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Why do you think the term "royalty" isn't applicable to a sales-based bonus when the copyright has transferred? I've processed many contracts which use the ter

Why do you think the term "royalty" isn't applicable to a sales-based bonus when the copyright has transferred? I've processed many contracts which use the term in exactly that sense, and evidently SFWA use it that way too.

gamblor956 6y ago
Because "royalty" is a legally-defined term for IP and tax law purposes. You can't just call something a royalty, it specifically means a payment in consideration for an IP license (meaning the right to use another's IP). For a work-for-hire agreement, the author never owns the IP license; as a commissioned work the copyright always belongs to the employer, so there is never a royalty. (On a more technical note, legally the consideration received from the sale of an entire IP right is not a royalty either, since it's not for a license but for the outright sale of the IP right.) Thus, a sales-bonus for a WFH product isn't a royalty. Moreover, the original WFH payments would not be royalties either.
- anotherman554 6y ago
  My understanding is a work for hire contract entitles the writer to royalties if the contract says it does. Unless you can show a court case where the contract said a work-for-hire author is entitled to royalties and the court threw out that contract provision as "illegal" or "not royalties" then I'm skeptical what you wrote here is correct.
  - gamblor956 6y ago
    My understanding is a work for hire contract entitles the writer to royalties if the contract says it does. Yes, we agree on that point. However my point is that a WFH contract that entitles the author to royalties is extremely rare. ADF apparently has copies of these contracts (per the SFWA president) and they haven't yet shown any portion of the contract actually provides for royalties, which would be extremely rare for a WFH contract. Unless you can show a court case where the contract said a work-for-hire author is entitled to royalties and the court threw out that contract provision as "illegal" or "not royalties" then I'm skeptical what you wrote here is correct. There are plenty of court cases analyzing what a "royalty" is for both copyright and tax purposes, but the remedy isn't to throw out the contract provision if something isn't a "royalty." It simply informs how the contract between the two parties is enforced or the non-contract effects of the transaction. (For example, on the tax side, a royalty is generally subject to different tax rules.) In the IP realm, if a payment isn't a royalty, than that would simply mean that it's not paid for the right to use IP (but was paid for some other reason). I'm not saying that ADF isn't entitled to get paid something by someone. I'm simply saying that the facts as provided, given the nature of WFH agreements in Hollywood, suggests very strongly that he isn't entitled to royalties.
deleted 6y ago
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gamblor956 6y ago

Because "royalty" is a legally-defined term for IP and tax law purposes. You can't just call something a royalty, it specifically means a payment in consideration for an IP license (meaning the right to use another's IP). For a work-for-hire agreement, the author never owns the IP license; as a commissioned work the copyright always belongs to the employer, so there is never a royalty. (On a more technical note, legally the consideration received from the sale of an entire IP right is not a royalty either, since it's not for a license but for the outright sale of the IP right.) Thus, a sales-bonus for a WFH product isn't a royalty. Moreover, the original WFH payments would not be royalties either.

anotherman554 6y ago
My understanding is a work for hire contract entitles the writer to royalties if the contract says it does. Unless you can show a court case where the contract said a work-for-hire author is entitled to royalties and the court threw out that contract provision as "illegal" or "not royalties" then I'm skeptical what you wrote here is correct.
- gamblor956 6y ago
  My understanding is a work for hire contract entitles the writer to royalties if the contract says it does. Yes, we agree on that point. However my point is that a WFH contract that entitles the author to royalties is extremely rare. ADF apparently has copies of these contracts (per the SFWA president) and they haven't yet shown any portion of the contract actually provides for royalties, which would be extremely rare for a WFH contract. Unless you can show a court case where the contract said a work-for-hire author is entitled to royalties and the court threw out that contract provision as "illegal" or "not royalties" then I'm skeptical what you wrote here is correct. There are plenty of court cases analyzing what a "royalty" is for both copyright and tax purposes, but the remedy isn't to throw out the contract provision if something isn't a "royalty." It simply informs how the contract between the two parties is enforced or the non-contract effects of the transaction. (For example, on the tax side, a royalty is generally subject to different tax rules.) In the IP realm, if a payment isn't a royalty, than that would simply mean that it's not paid for the right to use IP (but was paid for some other reason). I'm not saying that ADF isn't entitled to get paid something by someone. I'm simply saying that the facts as provided, given the nature of WFH agreements in Hollywood, suggests very strongly that he isn't entitled to royalties.

deleted 6y ago

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