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Avvocato Arlo Canella
This contribution is an excerpt from the March 7, 2023 public talk “Legal Strategy and Contracts for Picture Authors” by Arlo Canella, made at the invitation of AI Authors of Pictures Association, during the Bologna Children’s Book Fair, an international fair dedicated to publishing for children and youth.
When an illustrator signs a contract, he or she lends his or her delicate inner world to the client, which is why the value of an image tends to be priceless. At least from my personal point of view.
However, images also play a vital role in publishing, marketing and communication. Therefore, we will explore the main factors that influence the “monetary” value of an image in the marketplace.
An illustrator might mistakenly tend to place maximum emphasis on “secondary” factors such as the technique used (etching, charcoal, pastels/chalk, pencil, watercolor, acrylic, oil, etc.), the type of request (humorous, fantastic, realistic, decorative illustration, etc.), hand illustration, digital or digitized.
But the value of an image or illustration depends on several factors beyond the technical or aesthetic characteristics of the work itself.
It is always market demand that plays a crucial role in determining the value of an image. Images that meet market demand or align perfectly with the client’s needs usually turn out to be more profitable.
When calculating the monetary value of an image, reference is usually made to the royalty rate agreed upon with the client, the duration of use, and the purpose and type of exploitation. For example, an image used for a nationwide advertising campaign will have a higher value than an image used in a personal blog.
Furthermore, if the image or illustration in addition to being pleasing is even unique, it will certainly have a higher value than stock images contained in an image database.
In this sense, the uniqueness of the image in the market is a very important factor, and for this reason, too, the illustrator should always carefully negotiate the exclusivity clauses contained in a contract.
Of course, the reputation of the artist is also a factor that greatly influences the value of an image. If the author is famous or, because of his or her choices, has a good reputation in the industry, the image he or she produces will be just as valuable as his or her image is.
As a result, it should be remembered that the performance of an image always depends on proper management of intellectual property rights and contractual choices. Let us see what are the fundamentals of a legal strategy.
Although the author (of the image or illustration) is often considered a weaker party to the contract (because the principal is generally the one who holds the most power and financial resources) there are some steps he or she can take to make the most of the contractual relationship.
First, the author, by asking the right questions, can avoid misunderstandings and disputes with the principal. Here is a check list on crucial issues:
The author should enter into the view that a price negotiation with the client may be inevitable. However, with a proper set of information, it is possible to create the best prerequisites for approaching the negotiation and properly valuing one’s creative work.
Information gathering, by relating the quotation to the client’s desired use of the images, makes it possible to define a consistent quotation.
On the other hand, when formulating a quote, one must take into account the commitment required to carry out the assignment and the actual expertise and experience held. A debut “in packaging,” for example, cannot be priced like the work of an illustrator with industry experience.
Unfortunately, it frequently happens that principals demand to have their rights assigned on a lump sum basis. In some cases, lump sum is practically a rule: if you design a logo for a company, the entrepreneur is unlikely to be willing to agree on a percentage royalty on sales with the author.
In other cases, however, royalty is the rule. Indeed, the law has introduced an obligation for companies to keep the author informed, in a transparent way, about the exploitation over time of creations. We will discuss this in a moment.
One should not be afraid to give discounts when one is in the early stages of a career, provided that the principal is committed to giving adequate prominence to the authorship credit. If the credit is placed in highly visible “corporate communication venues”, the author could benefit in advertising visibility, useful in obtaining new clients or assignments (but aspects of the credit and its placement must be properly agreed upon). The support of an experienced lawyer can often make the difference in these cases. However, let us see what are the main critical issues in the relationship with the principal and how to defend oneself.
A professional illustrator is able to create images that capture the audience’s attention and convey a message clearly and directly. However, the relationship with the client can often be a challenge. The main critical issues in this relationship in our firm’s experience are as follows:
Very often practitioners, especially illustrators, overlook the contract and completely underestimate the pre-contractual phase, i.e., the crucial exchanges that take place before an agreement is signed.
In addition to many practical expedients (e.g., the author should get into the habit of holding the original matrices “hostage” until the balance of the agreed fee is paid, transmitting only low-resolution images) an experienced lawyer in the field could provide the author with a great deal of useful advice regarding:
In an industry where atypicality reigns supreme, although copyright law stipulates that “the transmission of rights of economic use must be proven in writing” (Art. 110 Copyright Law) reading the contract carefully or drafting an accurate and binding one is always essential.
Authors experience the obligation of written form as a kind of absolute guarantee on the preservation of their rights, but in reality it is not so.
The Italian Supreme Court has clarified that “the author retains the authorship of the works, as the creator of them, but, as a result of the contract of professional services, the principal acquires the rights of economic use of them on an original basis within the limits of the object and purpose of the contract…” [Italian Civil Cassation, sec. I, June 24, 2016 sent. no. 13171].
When rights arise in the principal under the contract, more care must be taken than ever before.
The Italian implementation of the Copyright Directive has introduced some additional protections for authors, I discussed in a previous article (The new obligation to “report to authors” under Legislative Decree 177/2021 (Italian implementation of the EU Copyright Directive) – Canella Camaiora).
