Adoptable Characters Being Resold

[Ragamuffins]

Hello!

 

I am just looking for some advice on how to proceed, or if any one thinks this warrants a beware post.

I am having issues with a client that purchased two adopts from my recent sale of characters, and they also ended up purchasing two more of my former characters from some one else I sold them too. The main issue that I have is the client in question has been messaging multiple people in the past month attempting to resell the characters at exorbitantly increased prices. 5-10 times the original sales price. I have notes and email records from multiple people that have since contacted me about them with their attempting to resell at inflated prices.

I don't mind if people resell my characters, and would understand a markup if there was considerable artwork commissioned of them in the time that they owned them. But this is going from the $50 that they purchased them at, to an asking price of $500. Unfortunately I did not have any TOS down about restrictions reselling the characters, so I am limited in that regard. But would it be too much for me to refund them the amount they paid to reclaim the characters? I can't do anything about the ones they bought from the other client, and I am trying to reach them to see what they sold for, but it really makes me a little sick to my stomach that they are marking them up SO much.

Any advice  would be super appreciated! Thank you!

[Alkraas]

Ultimatively, when you sell a character you give up all the rights to the character. It's essentially like buying a tomato from Walmart. Walmart cannot take the tomato back or punish you when you decide to sell the tomato.

When you sell a character, you'll have to be ready to accept that the customer can do whatever they want with the character, which means even reselling it. A TOS probably won't do anything since a TOS means Terms of Service. Adoptables are not a service, Adopts are an item or a product. A service is an action you perform for someone else like a haircut or a commission.

The customer may also refuse to accept the refund and won't give the character back.

[Eden]

Adoptables are something that Boozy Badger has covered before.

You can see the article here.  I asked him personally how reclaiming and refunds work, and his response for that is here.

Quote

The artists, therefore, has the right to demand others not use that specific character (with certain limited exceptions that we ain’t getting into here today) and, likewise, can actually demand that people stop using the character.  So, to steal from our above example, in this situation the default would be the Artist A creates Sammy the Slutty Salamander, and then Buyer A – instead of purchasing Sammy as an adoptable – instead just screenshots that shit and sends it off to Artist B to create the world’s first and greatest salamander/vulpine hot pegging action comic.  If Artist A becomes aware of this, Artist A has every right in the world to demand that the comic be taken down and that Artist B not display or use it in any manner (once again, subject to some general exceptions we ain’t discussing here).

Quote

The artist can revoke the right to use the character whenever they fucking want unless they agree to certain limitations in the negotiation and purchase.  While this doesn’t necessarily have to be in writing, it’s a hell of a lot easier to prove when it is, though.  So, you know, join a group the artist doesn’t agree with and have no terms on the adoptable revocation of rights that limit it?  Feasibly the artist could send you an email terminating your license to use the same.

The tl;dr is that yes, you can take back the adopts any time you want.  Adoptables are a license to use a design.  Do you legally have to give a refund?  No.  However, what is legal and what is considered moral are two different things.  The adoptable market depends on trust, and an artist who recalls adoptables without a refund sours the trust.  Here we also consider it a bewarable offense.

[VosurAekira]

I might have to disagree with a good portion of that, Celestina. When an adoptable is sold, it becomes a "This character now belongs to (insert name)" situation. When a commissioner has already had art made of the said character, attempting to revoke said rights of the character to that buyer would become a messy ordeal. 

I'll use myself as an example: If I were to buy an adoptable, then I have a full-fledged reference sheet made to the character along with multiple pieces of artwork, then the original artist comes along and no longer wishes for me to use the character, they gave up on the rights to the character when the money exchanged hands. They can, however, attempt to make a deal to purchase back the character and the art to compensate for the rights, but then the artists of the other artworks will need to be notified as well for proper-credit or removal-requests. To further on this, if I were to deny the deal, then that is where this would end. However, the artist who made the original adopt art can request the original art to be removed if I were to have uploaded that to my own gallery(-ies) through one-on-one contact or through the administration means.

