Version v4.1 · Material version 1
Parties: KUME INC, a Wyoming corporation operating as Estako Yarns and shipping from Türkiye ("Estako" / "Company"), registered at [registered address], and the invited or accepted designer ("Designer").
Effective date: upon Designer's electronic acceptance (e-signature / clickwrap) of these terms.
Scope (revised 2026-08-08): Open to Designers worldwide from day one. There is no US-residency requirement. Tax documentation branches by status (Section 10.1: Form W-9 for a US person, the applicable Form W-8 otherwise) and payout rails branch by region (Section 10.4), but eligibility does not. (v1.0 limited Phase 1 to US-resident Designers; that limitation is removed.)
Program model (locked, revised 2026-08-10): Curated invitation, Estako invites a "Seed Designer." The Designer orders the agreed Estako yarn from estakoyarns.com (a real, paid order), produces a finished object (FO) + pattern + photography, and Estako runs QC. On passing QC, Estako refunds the Designer's order in full, and the paid pattern goes live on a page whose configurator sells the matching Estako yarn alongside it.
Core deal (locked, revised 2026-08-21): Designer retains full ownership of the pattern and may keep it on Ravelry; Estako sells the matching yarn alongside it. Designer earns the Agreed Royalty Price: a single figure, stated in the currency agreed with the Designer and exclusive of tax, recorded per pattern in Exhibit A, earned on every sale in every market and not moving with exchange rates, local retail prices or discounts (Section 8.1). That royalty is the Designer's only compensation under this Agreement (Section 8.0). Estako sets the retail price in each currency it trades in as a merchandising decision (Section 8.1(c)) and carries the currency, the rounding and the conversion. Designer licenses the FO/pattern photos to Estako per Section 6 (Clause A). Estako's own margin comes from the yarn, not from the pattern.
Source terms (locked, revised 2026-08-21): Designer orders the yarn and is fully refunded on QC-passed delivery (no separate "free shipment"; non-delivery = no refund) · retail price set by Estako per market (Section 8.1(c)(i)) · compensation = Agreed Royalty Price (Section 8.1), recorded per pattern in the agreed currency · deterministic order-line attribution; no cookies, no coupon codes, no synthetic bundle SKU (Section 8.3) · $50 monthly payout minimum · 30-day clawback lock on order-linked royalty (revised 2026-08-14; was 45) · publication conditional on tech-edit QC pass · payout rail: pattern royalty is CASH ONLY, bank transfer or Payoneer (2026-08-14 Esref: store credit closed for royalties, §10.5) (Section 10.4).
1. Relationship of the Parties
1.1 Designer is an independent contractor. Nothing creates an agency, employment, partnership, or joint venture. Designer has no authority to bind Estako.
1.2 Designer is solely responsible for its own taxes, expenses, and compliance.
1.3 This Agreement is the storefront sibling of the Estako Affiliate Program Agreement and Yarn Support / Designer Agreement; where a Designer also enrolls in the affiliate program (Section 11), that agreement is incorporated by reference and governs traffic-driven commission.
2. Invitation & Eligibility
2.1 Eligibility: open worldwide. Designer must be ≥18 and provide accurate registration data (legal name, email, shipping address, Ravelry/portfolio handle, payout details) together with the tax form applicable to the Designer's status under Section 10.1. Residency in any particular country is not a condition of eligibility; what varies by country is the tax form (Section 10) and the payout rail (Section 10.4), not the right to participate. Estako may decline or delay onboarding where sanctions, export-control, or payout-rail restrictions apply to the Designer's country or to the Designer personally, and may require a country-specific addendum where local law demands one. Eligibility is worldwide; onboarding is not guaranteed. Before any Designer is accepted, Estako runs a compliance gate: country of residence, verified legal name, sanctions/denied-party screening (KUME INC is a US person and is subject to OFAC, whose restrictions apply both to certain countries or regions and to specific listed persons and entities regardless of country), and confirmation that a lawful payout rail exists.
2.2 Acceptance is by e-signature / clickwrap; these terms are accessible in full before acceptance.
2.3 Estako curates by invitation; Estako may approve, reject, suspend, or remove any Designer at its discretion and may suspend accounts for breach.
3. Yarn Support: Pattern Development Order & Refund
3.1 Designer orders the yarn. Rather than Estako shipping free yarn, the Designer places a normal, paid order on estakoyarns.com for the agreed Estako yarn base(s) and a reasonable quantity needed to make the FO and write the pattern. The pre-agreed base(s) and an approximate quantity / value cap are recorded in Exhibit A; orders materially exceeding the cap require Estako's prior approval.
3.2 Full reimbursement on accepted delivery ("Yarn Support Reimbursement"). Upon the Designer delivering the pattern, FO, and photos and the pattern passing QC (Section 5), Estako reimburses the Designer's qualifying development order in full (product + shipping). Estako issues this as a refund to the original payment method for operational reasons, but it is not a return: the Designer keeps the yarn. The term used throughout this Agreement for that payment is the Yarn Support Reimbursement. Refund is issued to the original payment method. The Designer receives the full agreed amount. Two kinds of fee can sit between that refund and the Designer's account, and they are treated differently. Estako's own payment-processing fee on the original order is frequently not returned to Estako when a refund is issued; that is Estako's cost and it does not reduce what the Designer receives. Where the Designer's own bank or card issuer applies a foreign-transaction fee or a currency-conversion spread so that the amount landing in the Designer's account is less than the amount paid, Estako makes up the difference on the Designer notifying Estako and showing the shortfall. The Designer is not expected to absorb a cost that arises only because Estako's store charges in a currency other than the Designer's own.
3.3 No delivery, no refund. If the Designer does not deliver acceptable, QC-passing assets within the delivery window (Section 4, after the cure period), the development order is not refunded; the Designer keeps the purchased yarn and bears its cost, and Estako has no further obligation. This refund-on-delivery mechanism replaces any "return the yarn" remedy.
3.4 Nature of the transaction: no characterization is asserted. The Yarn Support Reimbursement reimburses documented, pre-approved development-material costs up to the cap recorded in Exhibit A, on delivery of QC-passing assets. The Designer keeps the yarn; nothing is returned. The parties make no representation as to its tax characterization, it is not asserted to be an ordinary customer refund, and it is not asserted to be in-kind compensation. That determination is referred to a tax advisor (see Section 10.2(c)) and neither party relies on the other's view of it.
4. Deliverables & Delivery Window
4.1 Designer will deliver: (1) a publishable knit/crochet/amigurumi pattern written on the Estako base(s) in Exhibit A, including a complete size → skein table (sizes[].slots[].skeins, one whole-skein figure per colour slot, Exhibit A); (2) the FO and project photography per Section 6; and (3) the PDF in Estako's template/branding.
4.2 Delivery window: Designer delivers all assets within 8 weeks of placing the development order / receiving the yarn (or by [date]), with milestones: swatch/gauge confirmation by week 2, FO + draft pattern by week 5, final photos + tech-edit-ready PDF by week 8. (8-week window is Estako's standard; counsel/Designer may adjust per Exhibit A.)
4.3 Remedy for non-delivery: if the Designer fails to deliver acceptable, QC-passing assets by the window (after 14 days' written cure notice), the Designer's development order is not refunded per Section 3.3 (the Designer keeps and has paid for the yarn), and Estako may terminate without further obligation. Repeated non-delivery makes the Designer ineligible for future invitations.
5. Quality Control: Tech-Edit QC Gate (Clause B: MANDATORY)
5.1 Publication is conditional on passing QC. No pattern goes live without passing tech-edit QC. The pipeline status flow is submitted → in_review → live (and may be set to paused); a pattern in submitted or in_review is not published and generates no royalty. Where the review finds something the Designer must fix, Estako sets the pattern to changes_requested and states the reason in writing; the Designer sees that reason on the submission form, corrects the work and resubmits, which returns the pattern to submitted and runs QC again from the start. (This state was added to the running system on 2026-08-18 and named here on 2026-08-19; it replaces the earlier practice of silently moving a pattern back, which left the Designer without a stated reason.)
5.2 QC checklist (all must pass before live):
(a) Sizing: all sizes consistent; chest/length measurements sensible; size-inclusive target (graded to ≥ 60-inch / 152 cm bust before ease).
(b) Gauge: stated gauge + needle/hook size consistent with the used Estako base's label gauge.
(c) Skein accuracy: sizes[].slots[].skeins matches real consumption (at least the sample size verified), a wrong figure means the buyer is told to buy the wrong amount of yarn. The figure the Designer states is the figure the storefront sells: it is stored as given and is not recomputed. To guard the case that motivated the earlier yardage rule, Estako records, at the moment of submission, the yards-per-skein of each designated yarn (ypp_at_submit). If that yarn's put-up later changes, the system flags the pattern as needing review rather than silently republishing a different quantity, and the Designer is asked to restate the affected figures under §5.3.
(d) Errata/typos: instructions, abbreviations, and charts are readable and error-free.
(e) Format: Estako PDF template, branding, and copyright notice.
5.3 QC is performed by Estako's internal team and/or a freelance tech-editor and/or test-knit at Estako's discretion. Estako may require corrections; failure to pass QC is grounds to withhold publication and, on repeated failure, termination-for-cause.
5.4 No generative-AI-produced patterns, text, charts, or imagery.
5.5 Post-publication errata (while live). If errors are reported after a pattern is live, the Designer will correct the errata and supply a revised PDF within 14 days of notice. Unresolved material errors are grounds for Estako to set the pattern to paused until fixed.
(a) Corrections reach earlier buyers. When the Designer supplies a corrected PDF, Estako emails it to every maker who already bought that pattern; Estako holds the delivery record needed to do this. Exhibit C promises the maker exactly this, so it is an obligation rather than a courtesy.
