Five Considerations Before Using a Brokerage EULA

Somewhere between a reseller and a publisher is an entity called a brokerage. A reseller sells products made by vendors; resellers provide shelf space and basic terms of sale of a package, and that’s about it. A publisher on the other hand, manages all aspects of product sales, support and sub-licensing, and from a customer perspective, the publisher is the sole source of the product, and the customer relationship exists between the customer and the publisher.

Then there is the brokerage, which is somewhere in between. There are all kinds of brokerages out there, but I am going to focus on the ones that broker content from creator artists, 3D designers and photographers and then license it to the end user – most specifically for 3D models, such as those provided by Meshbox Design. Brokerages own the customer relationship, and may require you to use their End User License Agreement on your product, as a condition of working with them.

At this point, I have to disclaim any and all claims that I am practicing law of any kind. I am not a lawyer. Anything resembling legal advice here isn’t legal advice. What I hope to provide though is some insight into using a license provided by a brokerage.

Limiting of Scope of the License

What uses are permitted, and what is expressly not-permitted? The first thing to consider here is that the copyright holder holds exclusive rights to specific uses of their work (tempered by specific laws to the contrary, such as Fair Use). A EULA must contain a statement of what rights are granted that are otherwise the exclusive right of the copyright holder. If the EULA grants it, its granted. If a EULA doesn’t grant it, then that right is exclusively the right of the copyright holder. The more in-specific a EULA is, the more likely this is going to be confusing to the licensee.

In 3d model licensing, a major consideration recently is allowing licensees to use a 3D model as a source for a 3D printed object. Can a licensee create 3D representations of your work? If you are the creator, you should consider very carefully if you want to permit this or not without additional compensation. This is one reason why you often find great disparities between license costs. One license may great significantly more rights than others.

Limiting the Morality of Expression or Endorsement

It really isn’t in the best interest of a brokerage to limit rights based on use of the work. It is a big one if you are a creator.  From a financial perspective, if the perception of your creation is damaged, it loses its appeal for licensing.

But you might not want your work to be used in hard core pornography. Or, you might not want your work to express any form of sponsorship of a cause of some sort. For example, you might not want your 3D orc being used as a spokesman creature for the National Rifle Association.

Triggering Automatic Termination

Does the brokerage EULA express a duration of the license? Properly, rights should continue until they are terminated. Breaching the agreement typically results in its termination – how specific is the language of the EULA about that? My understanding is that US courts will consider a breach of an agreement only to have happened if there is harm against the spirit of the agreement, so a minor breach may not be considered a breach that terminates.  This brings us back about what is expressly forbidden under the scope of the license. If a breach of some kind violates something which is expressly forbidden, maybe its more likely to be a breach for termination purposes?

Voiding the Entire License

One problem with licenses is to consider what happens if something in the license is held to be invalid. Often a EULA will have a statement which states that if any portion of the license is found to be invalid, then the license will continue without that specific portion, rather than invalidating the entire license.  This is where it gets very problematic with the Brokerage EULA. If the Brokerage EULA is entirely invalidated by some act of law, then what happens to the end user rights? Quite possibly, they end, and all rights to the end user ends.  This is a very important point for end users. If the Brokerage EULA is invalid, you may lose all your rights. Another consideration is if the Brokerage “winds up” its business and shuts down. If the brokerage no longer exists, does the license no longer exist? Did the brokerage wind up its business, license you the content, then fail to pay the creator? My feeling is that the safest license is the one between the creator and the end user.

Other Intellectual Property Considerations

EULAs tend to focus on copyright of the creative work being licensed, not its other intellectual property considerations, such as trademark. This is where I find most EULAs fall short, especially Brokerage EULAs. The last thing any brokerage wants is more legal complications. There are some very useful definitions on the USPTO website for consideration. You might have an unregistered trademark for PROJECT X. What happens if some other creator or user uses that term? It is possible to take action against the other creator or user, but its more problematic and considered a common law issue. It isn’t in the interest of the brokerage to get involved, but if they are selling both products they can become an accessory to it.

You might think I am opposed to using Brokerage EULAs because of these considerations. In general, it is entirely better for the EULA to be between the creator and the end user. However Brokerage EULAs have some good points from the business end. You know all the products you get through Brokerage X fall under a single license, making license tracking much easier. That makes one brokerage your go-to-place for specific uses. For example – a brokerage that expressly licenses for use in game development allows for pricing of all related products and terms for the game industry.




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