[Alex Wright]

On 3/17/2020 at 3:34 AM, VosurAekira said:

I might have to disagree with a good portion of that, Celestina. When an adoptable is sold, it becomes a "This character now belongs to (insert name)" situation. When a commissioner has already had art made of the said character, attempting to revoke said rights of the character to that buyer would become a messy ordeal. 

I'll use myself as an example: If I were to buy an adoptable, then I have a full-fledged reference sheet made to the character along with multiple pieces of artwork, then the original artist comes along and no longer wishes for me to use the character, they gave up on the rights to the character when the money exchanged hands. They can, however, attempt to make a deal to purchase back the character and the art to compensate for the rights, but then the artists of the other artworks will need to be notified as well for proper-credit or removal-requests. To further on this, if I were to deny the deal, then that is where this would end. However, the artist who made the original adopt art can request the original art to be removed if I were to have uploaded that to my own gallery(-ies) through one-on-one contact or through the administration means.

Legally though, that's incorrect. Unless a contract was made and signed assigning all rights of that character (in other words, its likeness) to you at the time of purchase, then the artist who originally created the likeness remains the copyright holder, as per Boozy's thread. You can disagree with that all you like, but that doesn't change the legality of it.

[VosurAekira]

Alright. Let's sort out what detail is given in the article:

1. "Adoptables are characters that are created by artists, and then placed out there for sale."
Okay. That just reiterates the mention that the character is sold. Not just the license-to-use is sold when purchasing an adopt. Usually it comes with a common-courtesy that the original artist is given proper credit due for the artwork, but that's a given to me.

2. "So the default, when there is no agreement and speaking in generalities, is that the artist is the holder of the copyright over the character from the moment of creation forward.  The artists, therefore, has the right to demand others not use that specific character (with certain limited exceptions that we ain’t getting into here today) and, likewise, can actually demand that people stop using the character."
Given. If the character hasn't been sold, it only belongs to the artist.

3. "Also, I should point out…without terms defining the scope of the artist’s ability to revoke, a revocable-at-will license is exactly what it sounds like.  The artist can revoke the right to use the character whenever they fucking want unless they agree to certain limitations in the negotiation and purchase."
BIG problem here if this is the case: If the artist does choose to revoke the character license to the commissioner, then the said artist would have to compensate based off of the amount paid to use the character, plus what extra art was made. But to reiterate this with the line from 1. : "Adoptables are characters that are created by artist, then placed out there for sale." And I'm going to stress the words "characters for sale", not "license for sale". There is a difference between those two.

So, if you make characters and intend to sell said characters, that's what an adopt is. If you intend to make characters and sell licenses to use the characters, it should be worded as "Licenses of Adopts for Sale" rather than "Adopts for Sale".

[Eden]

Just for clarity Boozy is a lawyer. If anyone wants to refute his claims we ask that they state their credentials. We are always looking to improve our understanding of the legalities.

[VosurAekira]

While I am not a lawyer, the problem I do see is that he does not give any cited laws to review over or any details as to 'why' they are the way he mentioned.  This could be a very long post, so I may end up needing to split it.

Starting off, we shall try to better identify what an "Adoptable" is. Probably the most common definition that is relevant comes from (oddly enough) urban dictionary: https://www.urbandictionary.com/define.php?term=Adoptable

"A term usually seen on furry art sites such as DeviantART, Inkbunny, etc. An adoptable is a custom-made cartoon/furry character, specifically made to be sold to someone..." (error in spelling corrected, you'll see it on the page.)

Okay, maybe not the most 'clean' of definitions, but it's straight-forward. "specifically made to be SOLD to someone".

Let's look at the Merriam-Webster version ( https://www.merriam-webster.com/dictionary/adoptable )

Adjective version of Adopt, definition of "Adopt", 1:
"To take by choice into a relationship, especially: to take voluntarily (a child of other parents) as one as one's own child."
Definition of "Adopt", 2: "To take up and practice or use."
Definition of "Adopt", 3: "To accept formally and put into effect."

This set does make a bit of sense on the origin of the word to a degree, all these people are taking in these characters into their own stories or worlds when they buy the adoptables. In both versions, the situation is permanent. There's no duration.