6. Photography Usage Rights (Clause A: MANDATORY)
6.1 License grant (restructured 2026-08-13 and closed 2026-08-14 on counsel's France/Germany advice). Designer grants Estako (KUME INC.) a non-exclusive, worldwide licence, for the full duration of the applicable copyright protection, in the finished-object (FO) photographs and pattern images the Designer produces, on the terms set out in paragraphs (a) to (d) below. The consideration for this licence is set out in paragraph (d).
(a) What is granted, and what is not. What Estako receives is a right of use. No copyright is assigned. Under German law this is the grant of a right of use (Nutzungsrecht) under UrhG §31, consistent with UrhG §29, under which the copyright itself is not transferable.
(b) The acts of exploitation granted, listed separately (CPI L131-3). The licence covers the following separately identified acts, and only these:
(i) reproduction of the images, including making copies in any digital or print format;
(ii) distribution of copies in the print materials listed in §6.2;
(iii) communication and making available to the public online, through the channels listed in §6.2;
(iv) public display of the images in those channels;
(v) the technical and editorial adaptations enumerated in §6.9(b), and no others.
Rights not expressly listed in this paragraph are reserved to the Designer, consistent with §7.5. `
(c) Extent, purpose, territory and duration, expressly delimited (CPI L131-3).
(i) Extent: the acts listed in paragraph (b), applied to the FO photographs and pattern images delivered under this Agreement for the pattern concerned.
(ii) Purpose: promoting, marketing, selling and supporting Estako's yarn and the patterns published under this Agreement, together with Estako's own brand, catalogue and editorial content. The licence is granted for Estako's own business and does not extend to promoting a third party's products.
(iii) Media and channels: exhaustively as set out in §6.2.
(iv) Territory: worldwide.
(v) Duration: for the full duration of the copyright protection applicable to the Licensed Photographs, including any statutory extensions, and surviving termination of this Agreement as set out in §6.4. (Counsel's own formulation, 2026-08-14: commercially all but identical to "perpetual", but it meets the CPI L131-3 duration requirement without inviting the argument that economic copyright was treated as endless.)
✅ (Counsel, 2026-08-14: territory and duration as drafted satisfy the delimitation CPI L131-3 requires. What L131-3 asks for is that the acts transferred be listed separately and the field of exploitation be determined as to extent, purpose, place and duration, paragraphs (b) and (c) do that. A worldwide grant running for the term of protection is not by itself an unlawful failure to delimit; the Paris Tribunal judiciaire, 7 July 2023, accepted a "definitive" and "worldwide" copyright grant as sufficiently delimited as to place and duration. No numerical term and no narrower territory is required for French or German Designers.)
(d) Consideration: single all-inclusive compensation (closed 2026-08-14; Estako's commercial decision, drafted on counsel's wording). The compensation payable under Section 8 constitutes consideration both for the Pattern licence under Section 7 and for the Photography licence under Section 6, subject always to any non-waivable statutory right of the Designer to appropriate, proportionate or equitable remuneration. There is no separate fee for the photographs, and the licence is not granted royalty-free: one payment is the agreed consideration for both licences together. The reservation in the preceding sentence covers, in particular, French CPI L131-4 (remuneration proportionate to the exploitation, lump sum only in the cases the statute lists; L131-4 to L131-5-1 being provisions of public order) and German UrhG §32 and §32b (claim to equitable remuneration and to contract adjustment where the agreed remuneration is not equitable, mandatory in the cases §32b lists). Where such a right applies and is not satisfied by the Section 8 compensation, it survives this Agreement and is not affected by any other provision of this Section. For Designers resident in France or Germany, Exhibit E applies in addition to this paragraph.
(Drafting note: this mirrors what §7.2 already does for the pattern licence, where the consideration is likewise the Section 8 compensation. The two Sections are now consistent; the earlier draft said "not royalty-free" for the pattern and "royalty-free" for the photographs in the same document.)
6.2 Scope of use. The license covers: the website (PDP, catalog, blog), social media (Instagram/Facebook/Pinterest/TikTok), email, paid advertising, Ravelry and marketplace listings, and print materials.
6.3 Credit. Estako credits the Designer wherever reasonably practicable, and always on the pattern product page and within the pattern PDF ("by \<Designer\>").
6.4 Survival. The license survives termination of this Agreement: Estako may continue using that pattern's photos even if the Designer leaves the program, although the Designer may be removed from the active catalog.
6.5 Warranty & model release. Designer warrants that it owns or controls all rights in the supplied photos. A model release is MANDATORY whenever a human model appears in a photo. If the Designer engaged a photographer, the Designer warrants that the relevant rights have been assigned to the Designer (and are sublicensable to Estako under this Section).
6.6 Estako's own photography. Estako may also shoot its own photographs of the FO and the yarn, and is not dependent on the Designer's photos.
6.7 Photo standards. Photos should be 1080p+, human-modeled (no dress forms), natural light, unwatermarked, and AI-free.
6.9 Non-US Designers: moral rights and attribution. Because Designers outside the United States are eligible from day one (Section 2.1), the parties acknowledge that moral rights differ materially by jurisdiction: in some they are inalienable and non-waivable (France treats the moral right as perpetual, inalienable and imprescriptible), while in others, including the United Kingdom, where moral rights cannot be assigned but CAN be waived, a waiver is effective subject to applicable law. A licence permitting cropping, resizing, and use in paid advertising may be read against a non-waivable right where one exists. Estako's crediting practice in §6.3 and its editing rights in §6.1 are to be applied consistently with any such non-waivable rights in the Designer's jurisdiction. Accordingly this Agreement does not rely on a blanket worldwide waiver. Instead:
(a) Waiver only where lawful. The Designer waives moral rights to the fullest extent permitted by applicable law, and no further.
(b) Specific prior consent. Where waiver is not permitted, the Designer consents in advance to the following uses of its photographs and pattern imagery and agrees not to object to them: cropping and reframing, resizing, colour and exposure adjustment, compression and file-format conversion, aspect-ratio adaptation, background removal, overlaying text or brand elements, compositing into layouts and product pages, localization of accompanying text, and adaptation for paid advertising across Estako's channels. Consent is given for these enumerated uses only. It does not extend to any edit that would materially misrepresent the finished object, misrepresent the Designer's work, or imply an endorsement the Designer did not make, nor to presentation in a derogatory or misleading context; the Designer retains its integrity right against those.
(c) Attribution. Estako credits the Designer by name under §6.3, always on the pattern product page and within the pattern PDF, and elsewhere wherever reasonably practicable. That crediting is a contractual obligation, so an attribution right that cannot be waived is satisfied rather than contested.
(d) 🔴 France and Germany: authorisation, not waiver (added 2026-08-13 on counsel's advice). In France (CPI L121-1) the moral right is perpetual, inalienable and imprescriptible, and in Germany the author retains the attribution right (UrhG §13) and the right to prohibit distortion or impairment that endangers the author's legitimate personal or intellectual interests (UrhG §14). For Designers in those jurisdictions, paragraph (b) operates as an express advance authorisation of the specifically identified uses listed there, it is not a waiver, and it is not an agreement not to assert moral rights. Nothing in this Agreement purports to extinguish UrhG §14 or CPI L121-1. Where German law treats a listed use as an adaptation or transformation, the Designer's authorisation under paragraph (b) is the consent contemplated by UrhG §23 for those enumerated uses only. The integrity carve-out in paragraph (b), no derogatory or misleading presentation, no material misrepresentation of the work, applies in full and is not limited by this paragraph.
Three further points are recorded, added 2026-08-13 on counsel's advice:
(i) Alteration is separately agreed (UrhG §39). The parties treat the enumerated list in paragraph (b) as the specific agreement on alteration contemplated by UrhG §39(1): those alterations, and only those, are agreed. Any alteration of the work or of its title that is not listed in paragraph (b) remains subject to §39, and Estako does not acquire the right to make it under this Agreement.
(ii) Statutory remuneration and adjustment rights are not excluded. Nothing in this Agreement is intended to exclude, limit, waive or contract out of any non-excludable statutory right of the author to remuneration, or to the adjustment of remuneration, including any claim under UrhG §32 and any right arising under CPI L131-4. Those rights are governed by the applicable statute and are unaffected by the wording of §6.1. The related open commercial point is recorded in §6.1(d).
(iii) No assignment of copyright. Consistent with UrhG §29, this Agreement assigns no copyright. What Estako receives is the right of use granted under UrhG §31 and delimited as to extent, purpose, territory and duration in §6.1(c).
(Counsel 2026-08-13: the three-part structure in (a)-(c) is approved; for France and Germany the drafting must read as specific consent/authorisation rather than waiver or non-assertion, and the derogatory/misleading carve-out must be preserved.)
6.8 Physical FO sample. So that Estako can shoot its own photography (§6.6), the Designer will, on Estako's request, ship the physical finished object (FO) sample to Estako within 14 days; Estako pays the shipping and returns the FO afterward unless the parties agree in Exhibit A that Estako retains it.
7. Intellectual Property: Pattern Ownership Split
7.1 Pattern = Designer's. Designer retains full copyright in the pattern (text, charts), and may keep and distribute the pattern on Ravelry and elsewhere. Estako takes no ownership of and no revenue cut from the pattern itself.
7.2 Hosting/sale license to Estako. Designer grants Estako a non-exclusive, perpetual, worldwide license to host, display, sell and distribute the pattern,
to grant each buyer Estako's standard Pattern Licence and Buyer Terms (Exhibit C), provided that any amendment to Exhibit C that materially expands a buyer's commercial-use rights requires the Designer's prior written consent, so that the scope of the sub-licence the Designer grants cannot be widened unilaterally under §19, and
to translate the pattern into other languages Estako's storefront serves (currently Arabic), with the Designer credited on the translated version (on-page description for SEO/AEO; delivery to buyers is governed exclusively by §8.6) and to sell the matching yarn alongside it, and to reference the pattern in marketing. This licence is not royalty-free: the consideration for it is the compensation in Section 8.
