This article is written by Vansh who is pursuing a Certificate Course in Introduction to Legal Drafting: Contracts, Petitions, Opinions & Articles from LawSikho.

Introduction

A company’s capability to sell and buy intellectual property is essential to its longevity and vitality. Although such property does not take up actual space, an excess of ownership can overburden a company, directing limited financial resources towards the maintenance of rights and registrations and defending against third-party disputes and claims. Selling of idle intellectual property can have an immediate positive effect on a company’s finances, generating surplus revenue and decreasing a large number of costs. This intellectual-property comes across the market in terms of copyrights, trademarks, patents etc. 

Ideally and in the natural course of things, the author or creator of such property is its owner and reserves all rights to use, sell, publish and portray such work of art or creation anywhere and anytime he pleases. But in reality, these authors do not possess the equivalent amount of resources in terms of outreach, finance, manpower etc. and thus they find the need to allocate the job of publication of the product to these publication and production houses or such investors. When there comes the time to grow a business, companies look to purchase property (including copyrights, trademarks, patents) to support their growth and widen their array of creative works in the market.

Entering into a copyright assignment: Why and When?

The Why?: Copyrights are a form of protection provided by the Indian Copyright Act as well as the Berne Convention of 1886, the Universal Copyright Convention 195, the Rome Convention 1961 and the agreement of Trade Related aspects of Intellectual Property Rights (TRIPS) to creators of “original works of authorship.” These include literary, musical, dramatic, scholarly, artistic and almost any original works, both published and unpublished. The author of a copyrighted work can prevent others from copying, performing, or using the work without its consent. 

In order to earn a revenue or even a living out of the work one creates, one needs to publish that work in either printed, digital or physically manufactured form and that needs an assignee and a copyright assignment agreement which provides the assignee the license to use the copyright of the owner to produce multiple forms of the work of art and hence increase its spread in the market. 

The When? : An owner or author of a type of intellectual property decides to sell or assign a copyright in order to earn revenue or gain royalty and goodwill out of the work he produces.

An individual can assign copyrights only when he is the owner, joint owner (along with the consent of another joint-owner) or an authorized agent of any type of intellectual property. 

Validity of an agreement involving assignment of copyrights

Copyright assignment is the transfer of ownership rights of a copyright from one party (generally the creator/author) to another (publisher). This transfer is not valid until it is put into writing and signed or stamped by the owner or his/her authorized agent. If a person wants to transfer a right on a non-exclusive or unrestricted basis, a written agreement might usually not be required. In simple terms, an exclusive license essentially means a straight-out transfer. Such an exclusive licensee has the right to use the copyright, assign it to a third party, or sue another party for any infringement. A non-exclusive licensee has the right to use the copyright but can neither assign nor sue a party for infringement.

In India, the law governing assignment of copyrights is The Copyright Act, 1957 and it lays down the requirements to assign copyrights as follows: 

The following are the simple interpretations of the actual clauses of the Act:

1. An assignment of a copyright can under no conditions be considered valid unless it is in writing and signed by its owner or authorized agent and expressly stated.
2. An assignment of a copyright must include all the rights being transferred permanently or temporarily to the assignee, the territorial extension and the term of the transfer.
3. A copyright assignment agreement must clarify and define the exact amount of royalty to be paid and when it is to be paid. This clause also states that the assignment is subject to updating, revising, enforcing and terminating on mutually agreed terms by both the parties.
4. This clause states that when an assignee fails to exercise the rights assigned to him for any reason, for a period of one year started from the day of the formulation of the agreement, such rights stand to be lapsed after the mentioned period unless the assignor has renewed them or specifically stated their non-expiry.
5. If the term of the rights assigned to the assignee is not specified under the agreement, the copyright assignment tenure shall be deemed to be 5 years from the date of formulation of the agreement.
6. If the territorial extent of copyrights assigned to an assignee, i.e., the area permissible for usage and the area under which the owner owns these rights is not specified, then they’re considered to be within the territory of the country (India).
7. This section states that nothing that has been defined as rights in the subsections 2, 3, 4, 5 or 6 shall be considered applicable to a copyright assignment agreement if an agreement has been made before the Copyright (Amendment) Act, 1994.
8. The assignment of a copyright shall be considered void if any of its terms and conditions run contrary to those already assigned to a copyright society of which the owner of the copyright is a member.
9. This clause defines the undeniable right of the author of a cinematographic film in terms of the royalties and considerations that are earned by the film in forms other than the usual screenings in cinema halls. The author of such work has the right to an equal share in the above-mentioned royalties. 

(Priyanka, senior executive, 2019) 

How to Negotiate a Copyright Assignment agreement

As an author or creator of creative and original work, one puts in a tremendous amount of work thinking about the dynamics, quality, audience, impact on society, political correctness and other copyright infringements as well. Similarly, negotiating a contract on behalf of a creator for his or her creative work, requires a humongous amount of attention to detail and attention to the various aspects in which publication could affect the work as well as the creator. 

Copyright ownership is different from ownership of physical copies of the work. Mere assignment does not transfer ownership in physical terms, even if there is direct physical representation of the copyright. The author of a bestselling novel or biography may hold a copyright of his book, but that doesn’t mean he owns every copy of the book that has ever been published. Assignment of copyright to someone means licensing and authorizing them with the owner’s consent, to produce, make copies (soft and hard), DVDs etc. of the original work for sale or rent to the general public.

