Should I Submit Fabric Designs to Vida?

Dear Rich: I built my business on printing my designs on fabric and making stuff. Now there's a handy service (VIDA) that makes stuff with your uploaded design and sells it to others. That makes it easier. I am just leery of any "catches." Can you look at the licensing agreement?
VIDA is a socially responsible e-commerce company, launched in 2014, that connects designers with manufacturers around the world and sells the resulting products at its site. Artists and designers submit original fabric designs which, if accepted, are converted to fabric and used for apparel and housewares merchandise. The designer receives a 10% royalty for each sale.
Nonexclusive and Exclusive Licenses. According to Vida's Designer's Submission and Licensing Agreement, by submitting your designs, you give Vida a nonexclusive license to reproduce  your design primarily for marketing and promotional purposes.  Once an order is made, you give Vida exclusive rights to sell your design in the designated categories (classes of goods that you selected when you submitted your design). (Here's an overview of the merchandise licensing process.)
How does Vida's license stack up? 

• Royalty -  Artists receive 10% of net revenue (gross revenue minus discounts, shipping and similar expenses). Fabric design royalties typically range between 2 and 10%. 
• Length of licenses -  You can terminate the nonexclusive license thirty days after providing notice. You can terminate the exclusive license within one year after providing notice. Most fabric licenses are for 1-3 years with one year renewable terms.
• Limitations - The exclusive license is limited to the designated categories that you selected when you submitted your design. If you don't want Vida to have exclusive rights for certain goods, don't select them as designated categories.
• Reliability of the licensee - The company appears to be well-funded and has been around for almost three years (a good sign for a start up). 

Though the agreement is relatively friendly to artists, there are some details we are not wild about -- for example, the ability of Vida to freely assign your exclusive rights. You can compare Vida's agreement with a model license agreement and explanation.

More Questions About Licensed Fabric

Dear Rich: I have two questions related to your post, "Can I Sell Clothing Made From Copyrighted Fabric?" (1) You indicate that crafters may freely use licensed fabric to make new creations under the first sale doctrine. But, it was my understanding that the first sale doctrine only applied to unaltered or substantially unaltered items. So, if I buy a Mickey Mouse fabric, decide to make a children's dress out of it, how does the first sale cover such an alteration? (2) Your post states that selvage statements such as "for personal use only" are not binding on the end users due to lack of assent. Wouldn't purchasing the item even in light of the selvage statement be an indication of assent? Similarly, there are thousands of digital artists on Etsy who have licensing terms for their creations but there is no requirement of assent necessary before purchase - are those statement also not binding? 
(1) How does the first sale affect alterations of copyrighted fabric designs? When you make clothing from a fabric design, you're not modifying the copyrighted design, you're modifying the shape and cut of the fabric. (It's true that cutting the fabric at certain angles may change how the design is perceived but that's not the same as modifying the design and reselling it.) Therefore, selling your clothing items is permitted under copyright law. When you use fabric containing trademarks (a different area of law than copyrights), courts will permit the resale of clothing provided that there is a prominent disclaimer that the finished goods are not associated with or endorsed by the trademark owner (see also this case). Alas, we're citing case law and precedents, legal niceties that some trademark owners may ignore when aggressively asserting rights at Etsy, etc. Therefore, unless you can afford to defend your rights in a courtroom, proceed with caution when selling clothing made from fabric that features trademarked characters or logos.
(2) Have you assented to a license if you see the "for personal use only" label before you purchase? No. A license requires mutual assent and without an affirmative indication of assent, no license is formed. For digital licenses, as you mention, "click to agree" assent is required. Otherwise, the "license" has no binding effect.

Can I Sell Clothing Made From Copyrighted Fabric?

silk fabric weaving circa 1914

Dear Rich: This question pertains to copyright images on fabric bought from the store. There have been a lot of questions regarding this because of crafter's listings being taken down from Etsy. I believe the ones being taken down are violating copyright by using imported items or their own reproductions. My question is can we purchase licensed fabric or ribbon from a store, make it into a dress or handbag and then sell those items legally? There is a "For personal use only" statement on the salvage of the fabric. My understanding is that First Sale Doctrine would cover the resale of the fabric along with a proper listing and disclaimer? You're correct. Thanks to the first sale doctrine, if you bought copyrighted fabric, you're free to make it into a product and resell that product. You're also free to photograph that product and reproduce that photo as part of an ad when selling the item. A disclaimer won't hurt but it's not required.
What about the statement on the fabric? The statement -- for personal use only -- is wishful thinking on the manufacturer's part. Unless you affirmatively agreed (signed something, clicked "I Agree" or made some other indication of assent) at the time you purchased the fabric, such a statement would not be binding on you.
What you can't do ... If the fabric is an infringement, that is, an imitation made without permission of the manufacturer, you'll run into problems. In that case, the copyright owner can stop your uses whether you knew or should have known it was infringing. You may also run into problems if you create fabric from found imagery that is still protected under copyright. In that case you're infringing the image owner's right to create derivatives.

Can I Use Carpet Pattern from The Shining?

Dear Rich: I am an independent knitwear designer, and I designed a caplet using the brown, orange and red carpet pattern from the Shining. Initially I did it entirely for personal use as part of costume. However now that it is finished, I'd like to make the pattern available for sale to other knitters, who may or may not use the iconic colors, but like the the design and want to make their own. I'm at a loss though on how to navigate this issue legally. From reading your blog I understand that movie costumes are not covered by copyright, but are set details like the carpet, or other furniture patterns or background art covered by either copyright or trademark laws? Would this be a trademark issue? Would the copyright/trademark apply if the design was made in different colors? And now that Stanley Kubrick has passed away how do I determine who to contact for permission, if needed? We'll spare you the lengthy legal explanation regarding derivative rights (yes, some elements within films are separately protectable) and protection of fabric patterns (yes, copyright protects the designs) because it appears as if the owners of the film are not claiming (or enforcing) proprietary rights for the carpet. How else to explain its use on fabric patterns, earrings, as well as sweaters, cardigans, scarves, ski masks, door mats, and area rugs. And of course, the carpet was also reproduced in another movie. (We don't see any indication of proprietary markings on the product pages so we assume these are not licensed uses.) Most likely the owners of the film copyright are not asserting rights and you should be free to use the design as you wish.