7.3 Photos = licensed to Estako under Section 6 (Clause A).
7.4 Yarn = Estako's product. The yarn (bases, colorways, SKUs, pricing, stock, and the configurator) is Estako's product; nothing in this Agreement transfers any product or inventory rights to the Designer. Estako does not sell accessories (needles, hooks, notions) as part of a pattern.
7.5 US copyright protects the pattern's expression, generally not the useful article itself; parties acknowledge this scope. All rights not expressly granted are reserved.
7.6 Originality & non-infringement warranty. Designer warrants that the pattern is its own original work, does not copy or create an unauthorized derivative of any third party's pattern, and does not infringe any copyright, trademark, or other right. This warranty is independent of the photo warranty in §6.5 and is backed by the indemnity in §15.
7.7 Designer's distribution + required Estako attribution. Designer may publish, distribute, or sell the pattern anywhere (Ravelry, its own site/blog, marketplaces, video, social). As a condition, every copy/listing of the pattern must: (a) name the designed-with yarn as the specific Estako base (e.g., "Estako Velvet"), not a generic weight description; (b) reference where to buy it, estakoyarns.com (a clickable link where the platform allows); and (c) not present a competing yarn brand as the primary or recommended yarn for that pattern (neutral substitution notes for readers are permitted).
7.8 Limited trademark license. Estako grants the Designer a limited, revocable, non-exclusive license to use the "Estako Yarns" name and logo solely to provide the §7.7 attribution, in accordance with Estako's brand guidelines; the Designer acquires no other rights in Estako's marks and will cease use on Estako's request.
7.9 Attribution is separate from disclosure. The §7.7 Estako attribution (a brand credit) is independent of and additional to the §12 FTC material-connection disclosure; both apply.
8. Designer Compensation (pattern royalty; referral commission is separate, §8.1(f))
8.0 🔴 Royalty is guaranteed on every sale; referral commission is a separate, optional add-on (revised 2026-08-13; refined 2026-08-15). This Section governs the pattern royalty: the Designer is paid the royalty on every sale of the pattern, under §8.1, regardless of who referred the buyer. There is no upfront design fee and no payment before publication; the earlier two-component structure was removed by Estako's decision of 2026-08-13. A separate referral commission may also be available under §8.1(f)-(g); it is optional, not guaranteed, and does not replace or reduce the royalty.
(a) A pattern cannot go live without a positive retail price. Because the sale price is the Designer's only guaranteed income, a price of zero would mean the Designer earns nothing at all. The price is agreed per pattern in Exhibit A, and Estako's publish gate refuses any pattern without one.
(b) Effect on ownership is unchanged. Nothing in this Section transfers ownership of the pattern or makes it a work made for hire; Section 7.1 continues to apply and Estako's rights remain the licences granted in Sections 6 and 7.2.
(c) No delivery, no compensation. If the Designer does not deliver QC-passing assets, the pattern is not published, no royalty can arise, and Section 3.3 (no reimbursement of the development order) applies. The Designer therefore carries the cost of the development yarn in that case.
(d) ⚠️ Tax consequence of removing the fee. The upfront fee was the payment with the strongest claim to being foreign-source compensation for services. With it gone, the only payment to a non-US Designer is the royalty. (Updated 2026-08-16. This paragraph previously said the classification was "still open" and that the §10.2(b)(iii) payout hold therefore covered every payment. Both statements are now out of date: the tax advisor settled the classification and the allocation method on 2026-08-14, and the payout hold was removed on 2026-08-16.) Every payment to a non-US Designer is therefore a royalty governed by §10.2(b)(ii): paid on the ordinary schedule, net of any withholding required by law.
8.1 Pattern royalty = the Agreed Royalty Price, net of reversals. For each qualifying sale, the Designer earns:
"Agreed Royalty Price" means the single figure, stated in the currency agreed with the Designer at onboarding (US dollars, pounds sterling or euro) and exclusive of any sales tax or VAT, recorded for that Pattern in Exhibit A. It is the amount the Designer earns on every sale of that Pattern, in every market, and it does not move with exchange rates, with the local retail price Estako displays, or with any discount.
"Net Pattern Proceeds" means the Agreed Royalty Price multiplied by the quantity sold, less only: (i) refunds; (ii) chargebacks; and (iii) cancellations.
Discount codes and automatic discounts are not deducted. If one reduces what the buyer pays, Estako absorbs the difference and the royalty is still calculated on the pre-discount price (§8.1(a)(i)). The single exception is a line on which Estako collects nothing at all, governed by §8.1(a)(iii) and §8.1(d).
A promotion that changes the Pattern's own listed price is a different thing and is governed by §8.1(a)(ii): it moves the listed price itself, and therefore the royalty basis, which is exactly why that clause caps such promotions in both depth and duration.
Nothing else is deducted either. In particular, payment-processing fees, platform fees, currency-conversion costs, advertising costs, shipping costs, and the cost of yarn are not deducted from Net Pattern Proceeds. This is stated expressly so that the figure cannot later be read as net of Stripe/Shopify fees.
(a) Discounts do not reduce the royalty; Estako absorbs them. Estako's own margin on a pattern is nil, the royalty is the whole pattern line, so a discount applied to a pattern comes out of Estako's pocket, never the Designer's. Three consequences follow, and they are the Designer's protection rather than Estako's licence:
(i) Patterns are excluded from discount codes by default. Estako configures its store so that pattern products sit outside discount codes and automatic discounts, and keeps them outside by default for as long as the pattern is live. Estako may deliberately include a specific Pattern in a promotion; if it does, or if a code otherwise reaches a pattern line, Estako pays the royalty on the undiscounted price for that order and bears the discount itself. Either way the Designer's pay is unaffected. This mirrors the promise Estako makes to buyers in Exhibit C.
🔴 AÇIK MADDE KAPANDI: carve-out yazıldı (2026-08-13, avukat görüşü). Bu fıkrayı yazarken "a code reduces a pattern line" ifadesinin %100 indirimi kapsam dışı bıraktığını düşünmüştüm. Avukat bunu çürüttü: 100'e düşürmek de 0'a düşürmek de bir reduction'dır, yani lafız %100'ü de kapsıyor ve kod ile metin gerçekten çelişiyordu. Kodun seçtiği ekonomik sonuç doğru bulundu; eksik olan açık yazılmasıydı. Aşağıdaki (iii) o carve-out'tur.
(iii) Complimentary / zero-price copies. Notwithstanding the foregoing, no royalty arises from a bona fide complimentary, replacement, test, support, reviewer or other zero-price copy for which Estako actually collects $0 for the Pattern. Estako may not use a 100% discount or complimentary public distribution as a means of avoiding royalties on ordinary commercial sales without the Designer's prior written consent. A Designer's purchase of the Designer's own Pattern remains non-royalty-bearing under §8.5.
(Böylece üç durum ayrışıyor: yanlışlıkla uygulanmış kısmi indirimde Estako tasarımcıyı korur ve indirimsiz fiyattan öder · gerçek $0 nüshada telif doğmaz · Estako toplu bedelsiz dağıtımla telifi bypass edemez.)
(ii) Estako-run promotions are capped in depth AND duration. Estako may reduce the pattern's own price for a promotion by up to 20% without the Designer's consent, and such promotions may not run for more than 30 consecutive days, or more than 60 days in aggregate in any rolling 12-month period. A deeper or longer reduction requires the Designer's prior written agreement (email suffices). Absent that agreement, the royalty for orders in a deeper or over-long promotion is calculated on the Agreed Royalty Price recorded in Exhibit A less 20%.
(b) VAT is not revenue, and it is not the Designer's problem. The Agreed Royalty Price is stated exclusive of tax. Where Estako must collect VAT or sales tax on a pattern line, that tax belongs to the tax authority and never forms part of the royalty; it is also not deducted from it. Pricing each market so that the local retail price covers the Agreed Royalty Price after any such tax is Estako's responsibility.
(c) Currency, and why the royalty is not a converted figure. The Designer's royalty for each copy sold is the Agreed Royalty Price (§8.1). It is the same figure in every market and it does not move with exchange rates.
(i) Local retail prices are Estako's merchandising decision, not the Designer's rate of pay. Estako sets a separate retail price in each currency it trades in, so that buyers see a sensible local number rather than a converted one. Those prices are set, and may be changed, by Estako alone. Because they do not determine what the Designer is paid, they are not subject to the prior-written-agreement requirement in §8.2(b) and a change to one is not a material change under §19.3.
(ii) Estako carries the currency, the rounding and the conversion. Where the amount Estako collects on a pattern line is less than the Agreed Royalty Price, whatever the currency of either, Estako bears the shortfall and the Designer is paid in full. Where it is more, Estako keeps the difference. This is the same allocation this Agreement already makes for discounts in §8.1(a), for United States withholding in §10.2(b)(iii) and for currency-conversion costs in §3.2: the pattern line carries no Estako margin, so these are Estako's costs of acquiring a customer, not deductions from the Designer.
(iii) Payment. Royalty is recorded in the agreed currency and paid in cash only (bank transfer or Payoneer); store credit is not offered on pattern royalties, because the royalty is the pattern's whole price and Estako takes nothing from it. Estako pays in the agreed currency where the payment provider supports it, and otherwise pays the equivalent in US dollars at the rate applying on the payout date, bearing the conversion itself.
The dashboard under §9.3 shows the Agreed Royalty Price applied to each sale in the agreed currency, so the figure the Designer sees is the figure the Designer agreed, and needs no exchange-rate explanation.
(d) Zero collected, zero owed. If the pattern line nets zero, for example a fully credited replacement order, no royalty entry is created and nothing is owed for that order. Estako does not publish $0 patterns (see Exhibit A) and does not apply discount codes to pattern lines (§8.1(a)(i)), so this is a residual safety rule rather than a routine case.
