Nearly four years after it was announced, the $30 million Google Lunar X Prize remains stuck on the ground, tied down by the same type of wrangling and delays that often characterize government space projects it is designed to replace.
Rules for the private moon race are still being revised. Teams have had trouble moving ahead due to the uncertainty. Deadlines have been pushed back. And there is deep frustration among competitors over the X Prize Foundation’s efforts to monopolize nearly all of the media and intellectual property (IP) rights from the contest.
The competition’s original goal – to launch a new industry by demonstrating that lunar exploration can be done quickly and cheaply by the private sector – has become lost in a complex process that has left everyone frustrated. The focus at times seems to be less on flying the missions than on who will profit from them.
The key problem is the still-unfinished Master Team Agreement (MTA), a binding document that includes the rules for the competition. The MTA has involved years of discussion, in large part because of the complexity of negotiating a set of rules with 29 teams that will satisfy laws in the many different nations from which they hail. As negotiations have dragged on, the document has ballooned from 12 to 67 pages.
The complexity of these negotiations shouldn’t be underestimated. The discussions have been complicated by the growing number of teams that have signed up over the years at ever rising costs. Initial teams paid a $10,000 registration fee. The fee was subsequently raised to $30,000 in 2009 and to $50,000 for teams that joined after July 1, 2010. The competition closed to new entries at the end of last year.
But, that isn’t the only problem. A key point of contention has involved media and intellectual property (IP) rights. The MTA gives the X Prize Foundation nearly total control over these rights once teams commit to a launch, a fact that has caused much consternation among the competitors. Images, video, lunar data and other content are governed by these restrictions.
According to MTA version 3.0, which is currently in force but is subject to future revision, the teams own the IP rights to the spacecraft and rovers they produce. For the most part, anyway:
Subject to the provisions herein, which provide XPF with the Media Rights, Team owns all rights in and to all of Team’s Intellectual Property associated with the design, manufacture, and operation of Craft, secondary vehicles, and subsystems. Specifically, XPF makes no claim to the rights in and to all or any of a Team or Team designee’s Intellectual Property associated with the design, manufacture, operation of and the data collected by the Craft, secondary vehicles, and subsystems on the surface of the Moon, except in such cases where said Intellectual Property relates to or includes the story of the Competition, the Competition Media, the data required in this Agreement as part of the Mooncasts, or the names, trademarks, copyrights, logos, insignias or similar Intellectual Property of XPF, Google, or other Competition partners, contractors, or collaborators.
The X Prize Foundation has carved out an exception, saying that it can assert claims “in such cases where said Intellectual Property relates to or includes the story of the Competition, the Competition Media, the data required in this Agreement as part of the Mooncasts.” In essence, the foundation can claim rights if the IP is essential to its role in the competition, which it owns completely.
The media rights break down into two main time periods:
- Registration Interval: the time period between a team’s acceptance into the competition and the acceptance of its notification of a launch attempt.
- Post-Registration Interval: the time between the notification of launch attempt through successful completion of the prize requirements on the moon and the awards ceremony.
During the Registration Interval, the X Prize Foundation has the non-exclusive right to exploit any media content produced by a team. However, once a team enters the Post-Registration Interval, it is effectively working for the X Prize Foundation and signs over nearly all of its rights to the non-profit group:
XPF shall own, and therefore have the exclusive right to Exploit, all Post-Registration Content. If XPF does not Exploit the Post-Registration Content in a given medium, however, XPF will, in good faith, consider any written proposal by Team to do so.
Each party considers the Post-Registration Content to be a work made for hire for the benefit of XPF. If for any reason the Post-Registration Content would not be considered a work made for hire under Law, in consideration of the obligations and monies described herein, Team does hereby and agrees to assign, convey, and transfer to XPF, its successors and assigns, the entire right, title, and interest in and to the Post-Registration Content and all Intellectual Property Rights therein, and in and to all works based upon, derived from, or incorporating the Post-Registration Content, and in and to all income, royalties, damages, claims, and payments now or hereafter due or payable with respect thereto, and in and to all causes of action, either in law or in equity for past, present, or future infringement based on such Intellectual Property Rights, and in and to all rights corresponding to the foregoing throughout the world. To the extent that Team or a third party owns or controls (presently or in the future) any Intellectual Property rights that were not created in connection with the Competition, but that may be necessary for XPF’s exercise of the rights assigned or granted to it pursuant to this Agreement (“Related Rights”), Team agrees to and does hereby grant to XPF, or will cause to be granted to, at Team’s cost and expense, a worldwide, perpetual, irrevocable, exclusive, royalty-free, sublicensable right and license to Exploit any such Related Rights to the extent necessary to enable XPF to exercise all rights assigned or granted to XPF under this Agreement.
