The Origin of “C.R.E.A.T.I.N.G.”

The word checklist “C.R.E.A.T.I.N.G.” spontaneously sprang from a preparatory conference call prior to a seminar about licensing entitled “Playing Nice in the Sandbox”, held at the Duke of York Pub in Toronto several years ago. The event was an ALAS legal educational seminar about licensing that featured myself speaking about music licensing, Marian Hebb speaking about licensing in the book publishing field, Tony Duarte discussing licensing in relation to film law and Emmanuel Evdemon speaking about licensing in relation to video games.

I had come up with a made-up word that served as a checklist that used almost the same letters that now form the acronym CREATING. At the time, the word was a little jumbled and garbled, probably something closer to G.-R.-E.-A.-A.-T.-T.-I.-N.-C. I shared it with the other panelists. Tony asked what I meant. I said it was a word that I made up that signifies and outlines key points that should be considered before entering into a licence agreement. It was coined by me to serve as a short checklist.

Marian then responded by saying “Oh, you mean “C.-R.-E.-A.-T.-I.-N.-G.”. All four of us agreed. That’s how G.-R.-E.-A.-A.-T.-T.-I.-N.-C. became the word checklist C.R.E.A.T.I.N.G. and acronym CREATING.*

What does “C.R.E.A.T.I.N.G.” mean in relation to creators’ rights agreements?

1) The letter C stands for compensation for a grant of rights, which is usually a licence but may be an outright sale. (See paragraph 12 below on grant of rights.) Under a creator’s rights agreement with a producer, developer or publisher, this can be anything from nominal consideration of a dollar, credit or, more typically, monetary compensation in the form of a flat fee, a royalty percentage or share of net or gross receipts, or a combination of some or all of these forms of compensation, in return for the right to use or “exploit” the rights that are licensed or purchased. Further fees may be paid for repeat uses (see end of paragraph 4 below on residuals) and royalty percentages may escalate based on the number of sales.

2) The letter C also stands for copyright in a work or performance and for credit or attribution to an author or performer. It’s usually best for the creator to keep their copyright and to have a copyright notice in their own name on a publication or a production as well as a credit as author or performer, since giving up copyright takes away the creator’s right to authorize or, except as may be specified in a rights agreement, to control further uses of their work. But, even if a creator grants all of their rights of copyright to another person, likely to be a producer, developer or publisher, the creator retains “moral rights”, which include attribution rights. Waiving moral rights may deprive the creator of their right to a credit unless specifically provided for in the rights agreement. So a creator should always carefully consider any request either to transfer their copyright or to waive their moral rights.

3) The letter R stands for reserved rights. Often some rights in a work or performance are retained or “reserved” by the creator. For example, a literary agent will almost always reserve a book author’s translation, film, dramatization and interactive digital property rights in a novel or other work. An author representing themself to a book publisher should do so too in appropriate circumstances and reserve all rights not specifically granted to the publisher. A composer may reserve all rights to their music other than the right intended for immediate use by the licensee or purchaser. For example, licensing a piece of music for use in a single documentary film would not entitle the licensee to use the music in a video game, a web series or traditional television series.

4) The letter R also stands for reversion rights, sometimes referred to as revocation rights. Typical grounds for a creator wanting to revoke or revert rights and terminate an agreement entirely include failure to publish or produce a work, non-payment of an advance against royalties or of earned royalties, failure to provide an accounting, failure to allow an audit or failure to meet some other very important term of the agreement. Whether a reason for revoking or reverting all or certain rights in an agreement is sufficient is often disputed, especially if not actually specified in the agreement. For example, a rights agreement, whether a licence or sale of rights, may say that the author is entitled to revert film rights if a film production has not been completed within a specified number of years following the producer’s acquisition of the film rights to the author’s novel. Or, a book or video game publishing licence may say that the author may revert all rights to a work if it is not published within a specified time following the agreed publication date, or may revert all translation or version rights to their work, or perhaps just rights for a particular language or version, if not translated or versioned and published within a specified number of years of first publication of the work in English (for example, a Japanese translation or console version of a game based on their novel if no such translation or version of the game is published within, say, three years of first English-language publication) or, similarly, a licence may say that the author is entitled to revert all publication rights for any territory where copies of their work have not been released or distributed after a specified time. Failure to make payments is frequently specified as a circumstance permitting a creator to revoke or revert all rights and terminate the agreement – but likely to be included only if requested by the creator! Before entering a rights agreement, a creator should give careful consideration to specifying circumstances in which they might wish to revoke or revert certain rights or to terminate the agreement and reclaim all rights.