(e) Not scaled by yarn. The royalty is a function of the pattern line only. It is not multiplied by skeins, sizes, or the number of yarn lines in the order.
(f) Referral commission is separate from, and additional to, the royalty. The royalty in §8.1 is earned on every sale of the Designer's pattern, whoever referred the buyer. A referral commission, where offered, is earned only on orders attributed to the Designer's own referral link or code. Estako may offer a referral arrangement, may set its rate and scope, and may withdraw it; no referral commission is guaranteed and its absence does not affect the royalty.
(g) Referral rail. Where a referral arrangement is offered, Estako will tell the Designer which rail applies. On either rail, the pattern line itself earns no commission, because the royalty in §8.1 is already the entire pattern line and Estako's own margin on it is nil; any commission is earned on the rest of the order.
(i) Shopify Collabs rail (available only where Shopify Collabs can pay the Designer, presently the United States, the United Kingdom and Canada): commission is calculated and paid by Shopify, through the Designer's Shopify Partner account, in USD, on Shopify's schedule (presently twice monthly, subject to a minimum balance). Currency conversion, if any, is for the Designer's account.
(ii) Estako rail: commission is calculated and paid under the Estako Affiliate Program Agreement incorporated by reference in §11, not under §10, which governs only the pattern royalty.
Refund treatment differs between the rails and the Designer is told which applies. On the Estako rail, commission is reduced proportionally whenever an order is refunded, in whole or in part. On the Shopify Collabs rail, reversal follows Shopify's own rules, which presently cancel commission only for orders cancelled or fully refunded within Shopify's holding period.
8.2 Price is agreed per pattern — and two different things are being priced. Two figures are recorded in Exhibit A and they are not the same thing:
• the Agreed Royalty Price (USD, tax-exclusive): what the Designer earns per copy. Negotiated, and changed only under §8.2(b).
• the local retail prices (USD / GBP / EUR and any other currency Estako trades in): what the buyer pays. Set by Estako alone as a merchandising decision (§8.1(c)(i)), recorded for information.
Estako sets the retail prices in its store; the Designer's royalty follows from the Agreed Royalty Price under §8.1, not from them.
(a) Disclosed tension. Because the royalty is the collected price, the price is simultaneously what the buyer pays and what the Designer earns. Estako therefore has an interest in a lower price (to move yarn) and the Designer in a higher one. Both parties acknowledge this and agree the price is a negotiated term recorded per pattern, not a figure Estako may change unilaterally after publication without notifying the Designer under §19.
(b) Price changes. Estako may run temporary promotions within the 20% cap in §8.1(a)(ii); deeper reductions require the Designer's prior written agreement. A permanent change to the Agreed Royalty Price requires the Designer's prior written agreement, not merely notice: it is a negotiated term under §8.2(a) and is simultaneously the Designer's rate of pay. A change to a local retail price does not require the Designer's agreement, because it does not change what the Designer is paid (§8.1(c)(i)).
8.3 Deterministic attribution (order line; no cookies, no coupon codes, no bundle SKU). Each pattern exists in Estako's store as a priced pattern product, and that product line is the pattern's identifier. There is no synthetic or bundled SKU; the yarn the buyer chooses is simply added to the same cart by the configurator. Attribution works as follows:
(a) One condition. A royalty arises where a single completed, paid order contains the pattern-product line for that pattern, as recorded in Exhibit A.
(b) 🔴 A yarn line is NOT required. An order containing only the pattern, with no yarn, still earns the royalty. Estako collected the pattern's price, so the Designer is owed it. (This reverses the position stated in v1.1 §8.3(b), which described the pattern as free and therefore uncompensated on its own.)
(c) One entry per pattern per order. The Shopify order webhook writes one ledger entry for that pattern and that order. Duplicate webhook deliveries cannot create a second entry.
(d) Auditable. Attribution is tied to the actual order lines, not to any cookie, link, coupon code, or self-reported claim, and each ledger entry is traceable to a real order in the Designer's dashboard (§9.3).
8.4 Qualifying Pattern Sale: a completed, paid order containing the pattern-product line, excluding shipping, taxes/duties, gift cards, and any amount refunded or cancelled.
8.5 No royalty on the Designer's own purchases. A purchase by the Designer of its own pattern earns no royalty. This is enforced automatically: Estako matches the buyer against the Designer's customer record (and, failing that, the Designer's email address) and records no entry on a match.
8.6 Pattern delivery to the buyer. The Designer supplies the PDF; Estako delivers it to the buyer by email when the order ships, never as an instant download at checkout. How the file reaches the buyer depends on where the buyer is:
(a) EU, EEA and United Kingdom. The email carries a link, not the file. Before it is sent, the buyer is asked to give express consent to supply beginning during the withdrawal period and to acknowledge what that means. The link opens a neutral page with a "Download pattern now" button; the buyer starting that download is what begins supply, and it is the moment the statutory right of withdrawal for that file ends. Receiving the email, or opening the link, does not begin supply.
(b) Everywhere else. The PDF is attached to the delivery email, because no statutory withdrawal right is at stake and an attachment is the more reliable delivery.
(c) A buyer inside (a) is never sent the file as an attachment.
(Aligned 2026-08-14. Counsel found this clause still describing a single delivery model while the live system had already branched; a contract that describes a different delivery obligation from the running code is a liability of its own.)
8.7 Royalty term. The royalty accrues for as long as the pattern remains live in Estako's catalog. If Estako removes or pauses the pattern, future sales (and royalty) cease; amounts already earned remain payable, and any sale collected before removal remains owed even if it is processed afterwards.
(a) Buyer licences survive removal. A maker who bought the pattern before it was removed keeps the licence granted in Exhibit C, including the right to keep and use the file and to sell what they make from it. Removal stops future sales; it does not reach back into copies already sold. This survives termination under Section 14.
8.8 ⚠️ "Bounty" is a measurement figure, not compensation. Estako's systems continue to record, for each pattern, a notional per-kit figure used only for internal reporting (how many kits a pattern moved, and what a per-kit arrangement would have been worth). No amount is payable under that figure, it does not enter the Designer's balance, and it creates no obligation. Where an earlier draft of this Agreement described a "flat bounty per qualifying Kit sale" as compensation, that model is superseded in full by §8.1.
9. Royalty Clawback / Reversal
9.1 Royalty ledger entries are PENDING until the 30-day clawback lock passes; only then do they become APPROVED/payable.
9.2 Estako reverses a royalty for returns, refunds, chargebacks, cancellations, or fraud on the underlying sale, and zeroes any royalty tied to a Section 4/5/6 breach.
(a) Refunds are proportional. A partial refund reverses the corresponding proportion of the entry; a full refund reverses it entirely. Reversals never exceed the amount originally recorded for that order.
(b) A yarn-only refund does not touch the royalty. If the buyer returns the yarn but keeps the pattern, Estako still collected the pattern's price and the Designer keeps the royalty.
(c) Cancellation reverses even an approved entry. If an order is cancelled, the entry is reversed regardless of whether the 30-day lock had already passed.
(d) Post-payment reversals. If an amount validly subject to reversal under this Section has already been paid, Estako may record the reversed amount as a negative balance and offset it against future compensation otherwise payable under this Agreement.
9.3 Transparency & dispute window. Estako provides the Designer a live dashboard showing pattern sales and royalty status (pending / 30-day-locked / approved / paid), including the gross amount, any discount applied, and the resulting royalty, so that a reduced figure under §8.1(a) is visible rather than unexplained. The Designer may dispute a ledger entry within 60 days of it posting; Estako reviews disputes in good faith and corrects genuine errors.
10. Tax / Reporting & Payment Rails
10.1 Tax forms (branches by status). Before any payout, Designer furnishes accurate payout details and the tax form applicable to its status:
(a) US person: a valid Form W-9.
(b) Non-US person: a valid form in the W-8 series, specifically the applicable IRS Form W-8 appropriate to the payee's US federal tax classification, which may include Form W-8BEN, W-8BEN-E, W-8IMY or another applicable Form W-8. (Counsel, 2026-08-14: do not write the branch as "individual to W-8BEN, entity to W-8BEN-E". A foreign partnership generally files W-8IMY; for a disregarded entity the owner's appropriate W-8 is usually the correct form; and the IRS states that a W-8BEN-E misused by a partnership, simple trust or grantor trust may not be accepted. The onboarding flow determines which form applies; the Agreement should not hard-code a two-way branch.) A Form W-8 in this series is generally valid for three years (through the third calendar year after signing) and must be renewed on expiry or on any change of circumstances that makes it incorrect. ⚠️ A valid Form W-8 establishes foreign status; it does not by itself deliver a treaty rate. (Tax advisor, 2026-08-14.) To obtain a reduced or nil treaty rate the Designer must complete the treaty claim on the form itself, and an entity must additionally satisfy the applicable limitation on benefits provisions. Where the claim is incomplete, Estako applies the statutory rate and reports accordingly; the Designer may still claim the treaty benefit on its own return.
(c) Payouts may be held until a valid, current form is on file.
10.2 Reporting and withholding.
(a) 🔴 US persons: the two payments are reported on DIFFERENT forms with DIFFERENT thresholds. Treating both as 1099-NEC would under-report the royalty by two orders of magnitude in threshold terms:
(i) ~~Upfront design fee~~ Removed 2026-08-13, there is no upfront fee, so no Form 1099-NEC arises from it. Form 1099-NEC may still apply to any other service payment Estako agrees separately in writing.
(ii) Pattern royalty: now the only payment (payment for the use of a copyright the Designer retains) → Form 1099-MISC, Box 2 (Royalties), threshold $10. Royalties from intangible property such as copyrights are reported in Box 2, not on Form 1099-NEC.
