According to Forbes list of richest fictional characters Scrooge McDuck was the richest in 2011 with an estimated fortune of 44.1 Billion $.
Ok, this is not really a serious figure as Forbes based their rich-list on fictitious information. However, characters can make the creators or rights holders a small fortune through licensing deals. Licensing allows the rights holder to control the use of the character for publications (comics, graphic novels, children's books etc.), animations, merchandising and branding. Therefore, it pays to be aware of IP rights you may have in your character - and even more important, how you can exploit them to make money.
Licensing contracts in publishing, film production (animation) or merchandising are very complex documents, and therefore, do not sign such contracts without first seeking legal advice if you are not represented by an agent. Even a small mistake can cost you big money and you may unwittingly assign all rights in your character while thinking that you can still retain some rights and make money yourself.
Beware also if somebody hires you to create a character. If you create the design in the course of employment, copyright in your character will be owned by your employer. If you are an independent contractor (a freelancer), you own the copyright and can either assign all rights to your commissioner or provide them with a license. Many commissioners believe that when they pay an hourly rate for your service they automatically own copyright in your design. Disputes often arise where there are no written contracts or even written email correspondence confirming the commission and terms and conditions. Creators, who don’t have written contracts or orally agree to certain usages without clarifying copyright do give clients an implied license to use the character in the way, which has been discussed. It is however problematic to interpret oral discussions without written evidence and creators are in danger of giving permission for usage they have not intended to permit without further payment.
Other rights to consider are design right and trade mark. While your character is in most cases considered to be an artistic work and as such protected by copyright, in some circumstances it may become a design, especially if you are creating it for 3D merchandising and your design is used for mass produced products. There is a fine line between design right and copyright and it’s important to be aware of the differences as it may have implications on ownership of rights and length of protection. Have a look at Own-it’s short article and factsheet on the subject.
Trade marks are signs of origin and core to the image of a company. You have probably won the jackpot if a big corporation selects your character design to become part of their branding strategy. They will either commission you through an advertising agency – in which case, they will probably also ask you to assign all rights in the character – or they may want to use an existing character, which already gained some reputation and may have a substantial following, eg. children’s book characters such as Lauren Child’s Charlie and Lola or Axel Scheffler’s Gruffalo.
Where the character is already well-known in the market, it’s much more appropriate to grant a license rather than an assignment of copyright to keep control over further exploitation and protect the reputation of your character – Lauren Child (or the publisher of her books) certainly doesn’t want Charlie and Lola to be associated with a brand that is suspected of child labour.
If they want to register the character you have especially developed for your client as a trade mark for their company they must first own all the rights and therefore, ask you for an assignment, which should command an appropriate high fee. You can of course exploit your character yourself and register it as a trade mark for your own service or design business.
All rights including copyright, design right and trade mark can be licensed rather than assigned. Depending on the circumstances you may be able to negotiate a non-exclusive license or exclusive license (where you retain copyright but give your licensee complete control for a certain period of time and under certain terms and conditions – read more on assignment or licensing rights) but negotiating a license rather than a complete assignment will be difficult if you are in a weak bargaining position. In any case, you should ensure that the range and period of usage and extent of territory is reflected in the fee you are paid.
Please read Own-it’s Factsheet on Character Design for further information. For specialist IP register on the Own-it website and submit your query through the online enquiry system.
Own-it – Intellectual Property Advice for the Creative Sector
http://www.own-it.org/ (Own-it's advice relates to UK law)