And the letter R may stand for residuals – a term that should not be forgotten if a creator is entitled to further payments as compensation for repeat performances or other uses.

5) The letter E stands for exclusive. Exclusivity means that the creator cannot license elsewhere the same rights that they have already granted under another rights agreement. Not all agreements are granted on an exclusive basis. Many are non-exclusive licences. For example, use of pre-existing master sound recordings and pre-existing music used in synchronization with visual images in film and television productions are typically non-exclusive. So are licences to quote excerpts from a book in other publications. If non-exclusive, the same rights can be granted to many licensees. On the other hand, for example, a choir or a football club will likely require exclusive use of a song composed for it, or an advertiser may request exclusive use of a few bars from pre-existing music or even of an entire work for advertising a particular product or class of products. However, for example, a car manufacturer may just want to be the only car manufacturer permitted to use a song, but is unconcerned if the song is used in a film. Whether a grant is exclusive or non-exclusive is a key consideration when a creator is looking at entering a licence agreement and usually greatly affects the amount of compensation to the creator.

6) The letter A stands for accounting. Since the compensation set out in many rights agreements is based on a royalty or share of net or gross receipts, the accounting clause is very important. It typically specifies what and when accounting statements are to be provided to the creator by the producer, publisher or other distributor, including how royalties or receipts are calculated, what period of time is covered, when payment will be made, and other relevant details.

7) The letter A also stands for audit. An audit refers to the right of the creator granting rights and receiving royalties or other payments to verify the accounting statements provided by the licensee or the purchaser by an inspection or examination of its relevant books and records, usually by a professional accountant and subject to other conditions. The cost of the audit is often contingent upon whether or not an error in accounting is discovered during the audit. This is another very important term of a rights agreement. (Typically, the matters in this paragraph 7 and in paragraph 6 above appear in the same clause of a licence or purchase agreement, but they are conceptually different.)

8) The letter T stands for the term of a licence or any other rights agreement including an option to purchase certain rights. The word “term” in this context is the duration of the rights agreement, typically lasting for a specified number of years, but sometimes as long as the rights are being used by a licensee or for the duration of copyright, and so an agreement may outlive the author of a work. The length of the term, like many of the other points highlighted in this checklist, is often negotiable.

9) The letter T also stands for territory, meaning the country or area where the licence is applicable and the licensed rights may be used. For example, a licence for publication of a work or for a performance could be on a Canada-only basis, for North America or for the entire world, or even the universe, depending on its type and scope.

10) The letter I stands for irrevocable. Some rights agreements, whether a licence or outright sale of rights, are entered into on an irrevocable basis, meaning the grantor of the rights cannot revoke or take them back. For example, master use licences for master sound recordings and synchronization licences for music in a film are customarily granted on an irrevocable basis, and that is a fundamental condition of such agreements. If a grant of rights is described as “irrevocable”, it may be appropriate for the agreement to also specify that the creator is entitled to sue for damages for breach of the terms of the agreement. Also, even a grant of rights described as “irrevocable” may be subject to “revocation” and may be reverted by the creator in specified circumstances, for example, failure to produce or publish a work. (See paragraph 4 above on reversion rights.)

11) The letter N stands for net. A creator should always view the word “net” in a rights agreement with intense scrutiny! Net of what? Sometimes a producer, publisher, or distributor is permitted to deduct so many expenses from its gross revenues that there is very little if anything left on which to base the creator’s royalty or share of profits.

12) The letter G is last, but is certainly not the least letter in the word checklist C.R.E.A.T.I.N.G. It stands for the grant of rights, which should be very carefully scrutinized by a creator. A grant may authorize anything from a narrow temporary non-exclusive use to a very broad long-term or permanent exclusive use. Under a licence, which is more akin to a rental than a sale of rights, the creator always retains a right to their property (though unable to exercise any right of copyright in it until expiry or other termination of an exclusive licence of all rights). An outright sale or other complete transfer of rights is often referred to as an “assignment” of rights. From a creator’s perspective, licensing is usually preferable to an assignment, and most rights agreements can be drafted as licences. A grant of rights can include a great many things including, broadly, the form, technology, manner of use, purpose, media and languages for which rights are granted and may be used. A grant of rights may capture future technology or formats for use of the rights granted, or attempt to capture rights unknown or even unimagined at the time of the agreement. The grant of rights can also specify restrictions on the grant. For example, if the grant is for the use of music in a film, is it restricted to use in that film only? Can the music be used in the trailers and advertising, marketing, or other promotional material for the film? Can that music be used in a sequel to the film or a video game based on the film? Can it be licensed by the creator to a different producer or publisher for a video game related or unrelated to the film? Such questions and many more are key issues that are part of negotiations regarding the scope of grants of rights in licences and other rights agreements.