(iii) Yarn Support Reimbursement: classified 2026-08-14 by Estako's US tax advisor. For a US Designer it is treated as additional nonemployee compensation for pattern development and enters the Designer's annual Form 1099-NEC total (Box 1a) alongside any other service payment, rather than being excluded as an expense reimbursement. The advisor's reasoning tracks §3.4's own facts: the yarn is not returned, and repayment is conditional on the Designer delivering QC-passing assets, so the payment is earned by performance rather than by a buyer's right to a refund. Estako's books reclassify it accordingly out of sales returns and into creator/development expense, notwithstanding that it is issued operationally as a refund to the original payment method (§3.2). For a non-US Designer the amount is service compensation, whose source follows where the services are performed, so a Designer who does all development work outside the United States generally has foreign-source income here; US treatment as 1099-NEC for a US person does not imply Form 1042-S for a non-US person. (Narrowed 2026-08-14 on counsel's third review: store credit was removed from this sentence because it is no longer a payout method under this Agreement (§10.5). There is no reason to ask a tax advisor to classify a payment type that cannot occur.)
(iv) Backup withholding (24%) is triggered by a missing TIN or an IRS notice, not by the Form W-9 certification alone. Estako may apply 24% backup withholding where a required TIN is not furnished, or where the IRS notifies Estako that the TIN furnished is incorrect or that the payee is subject to backup withholding for underreporting. (Corrected 2026-08-14 on the tax advisor's review. A payee who strikes certification item 2 on Form W-9 is not, for that reason alone, subject to backup withholding on these payments: the IRS instruction that keys backup withholding to that certification failure applies specifically to reportable interest and dividends, which Estako does not pay. The payout gate was changed to match, so that a Designer who answers that question honestly is no longer left unpaid on the strength of an obligation that does not arise.)
(b) 🔴 Non-US persons: the two payments are analysed separately, and the royalty is the open question. This Agreement makes two structurally different payments, and it is a mistake to characterize them together:
(i) ~~Upfront design fee~~ 🔴 REMOVED 2026-08-13. The upfront fee was the payment with the strongest claim to being foreign-source compensation for services (services income is sourced where the services are performed). With it gone, there is no services leg left: the only payment to a non-US Designer is the royalty in (ii). (This paragraph previously ended "the payout hold in (iii) therefore now covers every payment to a non-US Designer." The classification and allocation were settled by the tax advisor on 2026-08-14 and the hold itself was removed on 2026-08-16; the consequence of removing the fee is now simply that every payment to a non-US Designer runs through (ii)'s withholding-and-deduction treatment.)
(ii) Pattern royalty, paid per sale of a work whose copyright the Designer retains (§7.1) and which Estako sells under a non-exclusive licence to reproduce, distribute, sell and sub-license (§7.2). A payment in that shape is expected to be treated as a copyright royalty, subject to confirmation by Estako's US tax advisor. Copyright royalties are sourced by where the right is used, so to the extent the work is used in the United States the royalty may be US-source income, potentially triggering Chapter 3 withholding (up to 30%, reducible by treaty) and Form 1042-S, notwithstanding a valid W-8BEN. The buyer's country of residence is not the statutory sourcing test. Method adopted 2026-08-14 on the tax advisor's recommendation: Estako allocates each royalty order by order, using the buyer's billing country recorded on that order as a documented factual proxy for the territory in which Estako exploits the licensed distribution right. It is a proxy, not a statutory safe harbour: the IRS adopted a billing-address rule for sales of copyrighted articles in its 2025 final digital-content regulations and declined to extend it to copyright licences, where source continues to follow where the right is used. Estako uses a per-order allocation rather than a fixed annual percentage because the per-order country data exists, and an arbitrary annual ratio would be materially harder to support. The method, its version, and the underlying per-order records are retained, and the allocation applied to a Designer is disclosed to that Designer before payment.
✅ Positions taken 2026-08-14 by Estako's US tax advisor. The per-sale royalty is treated as a copyright royalty, the advisor rating that position low risk on these facts (the Designer retains copyright, Estako receives a licence to reproduce and distribute, and payment is per copy sold). The allocation between US and non-US use follows the per-order method stated above, which the advisor rates medium risk and supports with a separate signed tax memorandum held in Estako's file. Estako applies that treatment and discloses it to the Designer before payment; if the advisor revises it, the revised treatment applies prospectively and the Designer is told. A valid form in the W-8 series is required in every case, since it establishes foreign status and any treaty rate; which form applies follows the payee's US federal tax classification (§10.1(b)). If withholding is determined to apply, it is deducted from the payout and reported, and the Designer may claim any treaty benefit on its own return. ⚠️ A treaty rate of 0% does not remove the reporting obligation: US-source income paid to a foreign person is reported on Form 1042-S (with Form 1042) even where a treaty reduces withholding to nil. Foreign-source amounts are generally not reported on Form 1042-S.
(iii) Payout is not withheld on account of the Designer's country. (Rewritten 2026-08-16 on Estako's decision. The clause previously read: "No foreign-designer royalty payout is released before the withholding determination for that Designer is complete." That hold was removed in the running code on the same date, and a signed text that contradicts the code is a liability of its own.) A non-US Designer is paid on the same terms as a US Designer. The only condition precedent to payout is the tax documentation in §10.1: a valid Form W-9 for a US person, or the applicable Form W-8 otherwise. Estako bears US withholding on the pattern royalty. Where United States Chapter 3 withholding is required by law on a pattern royalty under (ii), Estako remains the withholding agent and withholds and remits the tax, but bears it as its own cost rather than deducting it from the Designer. Estako grosses the payment up so that the amount the Designer receives is the amount agreed in Exhibit A. Because the gross-up is itself reportable income, the gross is computed as the agreed amount divided by one minus the applicable rate, not by adding the rate to it. The gross amount, the amount withheld and the net paid are shown to the Designer under §9.3 and reported on Form 1042-S. A payment made on this basis discharges Estako's payment obligation for that royalty entry in full.
Rate, and what happens when a treaty claim is unproven. Where the treaty rate applicable to that Designer has not been established, because the treaty claim on the form is incomplete or the country and status have not yet been read against the treaty, Estako applies the statutory rate and grosses up at that rate. The Designer's payment is neither reduced nor postponed on that account. Estako's obligation under this paragraph is capped at the statutory rate of 30%; if a higher rate ever applies to a payment, only the excess above 30% is deducted from that payment and reported. Where Estako has borne withholding at a rate higher than the rate that would have applied under a valid treaty claim, and the Designer afterwards recovers any part of that excess from the United States tax authorities, whether as a refund or as a credit, the Designer holds that recovered amount for Estako and repays it on written demand. Estako will not otherwise seek from the Designer any part of the tax it has borne.
What this paragraph does not cover. It does not apply to backup withholding under §10.2(a)(iv), which is triggered by a missing taxpayer identification number or an IRS notice and remains deductible from the Designer's payment. It does not apply to any tax imposed on the Designer outside the United States, which remains the Designer's own under §10.4(b). It does not change who the withholding agent is: the duty to withhold, remit and report under the Internal Revenue Code stays with Estako, and the gross-up changes only who bears the cost.
Changing or withdrawing it. This gross-up forms part of the compensation terms. Estako may change or withdraw it only by a material version change under §19.3, which takes effect for an existing Designer only on that Designer's affirmative acceptance; absent acceptance, §19.5 applies and Estako's only remedy is prospective termination. A change never applies to a royalty entry that became payable under §9.1 before the change took effect, whenever that entry is actually paid, including amounts paid after termination under §14.3.
The Designer remains solely responsible for its own local tax registration, declaration, and payment.
What Estako does not give up is the withholding-agent role itself. Estako continues to withhold, remit and report. What it gave up, by Estako's decision of 2026-08-17, is the right to pass the cost of that tax to the Designer. It did so because the pattern line carries no Estako margin (§8.1(a)), so the royalty is a customer-acquisition cost rather than a revenue share; and because the conservative rate choice stated above is now paid for by Estako rather than by the Designer, with any recovered excess repayable to Estako under (iii).
⚠️ What this clause gives up, stated plainly. The hold existed because KUME INC is the withholding agent and a withholding agent that under-withholds is liable for the tax it failed to withhold, plus interest and penalties, even if the payee later pays its own tax. Paying before every Designer-specific determination is closed therefore moves that risk onto Estako. Estako accepts it on these facts: the classification and the allocation method are already settled by its US tax advisor in (ii) with a signed memorandum on file, so what remains is the rate, not the character of the income; and applying the statutory rate where the treaty rate is unproven is the conservative direction, since over-withholding is recoverable by the Designer on its own return whereas under-withholding is not recoverable by Estako. What Estako does not give up is the withholding-agent role itself. Estako continues to withhold, remit and report. What it gave up, by Estako's decision of 2026-08-17, is the right to pass the cost of that tax to the Designer. It did so because the pattern line carries no Estako margin (§8.1(a)), so the royalty is a customer-acquisition cost rather than a revenue share; and because the conservative rate choice stated above is now paid for by Estako rather than by the Designer, with any recovered excess repayable to Estako under (iii).
⚠️ Bu, affiliate sözleşmesindeki sonuçtan farklıdır ve olmalıdır. Affiliate komisyonu pazarlama hizmeti karşılığıdır; buradaki telif lisanslı bir esere bağlıdır. Affiliate işi için verilen "foreign-source, stopaj yok" değerlendirmesi buraya taşınmaz.
(c) Development yarn. Development yarn is purchased and then reimbursed in full (Section 3) rather than gifted, and the Designer keeps it. Whether that produces a separate in-kind income event, or whether only the pattern royalty are reportable, is referred to a tax advisor under §3.4. Estako asserts no conclusion.
10.3 Currency: USD. Payout minimum: $50. Payouts are made monthly by KUME INC. on a fixed date for APPROVED balances above the minimum; sub-minimum balances roll forward.