For contracts signed on or after June 7, 2022, anyone exploiting the work of an author is required to report to him, at least every six months, a set of relevant data on the commercial performance of the transferred or licensed works. This is stated in Article 110-quater of the LdA (Transparency Obligations) where it is stipulated that:
“1. Entities to whom rights have been licensed or transferred and their successors in title shall be obliged to provide authors and performing artists, including through collective management bodies and independent management entities referred to in Legislative Decree No. 35 of March 15, 2017, at least every six months, with up-to-date, relevant and complete information on the exploitation of artistic works and performances, and the remuneration due. In particular:
(a) the identity of all parties involved in the assignments or licenses, including secondary users of works and performances who have entered into agreements with direct contractors of authors and performers;
(b) the manner in which the artistic works and performances are exploited;
(c) the revenues generated from such exploitations, including advertising and merchandising revenues, and the remuneration contractually due, as stipulated in licensing or rights transfer agreements;
(d) with specific reference to non-linear audiovisual media service providers, the numbers of purchases, views, subscribers.
2. Fulfilment of the obligation under paragraph 1 shall be required to a proportionate and effective extent to ensure a high level of transparency in each area.”
Moreover, if such information reveals that the author’s remuneration is disproportionately low, authors are entitled to “additional remuneration”. The text of Article 110-quinquies of the LdA states that:
“1. Without prejudice to what is established in this regard by collective agreements, authors […] shall be entitled to appropriate and equitable further remuneration […] if the agreed remuneration proves to be disproportionately low in relation to the income originated over time from the exploitation of their works or artistic performances, taking into account all possible types of income derived from the exploitation of the work or artistic performance, for any reason and in any form…”
The Communications Supervisor has a central role in resolving these types of disputes. Indeed, under Article 110-sexies of the LdA:
“1. For the resolution of disputes concerning the transparency obligations referred to in Article 110-quater and the contractual adjustment mechanism referred to in Article 110-quinques, either party may turn to the Communications Guarantee Authority, which shall resolve the dispute within ninety days of the request, in accordance with the provisions of specific regulations, to be adopted within sixty days from the date of entry into force of this provision, without prejudice to the right to take the matter to court.”
Regarding the non-use of works, the so-called “revocation of the right” has recently been introduced in Article 110-septies LdA, first paragraph:
“1. An author or performer who has exclusively licensed or transferred his or her rights to a work or other materials, in the event of non-exploitation may take action for the termination, even partial, of the licensing or transfer contract of the rights to the work or other protected materials, or revoke the exclusivity of the contract. The provisions of the Civil Code on contractual termination shall apply.”
The fourth paragraph of the same article states:
“Unless otherwise provided for in the contract or otherwise provided for by law, the exploitation of the work or artistic performance shall take place within the term stipulated in the contract, but not exceeding five years or two years following the availability of the work by the publisher or producer. Failing this, the author or performer shall assign a reasonable term for the exploitation of the licensed or transferred rights. After the expiration of the term, the author or performer may revoke the exclusivity of the contract or terminate the contract, in accordance with Paragraph 1.”
If what you are most interested in is termination, I have written an article on this specific topic (Termination of a contract for non-performance: what it is and how it works).
“Artificial creation” of images is now made possible in Italy thanks to Article 70-quater of the Italian Copyright Law: “The extraction of text and data is allowed when the use of the works and other materials has not been expressly reserved by the holders of copyright and related rights as well as by the holders of databases.” I have already discussed this topic in this article (Artificial Intelligence: the silent exploitation of authors’ works. – Canella Camaiora).
To defend themselves against this kind of unauthorized use of their works, authors should put their credit on their images when they post them online, so that the authorship of the work is recognized. In addition, they could adopt technological protection measures such as adding watermarks or using other watermarking techniques.
However, these expedients may not be sufficient to completely prevent unauthorized use of the works. Therefore, it is important to closely monitor the evolving international legal situation and take appropriate protective measures to defend one’s interests and, in any case, react to change.
With AI, it becomes easier for anyone to create images and visual content. This means that there are more people competing for the same jobs, which can lead to a decrease in the value and remuneration of the illustrator’s work. There are many initiatives in defense of illustrators that you can join (for example: https://www.egair.eu/)
In any case, to be competitive, illustrators need to focus on creating high-quality, recognizable, and unique images using their creativity and artistic skills, but they also need to be able to adapt to new technologies and use AI tools effectively to improve their work.
Illustrators could, for example, leverage AI technologies to explore their clients’ tastes more efficiently and quickly. They could use AI-based image search engines to identify design trends or to find images similar to those requested by the client. However, it is important to stress that AI should not completely replace the illustrator’s creative and artistic skills, but rather complement and support them to improve the quality and efficiency of their work.
As for the copyright on images created through artificial intelligence, it is still unclear whether the principal can have legal exclusivity over their exploitation.
As a matter of fact, copyright is reserved by law exclusively for humans, and not for machines or software. This means that, although AI can be used to create high-quality images, the principal cannot be certain that he or she has exclusive exploitation rights over the images produced.
This is an important concept to explain to principals so that they fully understand the limitations and opportunities of using AI in creating images for commercial use. In addition, AI currently has not yet surpassed humans in terms of creativity and style.
For example, an AI algorithm can be programmed to reproduce an existing style, but it cannot create a completely new and original work of art without human input. In addition, the reproduction of artificial styles or images that still make the source work recognizable could be considered unlawful and force users to pay damages.
Avvocato Arlo Canella