The letters C.-R.-E.-A.-T.-I.-N.-G. have proven to be a very useful mini-checklist that I have used when teaching and working with creators and that any creator can use when considering the basics of what should be included when negotiating and entering into a licence or other agreement granting rights. The word checklist C.R.E.A.T.I.N.G. or acronym CREATING is easily remembered and can be applied to any licence or other rights agreement. It often is relevant and valuable when analyzing and negotiating the terms of almost any such agreement. It should be noted that terms, for example, “net receipts”, “net revenue”, “net profits” or “reversion” or “termination” rights, amongst the many terms used frequently in rights agreements, may be defined specifically in a particular agreement, though sometimes buried in a long paragraph or in a schedule to the agreement. All definitions should be reviewed carefully as they can substantially affect the interpretation of the agreement and the extent of the rights granted in the agreement. And, however clearly this article may explain the concepts represented by the letters forming this acronym, it is not, nor is it intended to be, an exhaustive discussion of all points that a creator needs to consider before signing a rights agreement. Ideally, in any given specific legal situation, legal advice should be obtained from a lawyer who practises law in the field in which the creator works.

Copyright © Paul Sanderson 2020

Paul Sanderson thanks Emmanuel Evdemon, Tony Duarte, Ken Thompson and Marian Hebb for their contributions and suggestions to this article and to Marian for her editorial assistance.

* Marian also coined both the names ALAS, which is a short form and acronym for Artists’ Legal Advice Services, operating since 1986 in Toronto and providing legal information, education and summary legal advice to all artists of all disciplines on a pro bono basis, and ALAC, which is a short form and acronym for Artists and Lawyers for the Advancement of Creativity, the federally incorporated not-for-profit corporation which co-ordinates ALAS.

ARTISTS’ LEGAL ADVICE SERVICES invites creators to use the acronym CREATING
as a reminder that the letters C.-R.-E.-A.-T.-I.-N.-G. form a useful checklist:

C stands for copyright, compensation and credit
R for reserved rights, revoke and revert – and missing a residual will hurt!
E is for exclusive, but non-exclusive is swell
A for accounting, and audit as well
T is for term, and territory too
I for irrevocable – do be careful of that!
N is for net, which could be a bad trap! 
G is for the grant of rights, don’t forget – since this checklist has no point without it!

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Contracts help prevent misunderstandings by clearly stating who is involved, what’s being agreed to, how it will happen, and what should happen if something goes wrong.

For artists, a signed contract is one of the best tools to protect your rights and ensure fair treatment. It creates a clear record of the agreement, sets expectations, and provides a foundation if a dispute arises.

In short: A contract helps make sure everyone is on the same page and gives you something to rely on if circumstances change.

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Why are contracts important?

The goal of a contract is to clearly set out an agreement between the parties to ensure there are no misunderstandings. Ideally, a contract should clearly set out (a) who it involves and the nature of their relationship, (b) what good or service is being provided, (c) how and when the good or service is to be provided, and (d) what happens if anything goes wrong. With these issues covered, a contract can ensure that an agreement between parties goes smoothly and according to plan. Additionally, if anything unexpected happens, or if the parties disagree, a contract can ensure that each party’s rights are protected and they are able to get any good or service (or other compensation) to which they are entitled.

For artists, having a signed contract can be the best way to ensure that your rights and interests are protected. Contracts provide a way to clearly set out the agreement between you and anyone you are working with, and so they are one an opportunity to make sure you get what you bargained for and are not taken advantage of. They can ensure that everyone involved is clear on the terms, and spell out what should happen if anything goes wrong (both so the people involved understand and agree, and to demonstrate the deal to an authority like a court if the need arises). Whenever there is an important situation (such as a sale or show), artists should always consider having a contract to make sure that everyone involved understands and agrees how everything is supposed to proceed.

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TL;DR: What is in a contract?