10.4 Payment rails: pattern royalty is paid in cash. (Settled 2026-08-14, Estako's decision. Two things changed on the same day and this clause records where they landed. Counsel advised against defaulting anyone into store credit in a worldwide program; separately, Estako closed store credit for pattern royalty altogether, because the running code already refuses it there and a signed text that contradicts the code is a liability of its own.) Pattern royalty is paid in cash, by bank transfer or Payoneer, to a receiving account in the Designer's own name. Store credit is not offered for pattern royalty and is not shown on the Designer's dashboard; see §10.5.
⚠️ There is therefore no store-credit fallback, and none is needed. A Designer for whom no lawful cash rail exists is not onboarded in the first place: §2.1's compliance gate already requires confirmation that a lawful payout rail exists before a Designer is accepted. That gate, not a credit fallback, is what prevents an earned balance from becoming unpayable. If a rail that existed at onboarding later becomes unavailable, Estako holds the APPROVED balance and works with the Designer to nominate another lawful rail; the balance is not forfeited and not converted to credit without the Designer's request. Any balance held under this paragraph remains subject to applicable unclaimed-property or escheat laws. (Added 2026-08-14: a closed payout rail does not give Estako the right to hold someone's money in a private ledger indefinitely.)
(a) Which cash rail. Estako offers bank transfer or Payoneer, whichever is available and lawful for the Designer's country, and confirms at onboarding under §2.1 that at least one of them exists for that Designer. The Designer may decline a payout in any given cycle and let the APPROVED balance roll forward.
(b) Every payment is made by KUME INC from the United States. Estako pays Designers from its US entity, in USD, to the receiving account or rail the Designer nominates. Estako does not structure payments around any individual Designer's local tax position, and gives no advice on it.
(i) The Designer nominates a receiving account in its own name and is responsible for its accuracy and for any intermediary or receiving-bank fees.
(ii) Local tax is the Designer's own: with one carve-out. The Designer is responsible for taxes imposed on the Designer, except for any withholding, reporting or remittance obligation that applicable law places directly on Estako (for example US information reporting or Chapter 3 withholding under §10.2). Those remain Estako's and cannot be shifted by this Agreement. Registration, declaration, payment, and any local exemption or incentive the Designer wishes to rely on are otherwise entirely the Designer's responsibility, and Estako makes no representation about any of them. Where a Designer's local regime requires funds to arrive in a particular manner, for example directly into a designated bank account rather than into an intermediary wallet balance, the Designer must say so at onboarding. Estako will accommodate a reasonable and lawful instruction of that kind where its rails allow, but does not verify, advise on, or guarantee its effect.
(iii) Where local law requires a bank account in the Designer's own name. Estako will use bank transfer rather than an intermediary payment rail, provided a lawful and operational bank-transfer rail is available for that Designer. If no compliant rail is available the Designer is not onboarded (§2.1); if such a rail becomes unavailable later, the balance is held under §10.4. (Narrowed 2026-08-14 on counsel's third review: the earlier wording declared that the requirement "is satisfied by the only rail on offer", but this Agreement offers two rails, and Estako should not certify by contract that Payoneer satisfies a national rule requiring direct payment to the payee's own bank account.)
10.5 No store-credit payout. Pattern royalty under this Agreement is payable only in cash in accordance with §10.4. Store credit is not a payout method under this Agreement. Any future introduction of store credit as a payout method constitutes a material change subject to §19.3 and therefore requires each existing Designer's affirmative acceptance.
11. Optional: Designer Affiliate Enrollment
11.1 The Designer may also opt into the Estako Affiliate Program to earn affiliate commission on traffic it drives to its own pattern and the matching yarn (in addition to the Section 8 royalty). This is governed by the Estako Affiliate Program Agreement, incorporated by reference, including its FTC-disclosure, prohibited-methods, attribution (30-day cookie / last-click), and clawback terms.
11.2 Where a Designer is both royalty-earner and affiliate, pattern royalty (order-line attribution under §8.3) and affiliate commission (traffic attribution) are tracked separately and may both apply to the same sale per their respective rules.
12. FTC Disclosure (when Designer promotes)
12.1 When the Designer promotes its pattern or the yarn it received at no net cost (refunded development order), the Designer must make a clear-and-conspicuous, unavoidable disclosure of the relationship in every endorsement, per 16 CFR §255.5 (and §255.5 Example 7 for free/at-no-cost product): same-medium; for video both on-screen text and spoken; for live streams repeated ~every 10 minutes. The material connection is twofold: the no-net-cost yarn and the royalty the Designer earns on sales of its pattern.
12.2 Suggested wording: "Estako Yarns covered the yarn for this design, and I earn on sales of my pattern."
12.3 Designer must not condition any incentive on positive sentiment; reviews/UGC may be honestly negative (16 CFR Part 465 §465.4).
13. Brand-Safety, Compliance & Monitoring
13.1 Content must be accurate, non-disparaging, and free of association with objectionable/conflicting brands. Estako may operate an approval workflow for the design concept and key assets (in addition to the Section 5 QC gate).
13.2 Designer shall comply with applicable law in the Designer's own jurisdiction and in any market the Designer targets, in addition to the Section 12 FTC standard. Because Designers outside the United States participate from day one, this includes (without limitation) the EU UCPD / Omnibus rules and the UK DMCC regime on incentivized endorsements where those markets are targeted. Estako may monitor the Designer's content for disclosure compliance.
14. Term & Termination
14.1 Either party may terminate at will with 14 days' written notice.
14.2 Termination-for-cause (immediate) for non-delivery after cure (Section 4.3), repeated QC failure (Section 5), photo-warranty breach (Section 6), disclosure failure (Section 12), fraud, or brand-safety breach.
14.3 On termination: the photo license survives per Section 6.4 (Estako keeps using that pattern's existing photos) and the Designer retains the pattern per Section 7.1; the Designer may be removed from the active catalog; pending non-violating pattern royalty (§8.1) is paid after the 30-day lock and any royalty already earned on a published pattern remains payable (there is no upfront fee since 2026-08-13); Estako may withhold amounts tied to breaches; and any undelivered development order remains unrefunded per Section 3.3.
14.4 Survival. Sections 6 (photo license), 7 (IP + attribution + originality warranty), 8–9 (accrued compensation: accrued pattern royalty), 10 (tax), 12 (disclosure for past content), 15 (indemnity/liability), 16 (confidentiality), and 18 (governing law) survive termination.
15. Indemnification & Limitation of Liability
(Rewritten 2026-08-14. Counsel reviewed the actual document and found this Section still carrying the old three-month placeholder while the sibling Affiliate agreement had already moved to the architecture below. The two agreements are meant to read as one family, so this Section now mirrors Affiliate §12. Counsel's note: the Designer's whole output is copyright, which makes the IP warranty and indemnity here more important, not less, and a measured indemnity with procedure is the stronger contract.)
15.1 What this Section does not touch: money already earned. Nothing in this Section limits Estako's obligation to pay compensation validly earned and payable under this Agreement. Earned royalty is a contractual payment obligation, not damages, and it does not sit inside any cap below.
15.2 Estako's liability cap. Subject to §15.3, Estako's total aggregate liability arising out of or in connection with this Agreement is limited to the greater of (i) USD 1,000 and (ii) the compensation paid or payable to the Designer during the twelve (12) months immediately preceding the event giving rise to the claim. Neither party is liable for indirect, incidental, special or consequential loss, or for loss of profit, revenue, goodwill or anticipated savings.
15.3 What the cap and the exclusion never cover. §15.2 does not limit or exclude liability for: (a) fraud or fraudulent misrepresentation; (b) wilful misconduct; (c) any liability that applicable law does not permit to be limited or excluded; or (d) accrued payment obligations under §15.1.
15.4 Designer indemnity: third-party claims only. The Designer indemnifies Estako against third-party claims arising from: (a) the pattern or any part of it infringing a third party's copyright or other intellectual property; (b) the photographs, including a failure to hold the necessary photographer rights; (c) the absence of a model release where a person appears; (d) misuse of a third party's trademark; or (e) the Designer's breach of applicable law in producing or promoting the pattern. The indemnity does not extend to Estako's own acts, to Estako's own materials, or to claims between the parties.
15.5 Indemnity procedure. (a) Estako notifies the Designer promptly of any claim for which it seeks indemnity, and a delay in notice reduces the indemnity only to the extent the delay causes prejudice. (b) The Designer may participate in the defence at its own cost. (c) Where Estako is the named party, Estako controls the defence. (d) Neither party settles a claim in a way that admits the other party's liability, or imposes an obligation on it, without that party's prior written consent, not to be unreasonably withheld. (e) The indemnity covers reasonable and documented costs, losses and legal fees only. (f) No double recovery: amounts recovered under this Section are reduced by anything recovered for the same loss under any other provision or from insurance.
15.6 Cap on the Designer indemnity. The Designer's aggregate liability under §15.4 is limited to the greater of (i) USD 5,000 and (ii) three (3) times the compensation paid or payable to the Designer during the twelve (12) months immediately preceding the claim, except where the claim arises from the Designer's knowing infringement, fraud or wilful misconduct, in which case no cap applies.
15.7 Reasonableness. The parties agree that §15.2 to §15.6, read together, allocate risk in a balanced way in return for the commercial terms of this Agreement. (Counsel note: standard-form B2B limitations are not unrestricted in the United Kingdom; the Unfair Contract Terms Act 1977 reasonableness review can apply.)
16. Confidentiality
Designer shall keep compensation terms, program data, and non-public materials confidential.
17. Data Protection
17.1 Estako handles registration, payout, tax, and bank data with encryption and access control, uses it only to operate the program (onboarding, QC, attribution, payment, tax reporting, and support), retains it for as long as required for tax and accounting purposes, and cooperates on breach notice. Details are in the Estako Portal Privacy Notice (Exhibit D).
