What is Clearance? Clearance is the process of determining and negotiating any permissions that are needed to include use of someone else's intellectual property in your creative project.  
Part of that process includes:

• Determining the owner(s) of the intellectual property.
• Contacting the owners and negotiating an agreement
• Administering written contracts
• Handling other issues related to the use and licensing of intellectual property.

What is Intellectual Property? As soon as you create any work of art - for instance, a piece of music, a film, a work of art - that work instantly has a copyright and is considered your "intellectual property". This means that this piece of music, film or work of art, a performance, virtually anything you create belongs to you and you control who you allow to use it, and how they are allowed to use it.

Now if you are writing a piece of music or are directing a film or television show or creating art work etc. that includes someone else's intellectual property, you have to receive permission from them to do so. When you "clear" intellectual property, you receive permission to include it in your project.

Why do I need Clearance?
If you use someone else's intellectual property without their permission, you can face some very serious consequences. The operative term here is property. If you use someone else's property without asking, then you are stealing.   The Copyright Act provides substantial penalties for copyright infringement ranging from $10,000 for accidental infringement to $250,000 for willful infringement. The copyright holder can also file an injunction against you, which can keep you from distributing or selling your work with their material in it. Examples of what can happen when clearance is not handled correctly can be found here .