Copyright ownership is often referred to as a “bundle of rights.” In other words, when you own the copyright on a particular artistic work, you not only own the right to copy and sell the work, but also the right to create derivative works (modifications or new expressions, based on the original), perform the work in public, and broadcast it. Hence, the “bundle.”
“Derivative Works” are exactly what they sound like – new copyrightable works of art based on some pre-existing material. If you own a copyright and grant someone the right (a license) to create derivative works based on your original work – the new, derivative work, will be its own artistic expression and have its own copyright…owned by the person you granted the license to.
That presents an interesting situation when it comes to control, because once the derivative work is created – the train has left the station. Even if the license you granted terminates, if the right to create the derivative work was granted, and the work was created during the term of the license, termination of the license will not bar the creator of a derivative work from registering it and fully utilizing the entire bundle of copyright rights on the (derivative) work.
What does this mean in practice?
First and foremost, grant third-parties the right to create derivative works sparingly.
Second, contract around the “default” (you can do whatever you want!) rules and grant the right to create derivative works with some additional restrictions (like, for example, a limited right to use the derivative work, among others).
Third, be careful what you wish for. Sometimes rights are granted, and the outcome is less than perfect. Once created, derivative works can spawn a life of their own – and the original creator may have no control over the consequences.
Thanks for reading.