In it's purest form, I would find an "adoptable" as an intellectual property. For that definition, I will pull this from the World Intellectual Property Organization: https://www.wipo.int/about-ip/en/ if you wish to read beyond the following statement:

"Intellectual property (IP) refers to creations of the mind, such as inventions; literary and artistic works; designs; and symbols, names and images used in commerce."

Alright, let's find out what we can do with an adoptable if it falls under that category ( https://mmaiplaw.com/sell-startups-intellectual-property/ to follow along)

"The intellectual property of your startup can be bought and sold, licensed, exchanged, or donated just like other types of property."

It does give credit to both licensing and selling (along with giving or trading) as options. So nothing's off the table yet. Keeping with that last page, there's more to see.

"Legally speaking, an assignment of a patent is a transfer of the rights to use the IP so that the recipient has title to it. Again, think of it as selling the patent to another individual or company. You sell it, and they own it. When your startup assigns the rights to a trademark and your goodwill, the assignee becomes the owner of that trademark… they have the same rights as the startup that owned it in the first place. "

There's those keywords again: "you sell" and "they own". Now comes the tricky part on this same page:

"A license is a contract to use someone else’s intellectual property rights, usually for a fee. In contrast to an assignment, the startup that owns the IP maintains the ownership of those rights. This allows your startup to contract for an ongoing regular payment for the use of those IP rights, like being the landlord and receiving monthly rent from a tenant.

A license agreement requires the assistance of an experienced IP attorney because there are numerous details that must be addressed—or your startup may give away more than it intended. Your attorney will negotiate the rights to your intellectual property for a defined time, context, industry, or territory. The license can also be exclusive or non-exclusive."

Hm.. so a license is closer to a "rent or lease"? But you only pay for adoptables once. Also, more than one person can have a license agreement? That would also put possible conflicts on who can do what with the said character (give a story/personality to the character, ect.)

---------------------------------

Part two.

Alright, we defined the aspects of what an adoptable is (both common to artwork and origin), what an intellectual property is, and what can be done with an intellectual property.

Now we move onto the process of buying and selling adoptable characters (or buying and selling adoptable character licenses). First step is the offer, second step would be negotiation (if needed), and lastly would be acceptance. In most adopt-transactions, the conversation would be similar to this that I've seen:

Seller: "Hello! I'm selling (insert adopt) for (insert price)!"
Buyer: "I'll take the character."
Seller: "Alright, send the money to (insert money transfer means, usually Paypal address)."
Buyer: "Money's sent!"
Seller: "And received!"

The intent is stated in the example above is to fully transfer the rights and design of the character from Seller to Buyer in exchange for the price, which is a one-time transaction. This is called an "assignment" rather than a "license".

However, the details of a licensing agreement is far more detailed (follow along here: https://www.inc.com/encyclopedia/licensing-agreements.html )

"A licensing agreement is a legal contract between two parties, known as the licensor and the licensee. In a typical licensing agreement, the licensor grants the licensee the right to produce and sell goods, apply a brand name or trademark, or use patented technology owned by the licensor. In exchange, the licensee usually submits to a series of conditions regarding the use of the licensor's property and agrees to make payments known as royalties..."

The terms of agreement would usually be set before purchase and both parties would have to agree on it. But let's read further:

"One of the most important elements of a licensing agreement covers the financial arrangement. Payments from the licensee to the licensor usually take the form of guaranteed minimum payments..."

Again, more than one payment that I see for a license. Let's continue on this page:

"Another important element of a licensing agreement establishes the time frame of the deal.... The licensing agreement will also include provisions about the length of the contract, renewal options, and termination conditions."

A license can expire, but it's stated in the license. Most adopts that are bought do not state anything about how long a person has them. Also termination conditions? So there would be a price to pay if you're no longer wanting to continue to have the adopt if it were a license? But let us continue on:

"Another common element of licensing agreements covers which party maintains control of copyrights, patents, or trademarks. Many contracts also include a provision about territorial rights, or who manages distribution in various parts of the country or the world. In addition to the various clauses inserted into agreements to protect the licensor, some licensees may add their own requirements. They may insist on a guarantee that the licensor owns the rights to the property, for example, or they may insert a clause prohibiting the licensor from competing directly with the licensed property in certain markets."