Most contracts include key elements that define the relationship between the parties and clarify what each side is agreeing to. These often include:

• Parties: Who is involved in the agreement.
• Term: How long the agreement lasts, or when it ends.
• Subject: What is being exchanged (goods, services, and value).
• Territory: Where the contract applies (e.g. local, national, global).
• Payment: How, when, and what form of payment is provided.
• Representations & Warranties: Promises each party makes about themselves or their ability to enter the agreement.
• Indemnity: Who is responsible if something goes wrong or if there’s a third-party claim.
• Disputes: How disagreements will be resolved (e.g. negotiation, mediation, or court).
• Termination: How the contract can be ended, and under what conditions.

These sections help define expectations, protect your rights, and provide a roadmap if the agreement breaks down.

Full article below

What is in a contract?

For more information about different types of contracts, and the different parts of contracts, please see the various articles throughout the ALAS Legal Database. As a general overview, many contracts will cover or include the following elements:

The Parties
In order for a contract to exist, it should be clear who the agreement is between. So it should be possible to identify the parties to a contract.

The Term
Many contracts will include details about when or how long they will apply (e.g. “I will provide this service on this date” or “I will give you this for a year”). Some contracts may continue for an indefinite period, and will last until the parties agree to ‘terminate’ (i.e. stop) the agreement. Either way, the length of a contract is known as its ‘term’.

Subject of Agreement
A contract should indicate what it covers, i.e. what good(s) and/or service(s) is/are being provided, and what value is being given in exchange. This exchange of good/service for value is the ‘subject’ of the agreement, and is the core of the contract between the parties.

Territory
Some contracts will specify that they apply throughout the entire world, or the universe. Other contracts will specify that they only apply in a certain location, such as a province, state, or country. This may mean that the service is only being provided in that territory, or that the owner of the good/service may be providing the same good/service to other parties in different territories. Paying attention to where a contract does (and does not) apply will help you understand the scope of the rights being conveyed by the agreement.

Payment
Most contracts will provide for some form of payment by one or more parties to the other party(ies). This payment is generally in exchange for the good(s) and/or service(s) being provided by the party(ies) receiving the payment. There are many different forms of payment, such as ‘lump sums’ (a one-time payment of a specific amount) or royalties (payment of a percentage of some amount). The contract should specify the form of payment (if any), and how and when it will be made.

Representations and Warranties
These are promises that a party to a contract makes to the other party(ies) to the contract. Sometimes these promises include that a party is who they say they are, or that they do not have any outstanding legal claims against them. Sometimes these promises will be fundamental to the value being exchanged between the parties. In some contracts, all the parties will make promises to each other, but in other contracts only one party will need to make these kinds of promises. Different contracts call for different types of promises.

Indemnity
An indemnity is a promise by one party to reimburse (or defend) another party for certain costs in certain circumstances. For example, if party A is granting party B permission to do something, and then party B gets accused by a third party of doing that thing without party C’s permission, then party A might agree to reimburse or defend party B from party C’s accusations. Some contracts will include indemnities between the parties to cover what happens if anything goes wrong.

Disputes
Many contracts will specify how the parties should resolve any disagreements they may have during the term of the contract. For example, sometimes the agreement may specify that the parties have to work together to try to resolve the disagreement before turning to a court. Or the parties may agree to go to a neutral third party (such as an arbitrator or a mediator) to resolve or facilitate the resolution of any disputes.

Termination
Many contracts will include specific language to address how the parties may end the agreement. For example, if Party A and Party B form a contract for Party A to provide a service to Party B, and then Party B later decides it no longer needs the service, then Party B may wish to have a contractual right to terminate the contract with Party A.

Alternatively, if Party B ‘breaches’ the contract (i.e. they fail to meet any obligations or promises that are part of the agreement) then Party A may want to have the right to end the agreement and stop providing the service to Party B.

Some contracts will specify the process or timeframe for terminating the agreement (e.g. before Party B can terminate the contract they have to give Party A with at least one month advance notice, and that termination must be signaled in writing). How a contract may be terminated can be very detailed and may take many different forms, so you may wish to look through the ALAS Legal Database for more information.

Illustration by Kristine Buerano

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TL;DR: Written vs. verbal contracts

Verbal contracts can be legally binding, but they come with serious risks, especially for artists.

Without anything in writing:

• There’s no physical proof the contract exists.
• It’s easier to disagree about what was actually agreed upon.
• It’s harder to enforce the agreement in court.
• Third parties (like buyers or funders) may not accept a verbal agreement as valid.

Some contracts (like assigning copyright) must be in writing to be valid.

The more important the agreement, the more important it is to get it in writing. A written contract protects everyone and reduces misunderstandings.