17.2 EU / UK Designers. Because Designers in the EU and the UK participate from day one, Estako acts as a controller for the personal data it collects to run the program, and processing is subject to the GDPR / UK GDPR, including the lawful basis for processing, transparency, data-subject rights, retention limits, and a lawful mechanism for transfers outside the EEA/UK (Estako operates from Türkiye and is incorporated in the United States).
17.3
18. Governing Law / Dispute Resolution
18.0 🔴 Designer's professional capacity (added 2026-08-13 on counsel's advice). The Designer enters into this Agreement in connection with the Designer's trade, business, craft or profession, and not as a consumer. The parties record this because consumer-protection conflict rules turn on that status: Brussels Ia Article 17 defines a consumer as a person contracting for a purpose outside their trade or profession, and the Article 18 protection allowing suit in the consumer's own courts "regardless of the domicile of the other party" attaches only to that category. A designer who licenses a pattern for a royalty and joins the Creator Program in a professional capacity is not, in the ordinary case, a consumer for these purposes.
(Counsel 2026-08-13: this clause does not by itself change the underlying facts, but it records the parties' intent and is worth stating expressly. Two further points were noted: Brussels Ia expressly excludes arbitration from its scope, so the validity and enforcement of the arbitration clause in §18.2 is assessed under arbitration law rather than Article 18; and while Rome I Article 3 generally permits the parties to choose the applicable law, local overriding mandatory provisions, copyright and moral-rights rules, and any re-characterisation of the relationship as employment cannot be displaced by that choice.)
18.1 Governing law. This Agreement is governed by the laws of the State of Wyoming, United States, without regard to its conflict-of-law rules.
(Counsel 2026-08-13: governing law and forum are deliberately separated. The earlier wording, "Wyoming, USA law and venue", would now contradict §18.2, which sends disputes to arbitration rather than to a Wyoming court, and would create an interpretation problem inside the same section. Choosing Wyoming law does not displace local overriding mandatory provisions under Rome I Article 9, nor copyright and moral-rights rules in the Designer's jurisdiction, see §6.9(d) and §18.4.)
18.2 Tiered dispute resolution. Most disputes under this Agreement will be small in value, a royalty calculation, a missed payment, a clawback, attribution, QC, or image use. Escalation is therefore staged, and the first stage is designed to resolve almost everything without any formal proceeding:
(a) Good-faith negotiation, 30 days. Either party may give written notice of a dispute; the parties then attempt to resolve it directly for 30 days before commencing any proceeding.
(b) Small-claims carve-out. Either party may instead bring a qualifying low-value claim in any court of competent jurisdiction whose small-claims or simplified procedure accepts it, including a court in the Designer's own country.
(Counsel 2026-08-13: this deliberately does not say "Wyoming small-claims court". Telling a designer in France to appear in a Wyoming small-claims court is not a practical remedy. The purpose of this carve-out is not enforcement strategy, it is to avoid creating $3,000 of arbitration cost for a $300 dispute.)
(c) ICDR arbitration for everything else. Any dispute not resolved under (a) and not brought under (b) is finally resolved by arbitration administered by the International Centre for Dispute Resolution (ICDR) under its International Arbitration Rules, on these terms:
• one arbitrator;
• English language;
• legal seat: Wyoming, United States, this fixes the legal place of the arbitration and does not require anyone to travel to Wyoming;
• hearings are remote by default;
• the arbitration proceeds on documents only where that is appropriate and permitted by the applicable rules, unless the arbitrator determines that a remote hearing is reasonably necessary for a fair determination;
• proceedings are individual; class, collective, and representative proceedings are waived to the fullest extent permitted by applicable law, and if that waiver is held invalid in any jurisdiction it is severable and does not affect the rest of this arbitration agreement.
This clause binds Estako and the Designer. It does not apply to end consumers who buy patterns.
(Counsel 2026-08-13, why ICDR rather than JAMS: both work, but ICDR is AAA's international division and carries rules written for international disputes, with expedited procedures and a sole arbitrator below a published USD 250,000 threshold. On the current schedules ICDR is also the proportionate choice at this contract's scale. The documents-only rule was deliberately softened from the earlier absolute form: a clause that forbids a hearing under all circumstances invites a due-process or enforcement challenge exactly where credibility or witness evidence is in dispute.)
(d) Cost of a low-value arbitration. Where the amount in dispute is at or below USD 25,000, Estako advances the institutional filing and administrative fees and the arbitrator's fees. Estako advancing those costs does not determine who ultimately bears them: the arbitrator may reallocate all costs, including advanced costs, in the final award in accordance with the applicable rules. For this paragraph, "amount in dispute" means the principal amount claimed, exclusive of interest, attorneys' fees and arbitration costs, so that a claim of, say, USD 24,800 does not fall outside this protection because fees were added to the demand. (Threshold aligned with the creator Terms on 2026-08-14 at Estako's decision and confirmed by counsel; counsel's earlier USD 10,000 figure was a proportionality suggestion, not a statutory threshold, and the same disproportion arises at USD 9,000 as at USD 20,000. Definition and the advance/bear split added on counsel's 6th-round drafting conditions.)
(Counsel 2026-08-13: a blind "each party pays 50%" rule was rejected. A designer with a USD 1,000 unpaid-royalty claim faces roughly USD 1,450 in ICDR initial administrative fees before the arbitrator's fees, a clause that formally grants arbitration while making it economically unusable. Because the Designer contracts professionally, consumer arbitration-fee protections cannot be assumed to apply automatically, so the protection has to be written in. This provision also materially weakens any later argument that one party priced the other out of bringing a claim.)
(e) Injunctive and emergency relief. Either party may seek injunctive or other emergency relief in any court of competent jurisdiction for intellectual-property, photograph, or trademark matters. Seeking such relief does not waive this arbitration agreement, and the arbitration continues to resolve the substance of the dispute.
(Counsel 2026-08-13: deliberately not limited to a Wyoming court. If a photograph is being misused in France, or a third party infringes in Germany, fast relief may have to be sought where the assets or the infringement are.)
18.3 Why arbitration rather than a Wyoming court (non-US Designers). Designers outside the United States participate from day one, and the decisive factor is enforcement:
• An arbitral award seated in the United States travels under the New York Convention, whose purpose is precisely the recognition and enforcement of foreign and non-domestic awards in contracting states. A pattern licence and royalty relationship between KUME INC and a designer in France, Germany or the United Kingdom is commercial in character and falls squarely within 9 U.S.C. §202, which brings it into that system. 9 U.S.C. §204 additionally provides a federal venue tied to the agreed US place of arbitration.
• A Wyoming court judgment, by contrast, has no equivalent uniform route into the EU or the UK today. The United States signed the 2019 Hague Judgments Convention but does not appear as having ratified it on the HCCH status table, while the EU and the UK are parties.
Arbitration is therefore chosen not because a court is unavailable, but because an award is enforceable where the Designer actually is.
(Counsel 2026-08-13: Brussels Ia expressly excludes arbitration from its scope, so the arbitration agreement is assessed under arbitration law rather than under the consumer-jurisdiction rules of Articles 17-18. Combined with §18.0, a typical Designer here is a weak candidate for consumer status. §18.0 is nevertheless not a magic sentence, see §18.4.)
18.4 What a choice of law and forum cannot do. Nothing in §18.0 to §18.3 displaces:
• overriding mandatory provisions of the Designer's own jurisdiction (Rome I Article 9);
• copyright and moral-rights rules, including German author-remuneration rules and French moral-rights provisions (see §6.9(d));
• any re-characterisation of the relationship by a competent authority, for example as employment.
If the Designer is in fact acting outside any trade or profession, recording professional capacity in §18.0 does not by itself change that person's status.
19. Amendments & Versioning
(Rewritten 2026-08-14. Counsel found this Section still saying "continued participation = acceptance", which is the position he rejected in the creator Terms. It now mirrors Affiliate §16.)
19.1 Two version numbers, doing two different jobs. This Agreement carries both a document revision and a material version. Estako records both, and records which pair the Designer accepted.
19.2 Document revision: no re-acceptance. Changes that do not alter the legal effect increase the document revision only: typographical and grammatical corrections, formatting, headings, clause numbering, broken links, and updates to Estako's own contact or registered address. Estako maintains a change log and gives 30 days' notice. Continued participation is sufficient for these.
19.3 Material version: affirmative re-acceptance. A change to any of the following increases the material version and takes effect for an existing Designer only on that Designer's affirmative acceptance (clickwrap), not on notice and not on continued participation: compensation, royalty basis or price; payout mechanics, thresholds or timing; tax documentation requirements; the intellectual-property and licence terms in Sections 6 and 7, including Exhibit E; the buyer licence in Exhibit C where it changes what the Designer grants; advertising and disclosure obligations; confidentiality; data processing; termination; limitation of liability; indemnity; governing law; dispute resolution or forum; and exclusivity.
19.4 Starting point. The first published version of this Agreement is document revision 1.0.0, material version 1.
19.5 If an existing Designer does not accept a material change. The new terms are not applied retroactively. Royalty already earned, and any right already vested, remain governed by the version the Designer accepted and remain payable under it. Buyers who already bought keep the licence in Exhibit C as it stood at their purchase, regardless of any later version. Continued participation after the material version changes requires acceptance of the new version; absent acceptance, Estako may terminate the relationship prospectively, which does not affect amounts already earned.
19.6 Electronic acceptance. Acceptance is given electronically. The Uniform Electronic Transactions Act as enacted in Wyoming gives legal effect to electronic records and signatures. Estako records, for each acceptance: the version pair accepted, the exact text presented, a timestamp, and the identity of the accepting account. Where Exhibit E applies, the acceptance screen states that the Agreement includes it, and the same record covers it.