Now we're at the part we really need to be in. In such a licensing agreement, it actually does need to be stated who has what rights over the character. All the time, the artist retains the right to the artwork with possible credit given to the buyer to being the one who 'adopted' the character in some cases (usually as a reminder of who owns what in adopt 'batches').

The conversation I see pertaining to this type of situation would be like this:

Seller: "Hi, I'm wanting to sell the right-to-use for this character, are you interested?"
Buyer: "I am, what are your terms?"
Seller: "This is what you can and cannot do with this character, and also this is how long you will have this character."
Buyer: "Alright. And the fee?"
Seller: "(Insert price) to be sent to (money transfer setup)."
Buyer: "I agree to that. First payment has been sent."

So to play Devil's Advocate in this: We do not know the conversation that went between the Original Poster and the Buyer for this transaction, so whether it was an assignment (standard adoptable procedure as told by many artists and buyers to me) or a licensing (procedure found out through this situation), we do not know for sure.

[Bornes]

@Ragamuffins
You can either get the person to willingly give up ownership of the adoptables.
Or you can tell they they don't have permission to use them anymore, and they use them anyway.
Then the onus is on you to keep yelling at the internet that this person does not have permission to use your adoptables and hope everyone else knows that. Which they won't.

Without the person's willingness to give up the characters, you're setting yourself up tor a ton of aggravation with DMCA notices, notice journals, bewares, etc.

Edited April 27, 2020 by Bornes
deleted an off-topic statement

[armaina]

Unless the words in the buying contract say something to the effect of 'transfer of ownership' In a clear and legal context, then there is no inherent wholesale transfer of rights to another individual. You cannot use the phrase 'selling the character' to define your argument because these are colloquial terms and are not legally binding terms.

If you handed over a case to a judge and tried to claim 'but they said they were selling a character' and the judge looks over the material and the seller makes a case that they, in no way ever stated or implied, that there was any sort of transfer of ownership of the rights to the images and their likenesses, your whining "But they used the phrase selling a character!!!" won't suddenly make your case.

That being said, most artists need to define the terms they use and make clear language regarding what's being sold. But unless it is clearly stated that the whole and complete rights are sold, and there is a contract involved stating such, then there is no legal transfer of ownership of rights to uphold.

[Bornes]

Sorry for double reply.
Decided to try to be a little more helpful regarding the actual situation.

@Ragamuffins

Like I said you need to get the person to give up the adoptables willingly, becuase someone trying to make that much of a profit is probably the same type of person to use stolen adoptables.

You know this person's history/personality better than us, so use whichever method you think may work best to convince this person to stop.

- Explain to them that you don't agree with what they're doing and make a threat about reclaiming the adoptables if they don't stop marking up the price so high. See how they respond and gauge your future responses from there. You might be able to scare them into submission.

- Tell them that reselling for such a high markup is against the agreements made of adopt purchases and say that you are reclaiming the adopts. See if they comply. If it looks like they're going to, give them a refund to smooth them over if you want (you don't have to give them a refund).

- Some mix of the 2 above.

- Get in contact with them about your adoptables and ask if you can buy them back. Make no mention of how you disagree with their markups to other people. See if you can agree upon a reduced price since you're the artist. Basically try to go about this as a genuinely interested party without allowing room for the seller to get defensive. Maybe they're really hard up for cash. This would be the "sympathetic friend who assumes the best in people" approach. You can fall back on the other options if it doesn't pan out.

If it were me, I'd probably go with a gentle threat.

Something like the following:

Hi SELLER,
I noticed you have been trying to sell the adoptables you bought from me for PRICE. It's disappointing to see you've marked them up so high from the ORIGINAL PRICE you bought them for. While I could understand this if you've added additional art, it seems you haven't.
 

Unfortunately, I don't agree with this practice, and as the creator of the adopts I have to ask you to stop offering to sell them at the prices you have listed.