If the Post-Registration Content is subject to 17 U.S.C. 106A or any similar Laws, Team hereby irrevocably waives and agrees not to assert all rights under such section and irrevocably appoints XPF as its Agent to assert on Team’s behalf Team’s moral rights or any equivalent rights regarding the form or extent of any alteration to the Post-Registration Content (including, without limitation, removal or destruction) or the making of any derivative works based on the Post-Registration Content, including, without limitation, photographs, drawings or other visual reproductions of the work, in any medium, for XPF’s purposes.
Team shall not Exploit any content generated during the Mission Interval, Bonus Mission Interval, or Award Ceremony Interval, including, without limitation, content unrelated to the Competition, that would interfere with XPF’s efforts to Exploit the Competition Media.
As it determines in its sole discretion, XPF will release certain limited rights to Team to allow such Team the ability to recruit and activate Team sponsorships, participate in online social networking such as blog posts, provide short video news releases, communicate internally to Team, perform Team engineering work, and recruit Team employees or investors. Additionally, each Team may request audio, video, written, or photographic material releases from XPF for such purposes; such requests will not be unreasonably denied. XPF may, from time to time and at its sole discretion, release a license to Team for use of limited Competition Media if XPF determines that such Competition Media will not be Exploited by XPF. In addition, when requested, XPF will generally permit Team to license Competition Media that comprises scientific or engineering data to third parties where such license will not interfere with XPF’s right to Exploit Media Rights as permitted by this Agreement. Any grants or rights made pursuant to this paragraph are subject to the execution of a separate agreement between the parties.
Team understands and agrees that XPF may sublicense any or all of its rights in any of the content described herein, including, without limitation, its Media Rights and Post Registration Content to third parties, including , without limitation, Google.
Under the MTA, teams must ask the X Prize Foundation for the right to use content that they produce on their own missions, but only for non-commercial use:
XPF shall have the right, exercisable in its sole discretion, to sell, assign, license, transfer or other otherwise Exploit its rights and title in and to such audio, video, photographic, or other material in any manner. Team shall retain the right to request royalty-free usage of such material as is pertinent to their own involvement in the Competition for the purposes of video news releases, internal Team communications, Team engineering work, Team employee or investor recruitment, or similar non-commercial purposes; such requests shall not be unreasonably denied. If XPF requires use of any Team Intellectual Property not covered by the grants of rights herein in its production of media content or for advertising or promotional purposes, XPF shall submit a request to Team for permission to use such materials for such purposes of producing media content or educational materials related to the Competition. Team agrees not to unreasonably withhold, condition, or delay approval for XPF to use Team Intellectual Property for production of media content or educational materials related to the Competition, it being understood that such approval would be withheld reasonably if it were to unduly interfere with Team’s revenue generation, agreements with financiers or customers, or trade secrets. Furthermore, Team agrees not to unreasonably withhold permission for advertising or promotional use related to the Competition. Team shall use best efforts to respond to such requests within ten (10) business days.
The main exception to the X Prize’s ownership of Post-Registration Content involves the Interim Moon Interval, which is defined as “any period of time after the conclusion of the Mission Interval [successful completion of GLXP requirements] when Team and its Crafts are engaged in activities on the surface of the Moon that are unrelated to any aspect of the Competition, as determined by XPF.”
The teams get to keep ownership of the Interim Moon Interval content; however, they must “grant XPF the perpetual, sublicensable, worldwide, irrevocable, royalty-free, non-exclusive right to Exploit the Interim Moon Interval Content in any manner and media now known or hereafter created, including, without limitation, for purposes of promotion or marketing.”
