Art licensing: how to license your art to manufacturers

What art licensing is

Art licensing is a contract in which an artist lets a company use a design on its products while the artist keeps the copyright. The manufacturer prints, weaves or molds the design onto wallpaper, greeting cards, mugs, phone cases or fabric, sells the goods through its own channels, and pays the artist for the use. You do not make, stock or ship any of those products.

You license rights, not ownership. Copyright in the artwork exists automatically, from the moment the work is fixed, and a license carves out a slice of the rights that come with it: the right to reproduce the design on one kind of product, in one place, for one period. The law lets you do this. Under the Copyright Act, any exclusive right, or any subdivision of one, can be transferred and owned separately. That is why one painting can sit on a duvet cover from one company and a calendar from another at the same time.

Licensing suits artists who have a body of work in a consistent style and would rather design than run a product line. It pays less per item than selling the product yourself, but the manufacturer carries the cost of production, inventory and distribution.

Exclusive or non-exclusive licensing of artwork

The first choice in any art licensing agreement is whether the licensee gets the rights to itself. The two kinds of license are treated differently in US law, and the difference decides what you can still do with the design.

An exclusive license does not have to cover everything. Under the law, a transfer can be limited in time or place of effect. Example: you could give one company the exclusive right to put a design on bedding in North America for three years and keep every other product and territory free.

How to license your art, step by step

These steps cover the order most artists work in. Agent and company lists are left out; the steps are the same whether you pitch a manufacturer yourself or through a representative.

1. Build a collection, not a single image

   Manufacturers buy designs that fit a product range: a main pattern, coordinating patterns and a few spot motifs in one palette. Prepare files at print resolution, in layered or vector form where the art allows, so a licensee can resize and recolor them.

2. Register the copyright before you pitch

   Copyright exists automatically, from the moment the work is fixed, but the law allows no infringement suit over a US work until the copyright is registered or preregistered. The Copyright Office charges $45 for a Single Application, $65 for a Standard Application, and $85 for a group of two-dimensional artworks. If you register within three months after first publication, statutory damages and attorney's fees stay available against infringement.

3. Decide what you are offering

   Before talks start, write down which product categories, which territories and how long you will license each design for, and whether you will grant exclusivity. List the uses you keep for yourself, such as your own print sales.

4. Pitch the companies that make the product

   Send a short portfolio of finished collections shown on mockups of the company's own product type. Mark the files with your name and a copyright notice, and share low-resolution images until a contract is signed.

5. Negotiate and sign the art licensing contract

   Agree the payment model, the grant and the approvals, then sign. An exclusive license must be a signed writing to be valid. Keep a copy of every signed version and of each amendment.

6. Record the license with the Copyright Office

   Under the law, a transfer or other document about a copyright may be recorded in the Copyright Office; nothing requires it, but it is useful for an exclusive license. Recording means recording a document gives everyone constructive notice of the facts in it, but only if the document specifically identifies the work and the work has been registered. The electronic base fee is $95.

7. Track royalties and renewals

   Read each royalty statement against the sales periods in the contract, note the end date of every term, and decide before it arrives whether to renew, renegotiate or let the rights come back to you.

Royalty or flat fee

A royalty pays you a percentage of what the licensee earns from each product sold, usually on the wholesale price or on net sales, reported and paid on a schedule such as each quarter. A flat fee pays a fixed amount once for the rights described in the contract, whatever the products sell.

Royalties reward a design that sells well over years, but you depend on the licensee's sales and reporting. A flat fee is certain and fast, and suits short runs, one-off products or a buyer that will not share sales figures. Many agreements combine the two: an advance paid on signing that is set against royalties, sometimes with a guaranteed minimum the licensee pays even if sales fall short.

Example: a manufacturer sells a printed tea towel at a $10 wholesale price and the contract sets a 5 percent royalty on wholesale. Each towel earns you $0.50, so a run of 2,000 towels earns $1,000. These are example inputs to show the arithmetic, not typical rates. Rates vary by product, company and the artist's track record.

What goes in an art licensing agreement

An art licensing agreement, also called an art licensing contract, sets out exactly what the licensee may do. Anything the contract does not grant stays with you, so a clear grant protects both sides. The clauses below are the ones most worth reading closely.

• Artwork: the designs covered, identified by title, image or file name, and whether colorways and resized versions are included.
• Product categories: the specific products the licensee may make, for example bedding and table linen, rather than broad terms such as home goods.
• Territory: the countries or regions where the licensee may sell.
• Term: the start date, the end date and any renewal option, plus a sell-off period for leftover stock after the term ends.
• Exclusivity: whether the grant is exclusive, and if so, only within the stated categories, territory and term.
• Payment: the royalty rate and what it is calculated on, any advance and guaranteed minimum, or the flat fee, and when each is paid.
• Reporting and audit: how often the licensee sends sales statements, and your right to check its records.
• Approvals and credit: your right to approve samples before production, and how your name appears on the product or packaging.
• Ownership: a statement that you keep the copyright, and that new versions the licensee makes from your design do not become the licensee's property.
• Termination: what ends the license early, such as missed payments or no product launched by a set date, and what happens to the rights when it ends.

Read any clause that calls the work a work made for hire, or that assigns all rights. Those turn a license into a sale of the copyright. Under the Copyright Act an author can usually end a grant in a five-year window that opens thirty-five years after the grant was signed, but that right does not apply to works made for hire.

Keep your own print sales outside the license

Many artists license a design to a manufacturer and keep selling prints, originals or their own small product runs of the same image. This works only if the contract says so. An exclusive grant with a loose description, such as all paper products worldwide, can stop you selling your own art prints of the design.

Write a reserved-rights clause that names what you keep: original artwork, fine art prints, sales through your own website and in-person events, and any product categories not listed in the grant. Check that the licensee's category list does not overlap with what you already sell, and that a non-compete clause, if there is one, is limited to the licensed products.

Where the rules come from, and what this page does not cover

The rules on this page come from the federal Copyright Act and the US Copyright Office. Contract terms such as royalties, audit rights and termination are governed by state contract law, which varies by state, and by the law of the country where a foreign licensee sells. This page is general information, not legal or tax advice. For a significant deal, have a lawyer who handles copyright and licensing read the contract before you sign.

Where Nation fits

Questions about art licensing