.upcounsel.com/ip-monetization)
11. License Intellectual Property: Everything You Need to Know (https://www.upcounsel.com/license-intellectual-property)
12. How to Get a Licensing Agreement: Everything You Need to Know (https://www.upcounsel.com/how-to-get-a-licensing-agreement)
13. Licensing Fee: Definition, How It Works, vs. Royalty, and Examples (https://www.investopedia.com/terms/l/licensing-fee.asp)
14. Encyclopædia Britannica (https://www.britannica.com/topic/copyright)
15. Universal Copyright Convention (https://www.wipo.int/wipolex/en/treaties/details/208)
16. WIPO Copyright Treaty (https://www.wipo.int/wipolex/en/treaties/textdetails/12740)
17. Stephens v. Cady, 55 U.S. 14 How. 528 (1852) U.S. Supreme Court (https://supreme.justia.com/cases/federal/us/55/528/)
18. Bobbs-Merrill Co. v. Straus 210 U.S. 339 (1908) U.S. Supreme Court (https://www.wipo.int/wipolex/en/text/581485)
19. Wheaton v. Peters, 33 U.S. (8 Pet.) 591 (1834) (https://supreme.justia.com/cases/federal/us/33/591/)
20. Sheldon v. Metro-Goldwyn Pictures Corp. 309 U.S. 390 (1940) U.S. Supreme Court (https://www.wipo.int/wipolex/en/text/581486)
21. Understanding Copyright and Related Rights, Second edition, 2016, by WIPO, Geneva, Switzerland. (https://www.wipo.int/edocs/pubdocs/en/wipo_pub_909_2016.pdf)
22. Page 406, Black’s Law Dictionary, 4th edition, 1968. (https://heimatundrecht.de/sites/default/files/dokumente/Black’sLaw4th.pdf)
23. WIPO Guide on the Licensing of Copyright and Related Rights (2004) (https://tind.wipo.int/record/28719)
24. English translation of the verdict in The Pirate Bay trial (https://web.archive.org/web/20090521010422/http://www.ifpi.org/content/library/Pirate-Bay-verdict-English-translation.pdf)
25. UK Intellectual Property Office website (https://www.gov.uk/guidance/license-sell-or-market-your-copyright-material)
26. The rights granted by copyright – UK Intellectual Property Office (https://www.gov.uk/guidance/the-rights-granted-by-copyright)
27. Berne Convention for the Protection of Literary and Artistic Works (https://www.wipo.int/wipolex/en/treaties/textdetails/12214)
28. 2021 U.S. Code: Title 17 – Copyrights (https://law.justia.com/codes/us/2021/title-17/)
29. Section 35, Copyright Ordinance, 1962 (Pakistan) (https://wipolex-res.wipo.int/edocs/lexdocs/laws/en/pk/pk005en.pdf)
30. Artist’s Resale Right – UK Intellectual Property Office (https://www.gov.uk/guidance/artists-resale-right)
31. Exclusive and nonexclusive Licenses – Copyright Alliance (https://copyrightalliance.org/education/copyright-law-explained/copyright-transfers/exclusive-vs-non-exclusive-licenses)
32. How copyright protects your work – UK Intellectual Property Office (https://www.gov.uk/copyright)
33. Monetization of Copyright Assets by Creative Enterprises prepared by Gordon V. Smith and Vladimir Yossifov, published by WIPO (https://www.wipo.int/edocs/pubdocs/en/copyright/955/wipo_pub_955.pdf)
34. Summary of the Framework Agreement on Telework – EUR-Lex (https://eur-lex.europa.eu/EN/legal-content/summary/teleworking.html)
35. Collective Management of Copyright and Related Rights, third edition. WIPO, Geneva. (https://tind.wipo.int/record/47101)
36. Licensing bodies and collective management organizations – UK Intellectual Property Office (https://www.gov.uk/guidance/licensing-bodies-and-collective-management-organisations)
37. Convention on the Law Applicable to Agency (https://www.jus.uio.no/english/services/library/treaties/11/11-03/law-agency.html)