Successful teams will get a share of the net revenues from any content sales after the X Prize Foundation deducts its expenses and overhead fee:
XPF shall share with Teams the Total Net Media Revenue. For purposes of this Agreement, “Total Net Media Revenue” means gross revenues actually earned and irrevocably received by XPF in connection with the Exploitation of the Media Rights less any and all costs, fees, charges, and expenses associated therewith, including, but not limited to, all financing, development, and production costs and fees; interest; a two and one half percent (2.5%) overhead fee; residuals; as well as promotion, marketing, advertising, and distribution expenses, costs, commissions, and fees; and all deferments and third party participations, as all computed, accounted, and paid in accordance with XPF‘s standard policies for projects of the relevant type, and shall be subject to any agreement entered into by producer with any financier, distributor, or other third party.
After the expenses and fees are deducted, the X Prize Foundation will distribute revenues to the teams in accordance with their performance. The table below shows how net revenues will be distributed according to various possible outcomes of the competition.
The X Prize Foundation keeps the largest single percentage of the net revenues in all circumstances. And that is after it has recouped all of its costs and paid itself a 2.5 percent overhead fee from the gross revenues. Depending upon how the foundation calculates its expenses, there could be a lot or a little left over to distribute to the teams.
Exactly who is responsible for all the unpopular provisions in the MTA is uncertain. Some sources say the fault lies with the X Prize Foundation, which has tried to monopolize media rights for competitions it has run in the past.
Others say that pressure has come from Google, which has put up $30 million in prize funds. Google is in the business of controlling access to the world’s information. The company has a project to digitize every book on the planet regardless of whether the copyright holders agree or not. Thus, it works best for the X Prize Foundation to control as many of the rights as possible and then sub-license them for a low fee to Google, which made the moon race possible in the first place.
The other major problem has the inability to finalize the rules. The X Prize Foundation released MTA version 3.0 in January, intending it to be the final binding document. The foundation said it was not planning to make any further revisions in the MTA, nor would it accept any comments from the competitors suggesting changes.
However, at least three teams – identified by one source as Moon Express, Next Giant Leap and Astrobotic – objected to some of the terms, especially those relating to IP rights. The X Prize Foundation decided to reopen the agreement to changes but, according to multiple sources, neglected to inform all the other competitors.
You can imagine the surprise on April 15 when the foundation send out MTA version 3.2 with revisions that tightened media provisions and muddled the IP rights. The teams were given two weeks to sign it as written or be booted from the competition. After protests, that deadline was moved back one week due to the Easter holiday.
On May 3, there was a teleconference between X Prize officials and representatives from eight teams – Team FREDNET, Rocket City Space Pioneers, Astrobotic, Next Giant Leap, Team Puli, Omega Envoy, Penn State Lunar Lions, and Selenokhod. X Prize officials agreed to consider the concerns and decide whether any further modifications were required. In the meantime, the competition would continue to operate under the MTA 3.0 agreement released in January. The issue might be discussed at a team summit set for late July at NASA Ames Research Center if it is not resolved before then.
One wonders how things got to this point. How did a seemingly simple idea turn into something so complicated and bureaucratic? Why is it beginning to resemble so many government space projects that have gone before it? These competitions are supposed to be different.
The X Prize Foundation was inspired by the Orteig Prize, a $25,000 competition to fly across the Atlantic that was won by Charles Lindbergh in 1927. Michael Doornbos recently visited the Air & Space Museum’s archives to find out how hotelier Raymond Orteig did things back in the day:
The entire competition was outlined in detail on 3 pages of typed text. Actually that’s a little bit of a stretch because the third page was just a list of judges and addresses of people to contact.
The competition credited with kicking off an entire industry was very simple and fit on two pages.
- Pay the National Aeronautic Association a registration fee of $250 (about $3250 in 2010 dollars)*
- Cross the Atlantic Ocean without stopping in an airplane
- Win $25,000
Oh, and you didn’t have to give the rights and revenue from any media events afterward to Mr Orteig. In fact, the rules specifically say:
No part of the Entrance Fees is to be received by Mr Raymond Orteig, the donor. All amounts received will be applied toward payment of the expenses of conducting the competition.
Yes, it was a simpler time. Fewer lawyers. Simpler laws. Few media options. But, still…. The point of the Orteig Prize, and its Google backed descendant, is about helping to launch a new industry. When did it become about who can squeeze the most money out of the competition?
It’s an excellent question that the X Prize Foundation isn’t answering these days. When I asked X Prize Foundation spokesman Michael Timmons for input on this post, he responded, “We have no comment at this time.”