A copyright can either be sold outright to a person or company, or licensed temporarily to a publication house with adequate resources. The former would mean the owner would receive a one-time payment for his work and then no other income from any sales or profits made from it whereas the latter would mean that the potential for a future income remains, even though the guarantee of that is, by no means certain. 

A copyright assignment does not have to be forever and does not need to be a complete assignment. You can grant a transfer for a specific period of time, in a specific area, or for a specific medium (e.g., allowing online use but not film use). The lawyers of each party must proof check the assignment carefully to ensure that all relevant points are put to detailed discussion. It is always better to be over-inclusive than under-inclusive. A professional like a lawyer should never assume that certain expectations or promises are agreed to if they’re not stated clearly and expressly on the agreement. If representing the creator or author of such work, one should always look to increase the restrictions on the usage of the copyright by the assignee and add clauses that require the other party to ask for permission of the owner at every major stage of publishing the work. However, since the publisher also has vested interests in the success of the product, there usually never occurs situations of him selling out the assignor but it is always advisable to be careful as the work being dealt with is original, authentic and valuable. It’s always advisable to have such an agreement’s documents notarized. This will later help in avoiding doubts and questions raised against the validity of a transfer or assignment of a copyright.

Strategies to Adopt and Points to keep in mind while negotiating a Copyright Assignment agreement 

• Consideration – In almost all agreements, each party is expected to perform some duty or do something for the other party. This obligation/duty might be to perform a service, transfer ownership of something, or pay money. The negotiator should enter the amount to be paid, as well as indicate how much time the Assignee has to make that payment from the date that the agreement is signed. If the piece of creative work has a scope to stay in the market for a long time, it is advisable to demand a one-time price that justifies its longevity or opt for a commission-based payment earned on the profit and sales of the product. Many tech giants, for example, buyout small creators’ projects and then self-fund the idea and make it a billion-dollar business. These independent creators usually don’t realize it but the price they get for selling all copyrights is not even a single percent of what these giants make.
• Re-assignment – A clause preventing the assignee from re-assigning the copyrights should be added to avoid him from re-transferring the work, or using it as collateral for loans, until it has made complete payment of the money due under the agreement if the owner wishes to sell the copyright outright.
• Amendment of section 19 (2012) – It is imperative for a lawyer to know that three new clauses have been added with respect to the assignment to Section 19 which essentially says that exploited creators of cinematographic films must be compensated in the form of payment of their royalty except by way of portraying or publishing such work in a cinema hall. This practically means that an author is entitled to several subsequent royalties which might arise in the course of any such further exploitation of the film which will not only include their work but also infringe copyrights.

Amendment of section 19 (2012) – The three clauses that have been added with respect to the assignment to Section 19 which essentially says that the royalty has to be paid to those authors whose work has been exploited in a cinematographic film other than by way of exhibition of film in a cinema hall. This basically means that the authors are entitled to subsequent royalties which might arise in the course of further exploitation of the film which will include their work.

Case study 

The following case displays how a director of a film assigned its copyright solely to a production house and how a third-party violating copyright owned by the production house and the owner of the film results in a lawsuit announced in favour of the owner and assignee of the original work. 

YRF v Sri Sai Ganesh Productions

Issue: Whether the expression ‘make a copy of the film’ under section 14 of the Copyright Act, 1957 solely means to make a physical copy of the clip? And whether there is a substantial similarity between two films produced by different production houses, one being an original work and the other being an inspiration or plagiarism. 

Facts: A copyright infringement suit was filed by Yash Raj Films Pvt Ltd against Sri Sai Ganesh Productions & Ors on grounds that it copied the movie ‘Band Baja Baarat’ produced under YRF’s production house and making a film named ‘Jabardasht’ which showcased significant and precise similarities in terms of its concept, message, characters, storyline, theme, climax and form of expression among other things. 

Judgment

The court while determining the issue of underlying works constituting a film, decided to cite the Delhi High Court Judgement of MRF Limited vs. Metro Tyres Ltd. This judgement concluded that the sections 13(1)b to 13(3)a and section 2d require the cinematographic film which is constituted of underlying works to be original and that copyrights exist in these underlying works.

The Hon’ble court while determining the second issue cited the case of R.G.Anand vs. Deluxe Films and concluded that under section 14(d)1 of the Copyright Act, 1957, the expression ‘to make a copy of the film’ does not only mean physical copies in the form of DVDs, CDs etc. Additionally, the court cited the originality principle set in the above-mentioned case as an example and precedent to draw a distinction between two films by way of an average viewer or layman’s understanding of the film in terms of its ‘substance, foundation and kernel’. In the present case, the court ruled in the favour of the plaintiff and found the defendant guilty of infringing the copyrights owned by YRF Pvt. ltd.

Reference

Priyanka. (2019). “Copyrights In India: How To Assign And License A Copyright? Retrieved on October 26, 2020. Retrieved from https://vakilsearch.com/advice/copyrights-in-india-how-to-assign-and-license-a-copyright/

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