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Written vs. verbal contracts

A contract is a binding agreement between two or more parties. In order for an agreement to be binding, there must be a few important features that are required for all contracts. In addition to the key elements of a contract, some contracts must be written in order to be effective (such as an assignment of copyright). However, it is sometimes possible to form a contract verbally, without putting anything into writing.

Verbal contracts can present a variety of risks and concerns:

• Generally speaking there is no physical evidence of the contract, and so it is up to the parties to demonstrate that the contract has been formed
• Because the contract is not written, there is no agreed-upon contractual language and so there is a much higher chance that the parties may disagree on the terms of their agreement
• Both of the above concerns can present significant issues if any party has to try to enforce the agreement, as courts are generally hesitant to apply legal consequences without written evidence of agreement between the parties
• In certain cases there may be other people who require you to prove that you have a contract (such as if you are trying to sell an artistic work that include any commissioned elements). If a third party requires you to have a contract in place then you may not be able to rely on a verbal agreement, and could have to prepare written terms after-the-fact

Artists should be careful about entering into or relying upon verbal contracts. The more important an agreement is, the greater the importance that the parties enter into a written agreement that clearly sets out the terms. Unwritten contracts come with significant uncertainty and risk, and leave open the potential for issues to arise down the line.

Illustration by Kristine Buerano

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For a contract to be valid, it must include four key elements:

• Offer: One party proposes to do (or not do) something in exchange for value.
• Acceptance: The other party agrees to the offer. Once accepted, the offer can’t be withdrawn.
• Consideration: Something of value must be exchanged (example: money for services or goods).
• Intent: All parties must intend to enter a legally binding agreement.

If any of these elements are missing, there may not be a valid contract.

Contracts don’t always have to be in writing; verbal or implied agreements can also count.

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How do contracts work?

There are four main elements to the formation of a contract:

Offer
At its core, every contract must involve an offer to do (or not do) something. This can take many forms, such as an offer to sell a car, or to provide bartending services for an event. But generally speaking, every agreement involves some form of an offer of an exchange of value.

Acceptance
The party (or parties) to whom the offer is made must accept the offer. Once a contractual offer has been accepted then the offer may not be withdrawn.

Consideration
In order for the accepted offer to be binding, there must be some form of value exchanged. For example, if someone agrees to pay $500 for a car, then the $500 being paid to the seller is the consideration for the car. It is a form of value being exchanged for the car being offered.

Intent
The final component of a binding contract is that all parties must intend to enter into a binding contract on the agreed-upon terms. This can be demonstrated in a variety of ways, including by having the parties sign the final version of an agreement. The purpose is to show that the parties reached terms that they agreed upon and accepted those terms as a contract.

A contract may be formed whenever these four basic elements are present. Once a contract is formed then it can be legally binding, and any party to the contract may try to enforce it against the other party(ies). However, if any of the four elements are missing then there may not be an agreement that the parties can rely on.

It is also important to keep in mind that not all contracts need to be in writing, and so a contract may be formed verbally.

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TL;DR: What is a contract?

A contract is an agreement between two or more people or organizations. It doesn’t always have to be written; it can also be verbal or implied (like through emails or conversations).

In most cases, one party provides a good or service, and the other provides something of value in return. This exchange is called consideration, and it’s a key part of any contract.

A good contract should clearly state:

• Who is involved
• What the agreement is about
• How the agreement will be carried out
• What happens if something goes wrong 

In short, contracts help make sure everyone is on the same page and knows what to expect.

Full article below

What is a contract?

A contract is an agreement between two or more individuals and/or companies. The participants in a contract are known as the ‘parties’. The contract can be a written document, however sometimes an agreement may be implied (such as verbally or by correspondence between the parties). Generally speaking, one (or more) party(ies) will provide a good or a service, and in exchange the other party(ies) will provide something of value (such as monetary payment, or some other form of value). This exchange of value for a good or service is known as ‘consideration’, and it is a key element of a contract.

Contracts are important, and it is critical to understand how they work and what they include. They are not necessarily complicated but they can come in many different forms, and cover a wide variety of different exchanges of value. Some contracts can transfer a good (“I sell you this car”) or provide a service (“I will do this for you on this date”), while others can grant permission (“you are allowed to do this for a year”). But ideally every contract should clearly set out who they involve, what the agreement is about, the details of how the agreement will be carried out, and what happens if anything goes wrong. With these elements in place, a contract will fulfil its purpose of ensuring there is no misunderstanding between the parties to the agreement.

Illustration by Kristine Buerano

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