Ancillary Rights: Everything You Need to Know
Ancillary rights refer to all rights that are related to exploiting property in ways that are different from their original format.3 min read
Updated November 5, 2020:
Ancillary rights refer to all rights that are related to exploiting property in ways that are different from their original format. You may often see the terms, allied and ancillary rights, listed on a purchase agreement or an option agreement. The term is also commonly used in the creation of feature films which will legally entitle you to have the right to create any other form of content that was based on the original feature film. This can include:
- Television series
- Stage plays
- Book publishing
- Soundtrack recordings
- Web series
- Graphic novels
There are some important things to consider when considering ancillary rights. Ancillary rights:
- Are supplementary or subordinate rights that arise from a primary right to the property
- Exist by depending on and being reasonably linked to the primary claim
- When related to entertainment law, are considered a contractual agreement where a percentage of the profits that are received come from the sale of items related to the film.
Purchase of Film Rights
To show a profit, a movie will often have to make three times the cost for it to be considered a profitable endeavor. Those margins can make stakeholders nervous as it is a wide bridge to gap. With the ever-rising cost of talent and the increase in writer's pay, the stories for the movie are often becoming one of the more underrated factors. The stories for movies often draw on many sources to gain their inspiration. Storylines are often gained from:
- Video games
When drafting a contract, there may be a section for allied, or ancillary rights , which can include the rights to turning the movie into merchandising, a television show, or other multimedia. When deals are first created, instead of asking for ancillary rights immediately, it may be better to have the option to acquire them as part of the agreement. This will give the original purchaser a period of time in which they can obtain the ancillary rights which can be good for those who need to seek additional financing.
You may also hear the term negative pickup which refers to a guarantee in which a studio will purchase the negatives of the film. During this process, the purchaser and filmmaker will agree to the standards and conditions in which the film will be made, and the filmmaker will guarantee the distribution of the film to the bank or other entity that is lending them money or financing the film.
When you request an option agreement in the film industry, the agreement is usually valid for a period of up to one year, though it can be a little as ninety days. It is vital that rights of the purchaser are clearly defined. If a sequel ends up being created for the movie, there should be a payment for each additional sequel that will be paid when the photography commences on the new movie. If you plan to do a remake, that will incur additional fees as well.
Television rights and multimedia rights are other popular rights found in a film rights agreement . These rights can translate into a lot of profit for sellers but can be more complex than other rights. For example, when an author grants television rights to a producer there will typically be a royalty formula that will be used to pay the author, often distinguishing a different royalty for pilots as well as other episodes.
When developing a contract for multimedia rights, there will often be a formula created that will be based on the sales, such as a per unit percentage of a fee when certain sales objectives have been achieved. These royalties will often depend on the value of the property.
Another term that is commonly used in film rights contracts is force majeure which is an essential part of an option agreement and deals with contingencies which may delay the performance of the agreement such as "acts of God." While this is often a common clause, it often includes a reasonable limit on the period of force majeure usually running around six months.
If you need help with ancillary rights, you can post your legal need on UpCounsel's marketplace. UpCounsel accepts only the top 5 percent of lawyers to its site. Lawyers on UpCounsel come from law schools such as Harvard Law and Yale Law and average 14 years of legal experience, including work with or on behalf of companies like Google, Menlo Ventures, and Airbnb.