Legal issues

…are not the most exciting part of our job. However, a legal mess can completely ruin you or create major obstacles in your business

In this document I have collected all the legal information that I wish someone had whispered in my ear three years ago. Well now I know and consider me the person whispering it in your ear.

These days ten new microstock agencies appear each year and just as many disappear. The new guys will contact you and try to get you to send them your images, and this is where you need to be really careful. A serious agency will have their contracts and the legal side of things covered and will present you with a good contract. A sloppy agency will give you some google translated ukraine contract with ambiguous wording or say “that will come later”.

Here are the biggest pitfalls to watch for if you’re signing a contract:

No clear termination clause.
You should not sign a contract that does not promise you to be able to remove all your images from their site and subdistributors’ sites within a minimum of two years. This is the very longest you should sign a contract for and ideally you should negotiate this down to one year or less.

Bad contract.
When you encounter a bad contract, walk away. A contract that you can’t make heads or tails of even after you’ve read it three times is not worth signing. If you’re really interested in joining the company, demand the contract be rewritten.

No signature back.
You sent them your hard copy, but did you ever get one back? Bad news: it won’t work if you didn’t.

Wrong entity, wrong name, wrong/misspelled company name.
Check the company name and the position of the person signing on behalf of the company. If not you might not be signing anything valid, but will act your part out because you don’t know this (before end up in court, that is).

Look at the jurisdiction:
Do you want to go to court in another country? Choose a jurisdiction that has a legislative history of cases in stock photography and licensing of media, copyright law. etc. The best jurisdictions are New York, Alberta, UK, Australia and New Zealand (We can thank Getty for this)

No user restrictions defined on the site.
This is really dangerous. Do not run the risk of letting an agency sell your images without user restriction that does not follow the stock industry standard. The industry standard for forbidden usage restricts resale or distribution of your image, restricts print runs over 250,000 (without special license) and forbids the use of an image alongside pornographic, defamatory or pharmaceutical or political content (i.e., images may not be used to promote tobacco products, adult entertainment, dating services, personal hygiene products, political endorsements, etc.).

No allowance for due diligence.
“Due diligence” is your right to check all the financial statements and finances of an agency to see if they are in fact keeping track of all sales and providing you with the right amount of money. If an agency does not allow this it is a really bad sign. You NEED this in the contract or you are making a deal with the devil.

Commission offer is too low.
If a new agency approached you then you should not go for anything below 40% commission. They will probably say…”well sorry, that is just too much,” and that’s okay. Wait another two months and they will warm up to the thought, and surprise, you will get yourself the contract.

Trying to squeeze in an submission minimum.
Some agencies have upload minimums or insist that you have to supply images every quarter etc.

Don’t say yes to this ever. Period.

Trying to squeeze in a “non-compete” agreement.
If they try to squeeze in a clause about you not being able to work with agencies or another of their already existing partners, this is a big no-no. A lot of contracts have this section and you should respond with a flat out “NO” to such agreements. If I signed a non-compete with a small agency and that agency had Getty as their partner, I could basically be sued for having my images on Istock.

No payment rules defined.
Payments must happen regularly, monthly or when requested. A contract needs a section about this so the agency cannot drag the payment process out forever. Also, your contract must contain clear terms on a sales statement reporting system.

Are there any dodgy subdistributors you need to know about?
Ask for a subdistributor list. The contract terms you are signing with the agency must be the same as the agency has with its subdistributors.

Who will do submissions, uploading and organizing into their collection?
How will they do this and how much effort is required by you? Get clear lines right away.

NDA
Some agencies will want you to sign a Non Disclosure Agreement, which basically states that you agree to not disclose (talk about) any of the confidential information you might have heard about the agency during the negotiations or contract formation. An NDA is ok, but it must be time limited and must go both ways. Make sure the confidentialinfo is defined.

Below is the standard autoreply I use when new agencies contact me. Feel free to use the same one yourself, or tweak it to make it your own. It is important to send a professional signal to new agencies and not to support legally messy agencies.

Dear agency XXX.
Thank you for showing interest in distributing my collection of images. My collection sells very well and I am sure we can mutually profit from a distribution agreement. When negotiating new contracts there are a couple of things we are looking for and that we would like you to clarify for us so we can move forward:

1. What is the commission offer you have in mind?
2. Will you do the submission and organization of our files on your site if we send you a hard drive, upload by FTP or other means, or are you looking to have us do that? Timeframe?
3. Please send us a copy of your contributor contract.
4. Please send us a copy of your user restrictions defined on the site.

Your contract must include the following:
1. A clear termination clause with a clear promise of complete removal
of all images within 2 years.
2. A allowance for due diligence.
3. Must not include a upload minimum or submission minimum.
4. Must contain a clearly defined payment structure and sales
statement reporting system.
5. A list of subdistributors if any.
6. A specified jurisdiction.