Can I Keep the Rights to my Characters' Images?

Duane Eaders of WA asks:
Is it possible to retain the rights to your characters -- names, appearance, etc. -- once you have sold your screenplay? For example, what if you have developed a character/person/creature that you intend to expand into a franchise of multiple films, toys, games and so on... (like Gremlins, Jack Ryan, Spy Kids)? How do you continue to legally create the screenplays and all of the spin-offs if the purchaser of the original concepts owns all the rights attached to your screenplay?

Our Experts Dina Appleton & Daniel Yankelevits respond:
Unfortunately, it is extremely unlikely that a studio will allow a screenwriter to retain motion picture rights to his characters once such studio acquires the screenplay (or exercises its option to purchase said screenplay). However, there are certain crucial rights that such a writer may negotiate to retain (as discussed below). This answer is a bit different in the case of books -- which is why Tom Clancy (author of the Jack Ryan books) continues to write books which include those characters -- and why Paramount continues to pay Tom Clancy for the right to produce sequel films. Let's review in steps:

A) Authors of books will almost always retain the right to exploit 'author-written sequels' -- at least in book form. Accordingly, a writer, such as Tom Clancy, can utilize the Jack Ryan character in new stories and sell the print publication rights without the movie studio's involvement. However, Paramount (the studio that released the first film) almost certainly retained a right of first negotiation, as well as a 'matching' right of last refusal, to acquire the motion picture rights to any such subsequent books. Thus, when Clancy finishes a new Jack Ryan book, he must negotiate with Paramount before shopping the book to other studios. Moreover, if he does not make a deal with Paramount, he cannot sell it to a third party, such as Disney, without offering Paramount the right to match Disney's last offer. This makes it extremely unlikely that Disney will usurp Paramount's successful franchise.

B) Screenwriters: Unfortunately, studios are in the driver's seat in these negotiations. In today's universe, where almost any successful film generates a sequel (even 'Gladiator,' where the main character was killed in the initial film), studios expect to acquire all rights to the character. HOWEVER -- if a writer retains a skillful negotiator to make his deal, the writer will almost certainly be granted a first opportunity to be engaged to write the sequel film. Thus, if the author wrote 'Spy Kids' for Miramax, Miramax would need to offer the writing gig for 'Spy Kids 2' to that writer (most likely with a 'floor' or minimum price no less than that paid for the first film). In addition, the Writers Guild will require that certain royalties be paid to the credited writer of the first film when his or her characters are used in spin-offs or other productions. Established authors may be able to extract a few additional rights, such as the right to mount live stage productions based on their work, but these details are worked out on a case-by-case basis. Hope that helps!