Exhibit A: Pattern, Yarn Support & Compensation detail (filled per pattern at onboarding)
| Field | Value |
| Pattern title / slug | [...] |
| Craft (knit/crochet) · category · difficulty | [...] |
| Estako yarn base (color-agnostic, e.g., Softy) | [...] |
Size → skeins per colour slot (sizes[].slots[].skeins) |
e.g. M: A (Main) = [ ] skeins · B (Contrast) = [ ] skeins · [...] |
| ⚠️ Whole skeins only | State whole skeins, rounded up: a buyer cannot buy half a skein, and the storefront adds exactly the number stated. Do not record a yardage figure here; the submission form does not accept one. |
| Sample colorway ("as shown"), per slot | A: [...] · B: [...] |
Attribution key 1: pattern-product ID / handle (shopify_product_id) |
[...] |
Attribution key 2: designated Estako yarn base product ID / handle (yarn_product_id) |
[...] (used for reporting; a sale does not require a yarn line, §8.3(b)) |
| Agreed Royalty Price 🔴 ZORUNLU | [ ] [USD / GBP / EUR] (tasarımcının söylediği tutar, vergi hariç: her satışta bu tutar, kurdan ve yerel fiyattan bağımsız (§8.1, §8.1(c)). Para birimi onboarding'de anlaşılır. Peşin ücret kalktığı için tutarsız pattern = tasarımcı sıfır kazanç; yayın kapısı pozitif fiyat olmadan geçirmez, §8.0(a). Açıkça yazılan çıkar gerilimi: §8.2(a). Kalıcı değişiklik karşılıklı yazılı onaya tabidir, §8.2(b).) |
| ⚠️ Telif ≤ perakende fiyat kontrolü | Anlaşılan telif, her pazardaki perakende fiyatı aşmamalıdır; aşarsa Estako o pazarda her satışta zarar eder (§8.1(c)(ii) gereği farkı yine Estako öder). Fiyatı koyan Estako olduğu için bu kontrol de Estako'nundur; panel uyarır. |
| Local retail prices (bilgilendirme, Estako kararı) | USD $[ ] · GBP £[ ] · EUR €[ ] (alıcının gördüğü fiyatlar. Estako tek başına belirler ve değiştirir, §8.1(c)(i) — tasarımcının ödemesine dokunmadıkları için §8.2(b) onayına tabi DEĞİLDİR. Boş bırakılan para birimi Shopify'ın kur çevrimine düşer. Kanada: CAD için sabit fiyat girilemiyor — Kanada birincil pazarın içinde ve Shopify birincil pazara fiyat listesi açtırmıyor (2026-08-21 canlı doğrulandı), o yüzden CA fiyatı kurdan hesaplanır.) |
| ~~Upfront design fee~~ | KALDIRILDI 2026-08-13, tasarımcıya ödenen tek şey pattern'in satış bedeli (§8.0). Bu satır bilerek boş bırakılmıştır; doldurulmamalıdır. |
| ⚠️ Retail price must be greater than $0 | Estako does not publish free patterns (decision of 2026-08-12; both the storefront and the publish gate enforce it). $0 is a valid DRAFT value but cannot go live. Peşin ücret 2026-08-13'te kaldırıldı: satış fiyatı tasarımcının TEK geliri, dolayısıyla pozitif fiyat artık yalnız yayın kuralı değil, ödeme kuralı. |
| Notional per-kit figure (reporting only) | $[ ] (⚠️ not payable, §8.8. Leave blank unless it is genuinely used for reporting.) |
| Development order, base(s) / approx. quantity / value cap ($) | base: [...] · qty: [...] · cap: $[ ] (refunded in full on QC pass; over-cap needs approval) |
| Delivery window / milestones | 8 weeks · swatch wk2 / FO wk5 / final wk8 |
Exhibit B: QC checklist (operational, gate before live)
Sizing (≥60" graded) · Gauge vs. Estako base label · sizes[].slots[].skeins vs. real consumption (sample verified) · Errata/typos/charts · Estako PDF template + branding + copyright. Status: submitted → in_review → live. No pass, no publish.
Exhibit C: Pattern Licence and Buyer Terms (what every buyer receives)
This is the licence Estako grants to each maker who buys the pattern, under the
authority in Section 7.2. It is shown on the product page before purchase, on the
pattern licence page, inside the PDF, and in the delivery email. The Designer
accepts it as the licence granted to buyers of their pattern.
Commercial decisions locked by Estako on 2026-08-12, as corrected on 2026-08-14:
(1) buyers may sell what they make by hand, crediting the Designer;
(2) patterns are refundable until supply of the file begins, and final afterwards,
subject always to any mandatory statutory rights the buyer has (see below);
(3) classroom use is allowed where each student buys their own copy, and
translation needs permission; (4) discount codes do not normally apply to
patterns, and where one does the Designer's royalty is still paid in full on the
pre-discount price, so no discount ever reduces it.
The canonical text is maintained at
İnfluencer-Marketing/agreements/pattern-buyer-licence-v1.md and reproduced in
full on estakoyarns.com/pages/pattern-licence. Any change to it is a change to
this Exhibit and requires notice to the Designer under Section 19.
Exhibit D: Portal Privacy Notice (worldwide Designers)
Roles. (Counsel 2026-08-13: this allocation is confirmed correct. A caution was raised against describing the Designer as "controller of its own data", the Designer is the data subject, not a controller and not a processor. The wording below already reflects that.) For the personal data described here, KUME INC (Estako Yarns) is the controller: it decides why and how the Designer's registration, tax, and payout data are processed. The Designer is a data subject, not a processor, Estako does not hand the Designer any third party's personal data to process on Estako's behalf, so no data-processing agreement arises between the parties. Estako shares personal data with service providers and other recipients whose roles are assessed according to the processing each actually performs: depending on that processing a recipient may act as a processor, an independent controller or, where applicable, a joint controller. (Corrected 2026-08-14: this sentence previously called every vendor a processor, which contradicted the role-by-role conclusion recorded further down this Exhibit and the matching wording in the Affiliate agreement.) It is Estako's onward transfers to those recipients, not the Designer's submission of its own data, that engage the international-transfer rules below.
What is collected: registration data (legal name, email, shipping address, portfolio/Ravelry handle), tax form data (Form W-9 or the applicable Form W-8), payout details, pattern/QC submissions, and program activity (attribution ledger, dashboard usage).
Why: to operate the program (onboarding, QC, order-line attribution under §8.3, payment, tax reporting, support).
How it is protected: encryption and access control for tax/bank data; breach notice.
Where it goes: Estako is incorporated in the United States (KUME INC, Wyoming). Personal data is also accessed and processed from Türkiye, by KUME INC's own personnel acting within KUME INC's organisation rather than by a separate legal entity. Data is additionally shared with Estako's service providers (store, payment, hosting, and email providers), see the vendor open item below.
Retention: tied to the applicable legal-claims limitation period in the countries Estako sells to and to tax/accounting obligations, then deleted or irreversibly de-identified. A single fixed figure is deliberately not stated here: limitation periods differ by Member State.
Your rights: access, rectification, erasure, restriction, objection, portability, and the right to complain to a supervisory authority. Erasure is not absolute, Estako may keep a narrow evidence set in a restricted archive where it is needed for actual or reasonably foreseeable legal claims.
Representative:
Vendors and transfers:
EU / UK Designers: the GDPR / UK GDPR applies to their personal data (see §17.2), including lawful basis, transparency, data-subject rights (access, rectification, erasure, objection, portability), retention limits, and a lawful transfer mechanism out of the EEA/UK.
Exhibit E: France and Germany addendum (photograph and pattern licence remuneration)
*Added 2026-08-14. Applies only where the Designer is resident in France or in
Germany, and prevails over §6.1(d) to the extent of any inconsistency. It exists
because Estako pays one all-inclusive compensation rather than a separate
photograph fee (Estako's commercial decision of 2026-08-14), and both
jurisdictions regulate how an author's remuneration for a grant of rights is
determined.*
E.1 Allocation of the Section 8 compensation. The compensation payable to
the Designer under Section 8 is the consideration for both licences granted
under this Agreement: the Pattern licence under Section 7 and the Photography
licence under Section 6. It is a single, undivided payment that rises and falls
with actual sales of the pattern, and the parties agree that it is therefore
linked to the proceeds of exploitation rather than a flat sum detached from
them. No part of the photograph licence is granted free of consideration.
E.2 France (CPI L131-4). The parties record that the Designer's remuneration
under Section 8 is the compensation determined under §8.1, which varies with actual sales of the
pattern, so that it participates in the revenue from the exploitation. *(Cross-reference corrected
2026-08-14: the earlier wording said "price actually collected", which no longer matches §8.1 now that
the royalty basis is the undiscounted price net of tax and reversals. Counsel asked for the cross-reference
rather than a restatement, so the two clauses cannot drift apart again.)* Where French law nonetheless requires remuneration that is
appropriate and proportionate to the exploitation of the photographs, and the
Section 8 compensation is found not to satisfy that requirement, **the Designer
retains that statutory claim in full**; it is not waived, capped or displaced by
this Agreement, and CPI L131-4 to L131-5-1 are acknowledged as provisions of
public order.
E.3 Germany (UrhG §32 and §32b). The parties record that no waiver of the
Designer's claim to equitable remuneration is intended or given. If the
compensation agreed under Section 8 is not equitable within the meaning of
UrhG §32, the Designer may require adjustment of this Agreement so that
equitable remuneration is provided, and UrhG §32b applies where its
conditions are met notwithstanding the choice of law in Section 18. The grant in
Section 6 remains a grant of rights of use (Nutzungsrecht) under UrhG §31;
no copyright is transferred (UrhG §29).
E.4 What this addendum does not do. It does not create a separate photograph
fee, does not alter the royalty rate or price recorded in Exhibit A, and does not
change the scope, territory or duration of either licence. It records how the
single Section 8 compensation is to be understood, and preserves rights that
cannot be contracted away.
Signatures
KUME INC (Estako Yarns), By: [name], [title] · Date: [...]
Designer, Legal name: [...] · e-signature / clickwrap acceptance · Date: [...]
