Issues for Businesses in the Creative Sector

Coodes’ Head of Corporate & Commercial Kirsty Davey explores the issues that businesses in the creative sector should be aware of when running their business.

BUSINESS STRUCTURE

When you leave university you leave as a sole trader which means that in practice you are running and operating a business as a sole trader from day one. Often this is the most appropriate structure for the business you intend to run. However, it is always advisable to have a quick discussion with an accountant to assess whether that is in fact the case. Particular issues to bear in mind are those of liability and also whether it is the most tax efficient structure for you going forward. You may want to also look at the way you work with others and whether being a sole trader slots in nicely with any collaborations on which you are providing input.

OWNERSHIP AND EXPLOITATION OF INTELLECTUAL PROPERTY

There are many different Intellectual Property Rights (“IPR’s) which arise in the creative sector and you will need to make sure you protect any IPR’s you have or may create in any work. You should also make sure that you exploit your IPR’s in the most efficient manner possible. If you own a registered IPR then you have already sought to protect your rights by way of registration. However, there are a great deal of unregistered rights which arise automatically and give protection against copying or use of the right and these rights include copyright, unregistered design rights, rights in unregistered trade marks and confidential information.

COPYRIGHT

One of the main rights which will arise for an artist is copyright. Copyright protects original artistic, musical, dramatic and literary works including computer programmes, sound recordings, typographical arrangements etc. As you will no doubt be aware, copyright arises automatically on creation of the work and lasts for 70 years after the death of the author for artistic, musical, dramatic and literary works. Sound recordings and broadcast are protected for 70 and 50 years from the date of publication and making respectively. Copyright protects an expression of an idea, not the idea itself and it does not protect against independent development of the same ideas only against the actual copying of another’s work. Ownership of the copyright in a work will enable the owner to prevent unauthorised use of his work, for example making copies or placing work on the internet.

UNREGISTERED DESIGN RIGHT

Unregistered design right gives a right against copying. In the UK the right is protected for 10 years from first marketing the design.

MORAL RIGHTS

You will also no doubt be aware of moral rights which only apply to copyright but in summary moral rights are:

(a) the right to be identified as the author or director of a copyright work;

(b) the right to object to derogatory treatment of a copyright work;

(c) the right not to suffer false attribution of a copyright work; and

(d) the right to privacy in respect of certain films and photographs.

There are also new rights which apply to performers and those are the rights to be identified as the performer of a qualifying performance and the right to object to derogatory treatment of a qualifying performance. Again, moral rights apply automatically (they do not apply in all circumstances, for example where the work is created by an employee), and they can be waived but you cannot assign your moral rights.

There is also an Artist Resale Right which you should also bear in mind.

EXPLOITATION OF IPR’S

There are many ways for you to exploit your IPR’s and often that is by way of licence or an assignment of IPR’s and you may even borrow money against them. Assignment or licence should not be taken lightly because your IPR’s have commercial value and so artists need to make sure that they really do look at the value of their IPR’s and deal with them accordingly. The clearer any agreements by way of assignment, licence or transfer of IPR’s are greatly assist the parties going forward and sets out what can and cannot be done with the IPR’s and in what territory.

PAYMENT TERMS

Another issue that tends to affect the creative sector more so than any other is payment terms. Whilst at risk of teaching you to suck eggs, it is really important to set out in your invoices what your payment terms are and also refer to the Late Payment of Commercial Debts (Interest) Act 1998 to ensure that you provide for payment terms and interest in respect of late payments within your invoices.

EXHIBITIONS AND WORK LOAN AGREEMENTS

Whilst it is fantastic to be taken on by a gallery it is key that you request a copy of the terms of the arrangement between the parties, in particular you will need to seek clarification as to who takes responsibility for and pays for the marketing and the percentage that will be taken by the gallery in respect of any items of work that are sold and whether that percentage is taken pre or post the expenses of the exhibition.

It is also important, when it comes to collaborating with others, for you to put some terms down so that each party knows what is expected of them and to avoid you unintentionally entering into a partnership structure which could put your interests at risk. It also helps to clarify what will be paid to each party on the sale of the works that are produced.

Often it is the case that artists will loan works to a café or shop or hotel and, again, it is key that you should have an agreement in place between the parties so that each party knows exactly where they stand in terms of commission, what to do if the item of work is stolen, who should insure such works, etc.

There are many other issues to bear in mind when it comes to the creative sector and whilst it should not stifle the creativity of an artist, it is key to step back every now and again and assess the commercial relationships you have and make sure that they are in your best interests.