Key Takeaways

  • Ancillary rights are secondary rights that allow the exploitation of a primary work (e.g., a film, book, or product) across additional formats, media, or jurisdictions.
  • These rights can significantly boost revenue through merchandising, sequels, licensing, adaptations, and cross-platform distribution.
  • Ancillary rights play a critical role in industries beyond entertainment, including insurance, retail, and estate law, where they extend value beyond the original asset or contract.
  • In film and media contracts, ancillary rights must be clearly defined and negotiated — often involving royalties, profit-sharing, or future option clauses.
  • Understanding ancillary rights is essential when dealing with cross-state property issues, intellectual property expansion, and commercial partnerships.

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:

  • Merchandising
  • Sequels
  • 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:

  • Television
  • Books
  • Screenplays
  • Newspapers
  • 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.

Broader Applications of Ancillary Rights

While ancillary rights are most often discussed in the context of film and television, their scope is far broader. At their core, ancillary rights allow owners to extend the reach and profitability of a primary asset beyond its original form or market. This concept applies across multiple legal and commercial contexts, from intellectual property and media to retail and estate administration.

1. Intellectual Property and Entertainment In entertainment, ancillary rights govern derivative uses of creative works, such as adaptations, remakes, spin-offs, or licensing for merchandise. These rights can include:

  • International distribution – granting rights for foreign markets or language adaptations.
  • Digital and streaming rights – allowing distribution on digital platforms beyond theatrical release.
  • Stage and live event adaptations – transforming a screenplay or book into a stage play, musical, or live performance.

Negotiating these rights early is critical, as they can represent a substantial share of long-term revenue. For example, merchandising and franchise spin-offs often generate more income than the original production itself.

2. Commercial and Product-Based Industries Ancillary rights also play a major role in industries like insurance and retail. Businesses often use ancillary products — offerings that complement a primary service — to strengthen customer loyalty and revenue streams. For example:

  • Insurance policies may include ancillary coverage options such as identity theft protection or roadside assistance.
  • Retailers frequently offer warranties, subscriptions, or co-branded merchandise that build on the core product sale.

These ancillary products are governed by contractual rights similar to those in entertainment, ensuring companies maintain control over secondary revenue sources.

3. Estate and Probate Law Ancillary rights can also arise in estate law, particularly during probate involving property in multiple jurisdictions. Known as ancillary administration, this process occurs when a deceased individual owned real estate or assets in a state other than their primary residence. Executors must obtain legal authority in the secondary state to transfer those assets, a process that can be simplified by careful estate planning or trust creation.

Legal Considerations and Best Practices

Because ancillary rights are often more valuable than the original property itself, careful legal drafting is essential. When negotiating or drafting agreements that involve these rights, consider the following best practices:

  • Clear definition of rights – Specify which ancillary rights are being granted or retained, including geographic scope, media formats, and duration.
  • Royalty and revenue structure – Outline payment terms, percentage of profits, and triggers for additional compensation (e.g., sequels, syndication, licensing deals).
  • Assignment and transfer clauses – Clarify whether the rights can be sold, licensed, or assigned to third parties.
  • Option agreements – Where future ancillary rights are uncertain, include options for later acquisition at pre-negotiated terms.
  • Dispute resolution and jurisdiction – Establish how conflicts will be resolved and under which state or national law.

Failing to properly address ancillary rights can lead to significant disputes and lost revenue opportunities. In many cases, parties mistakenly assume that purchasing primary rights automatically includes ancillary ones, which is often not the case. A well-drafted agreement protects both the creator’s interests and the buyer’s investment.

Frequently Asked Questions

  1. What are ancillary rights in entertainment law?
    Ancillary rights are the rights to use a creative work beyond its original medium — such as adapting a book into a film, producing merchandise, or creating a television spin-off.
  2. Are ancillary rights automatically included in a purchase agreement?
    No. These rights must be explicitly granted or negotiated. A standard rights purchase may only include the primary use, such as film production, without covering sequels, adaptations, or merchandising.
  3. How do ancillary rights affect estate planning?
    They can significantly impact probate if the deceased owned property in multiple states. Ancillary administration ensures proper transfer of those out-of-state assets.
  4. Why are ancillary products important in business?
    They allow companies to diversify revenue streams and enhance customer relationships by offering complementary goods or services tied to the main product.
  5. Do ancillary rights expire?
    Yes. Their duration depends on the terms of the contract. They may run for a fixed period, be tied to the life of a copyright, or renew automatically under certain conditions.

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