Film production: licence or copyright transfer agreement?

In film production, the standard – resulting both from the requirements of financing public institutions and the weakness of Polish legal regulations on licensing, which do not guarantee the stability of such licensing relations – is the conclusion of agreements on the transfer of rights. An exception is sometimes the inclusion of existing music or other non-commissioned works in a film.

Which agreement is more beneficial?

The answer is: it depends. From the point of view of co-authors of an audiovisual work it would probably be a licence agreement. Under a licence agreement a co-creator grants the producer a permission to use his creative contribution made to the produced film in given fields of exploitation, for a specified period of time and in a given territory. This means that under a licence agreement the author does not relinquish his/her author’s economic rights, as is the case with an agreement transferring author’s economic rights. Additionally, in the case of a licence for a specified period concluded for more than 5 years or a licence agreement for an indefinite period, it is possible to terminate the agreement. Although there are legal mechanisms limiting the possibility to terminate a licence for a specified period (automatic renewal, obligation not to terminate the licence, expression of the parties’ mutual intention to conclude a perpetual licence), they are controversial and not uniformly supported by the doctrine and judicature.

Given the above, it would therefore be very risky for the producer to enter into licensing agreements with the co-creators of the film. It would mean that after the expiration of the licence or in case of its termination, the producer would lose the rights to use the given creative contribution and thus the possibility to exploit the film. It needs to be emphasised that the film rights comprise the rights to all of the film’s creative contribution, i.e. costumes, set design, actors’ parts or director’s contribution. Lack of rights to one of the film elements makes it impossible to use the film as a whole. That is why it is so important for a film production to acquire the rights from all co-creators involved in the production.

The general principle and practice on the market is for producers to conclude agreements on the transfer of rights without time limitations. Such requirements are also provided for in development agreements and subsidy agreements concluded by producers with the Polish Film Institute. At the same time, in the case of such co-authors as a director or cinematographer, concluding an agreement on transfer of rights and not a licence agreement does not significantly affect their economic situation. The creative contribution of both the director and the cinematographer is so inseparably connected with a given film that it is impossible to exploit it separately from the film. Director or cinematographer transferring the rights to his contribution, that is de facto getting rid of the right to use it, does not suffer any loss in the economic sense, because using his contribution independently, separately from the film is actually impossible. However, the situation looks different in the case of such co-authors as a costume designer, character illustrator in animated films or interior decorator. Their creative contribution, as opposed to the contribution of e.g. the director, can be separated from the film itself. The created costumes, decorations or drawn characters could be used for other film productions as well as for other purposes, in particular for merchandising. Therefore, the conclusion of a rights transfer agreement or a licence agreement is of colossal importance. Such co-creators must be aware when signing a transfer agreement, in particular when negotiating the remuneration to which they are entitled, that they lose the rights to the work they have created.

When are licence agreements concluded in film production?

As a rule, for works that were not specifically created for a film, but exist separately and are exploited independently of the film, e.g. for songs (the music in the film was the subject of a separate article), for trademarks (when there are cases of product placement) or for fragments of other films.

What should be kept in mind when concluding a licence agreement or an agreement on transfer of economic copyrights / related rights in film production?

First of all, written form is required under pain of nullity, both for agreements on the transfer of rights and for exclusive licences. It is related to the obligation to list specific fields of exploitation, in which the transfer of rights takes place. According to the position well-established in the judicature and doctrine, reservation of the written form under pain of invalidity concerns the necessity to list the fields of exploitation. Therefore, the expression “that the rights are transferred in all existing fields of exploitation” is usually not correct and does not meet this requirement.

Additionally, the scope of rights acquired by the producer should be identical for each co-author. As mentioned at the beginning of the article, a film constitutes a whole. If the producer acquires a broader scope of rights from one of the co-creators, this does not entitle the producer to exploit the film to the fullest extent, but to the ‘common’ extent for all the co-creators. Also a lot of controversy can be aroused in practice by different descriptions of the same fields of exploitation in different agreements – giving room for interpretation as to what the differences in the formulation of the scope of transfer of rights really mean. Additionally, in the case of co-productions, the scope of rights acquired by the producer from co-creators must be consistent with the scope of rights provided for in co-production contracts, in which the producer undertook to transfer to co-producers the share in rights to the film and all its elements in the amount of the co-producer’s contribution.

 Author: Ewa Karwowska – attorney at law at LSW. She specialises in intellectual property law, in particular film law and advertising law.