Under an artwork license, the owner of the copyright in the illustration, painting, photograph or other work of art being licensed grants the licensee the right to reproduce the work on specified articles of merchandise and to distribute and sell the licensed articles in certain channels of distribution in a defined territory.  In exchange, the licensee agrees to pay compensation to the licensor, usually in the form of a royalty calculated as a percentage of the net amount (i.e., wholesale sales) invoiced or received from sales of the licensed articles.  In some cases, the licensee may pay an advance, a minimum guarantee, or both, and these amounts will be offset against the accrued royalties.

In many respects, an art license is the same as a license for any other type of property.  However, there are some considerations which are unique to art licensing, and the licensor and licensee should review these considerations before entering into a license transaction:

Licensors and licensees should address the above considerations before entering into an art licensing agreement.  In some cases the licensor and licensee may need to change the parties to the license agreement, add or remove artwork or revise the terms of the agreement.