--- you can stop here and send off the note now if you want to gauge their reaction first. Otherwise, continue on ---

You can keep the adopts and/or sell them at a more acceptable mark-up [or the original price, your best just judgement goes here.]

Or you can willingly sell the adopts back to me at the ORIGINAL PRICE you bought them for [this is the same thing as a refund but sounds slightly better]

Let me know how you want to proceed. If you don't agree with either of these options, I may have to revoke your permission to use my adoptables.

Thank you,
YOUR NAME

And as Armaina has said and the rest of the thread touched on, it's best you craft a Terms of Service for your adopts as soon as possible that clearly defines exactly how you want your adopts to work and the permissions the buyers have in the future.

EDIT2:

Just noticed the date on this thread
*Facepalm*

Apologies

Edited April 27, 2020 by Bornes
added bit about TOS

[VosurAekira]

@armaina
Actually, it would fall under the premise of a legally-binding verbal contract (follow along here  if you wish: https://thelawdictionary.org/article/is-a-verbal-agreement-legally-binding/  )  due to the nature being a "documented verbal contract" (meaning it has a transcript and can be used as evidence in court if absolutely necessary).

"Although oral contracts are difficult to enforce in court, the parties should make a concerted effort to discuss enforceability, which can be achieved by incorporating the following elements:

– Mutual consent and understanding, which means that both parties are cognizant about what they are agreeing to. If a woman hires a contractor to paint the interior of her house, both parties must understand exactly how many rooms and living spaces are to be painted.

– Offer and acceptance, which means that one party is proposing something that the other party may accept under certain conditions.

– Mutual consideration, which means that there must be an exchange of valuable goods, rights or services.

– Performance, which means that the contractual parties have certain duties to perform in addition to the mutual consideration.

– Good faith, which means that the parties should not attempt to enter into a verbal agreement to cheat each other or to break the law. It is important to remember that certain jurisdictions may require certain contracts to be written; for example, real estate purchases."

------------------------------------------------------
This might also fall under the premise of an informal contract (follow along here if you wish: https://www.upcounsel.com/informal-contract  )

"An informal contract is a type of agreement that will not require any sort of legal intervention to be considered enforceable. They are different from formal contracts because they do not need to be sealed, witnessed, or written.

An informal contract is often called a social contract. This type of contract needs to be avoided if there is no trust with the other party you are contracting with. A verbal contract is considered informal and only works when the other party can be trusted to perform their contractual duties without a written assurance.

A sales contract is an informal contract that is most common. They are specific to every situation and will not always include specific legalities. For instance, a sales contract will not be the same when buying a used car versus a brand-new car.

It could also be different if two people were buying the same car but in a different color. Everyone’s contract will be completely different based on individual circumstances.

For it to be legally binding, an informal contract has to include mutual assent, offer and acceptance, and consideration. It is not based in formalities, but in the observation of people making promises and intent.

There are five main elements when forming an informal contract:

1.     Mutual assent

2.     Consideration or validation

3.     Two or more parties entering a contract

4.     Parties have to have legal rights to contract

5.     No statute or rules declaring a contract void. "

"No statute/rules declaring a contract void..." That portion right there actually strikes me as prevalent because most Adopts actually follow that to a "T". You can't really just say "it's void because I say so", you have to include as to why it would be so rather than an out-of-the-blue revoking if you see it as a license. 
---------------------------------------------

But I will agree with you on one thing: "That being said, most artists need to define the terms they use and make clear language regarding what's being sold."

You can't sell (or distribute?) license contracts for characters without being more precise on it since you need the terms of agreement (price for duration, length of duration, what is allowed/not-allowed, what happens if actions are done outside of allowed, ect. ) However, it is much easier to go through an assignment since you can state "all rights go to you, I hold the right as the artist only" rather than listing off each individual right to be transferred, so most artists go that route.

Edited April 28, 2020 by VosurAekira

[Eden]

Locking this as it's a rather old post, and let's not necro post.

I also want it to be known Artists Beware's official policy will continue to follow Boozy's article.  We won't accept anything from individuals who are attempting to interpret law on their own.