In recent years, key entertainment industry players have shifted their business models. Rather than selling the rights to their content in the various windows, many prefer to accumulate and stockpile these rights. Apparently, even when there is no real intent to exploit certain rights, retaining them makes sense to some — lest a sale strengthen a potential competitor’s market position.
While this motivation is understandable, so is the frustration brewing not just among industry actors, but also among creatives and the broader public.
The situation begs the question: Is this stockpiling model completely well-founded in the law, or should producers be aware of any pitfalls?
It seems absolutely justified that producers who take a financial risk to create content should be allowed to milk the success in any and all ways imaginable.
But what happens if all of these rights are just contractually accumulated, but not in fact exploited? If the content is simply stashed into a streaming library, can the producer, or, as the case may be, streaming platform operator, feel safe in the knowledge that they have bagged all of the rights even if they do not intend to make use of them?
Not necessarily — because of copyright reversion.
The rights traded within the audiovisual industry are established by copyright laws. Each transaction is a contract, which the parties are mostly free to negotiate. However, because authors are regarded by legislators as the weaker party with less bargaining power, their interests are safeguarded by statutory provisions.
The so-called “reversion of rights” is such a safeguard. It refers to statutory provisions, which allow authors to recapture previously assigned/transferred/exclusively licensed rights. This means that however well the contract may secure the rights for the benefit of the producers/licensees, many countries’ laws nonetheless allow original creators to terminate the contract or revoke exclusive rights in full or in part, under certain circumstances.
There are significant differences among the various countries’ regulations of copyright reversion. Under American law, 35 years need to pass before the reversion, and notice of termination must be served at least two years before the effective date. Crucially for audiovisual content, the reversion does not extend to derivative works, and thus it will most likely not affect the content producer’s rights to exploit any already-made audiovisual content. However, the producer may be unsettled by the possibility that the works underlying the same content might be licensed to a different show or producer.
In Europe, there is no general requirement to wait 35 years, and the notice of termination is typically shorter than the two years specified as the minimum in the U.S. European legislators’ focus is less on time and more on use. The guiding principle is: Those who obtain exclusive rights to a work should “use it or lose it.” The rules vary among the different European countries. But since an E.U. directive requires all member states to provide certain revocation rights to authors, each member state must have some similar provision in their copyright legislation.
Content producers should care for three reasons. First, because the question of what constitutes “use” is nebulous at best, and a disgruntled creator may attempt to argue that the mere inclusion of content in a streaming library does not amount to sufficient use.
This line of argumentation, if successful, could pave the way for creators to partially revoke their licenses and recapture certain rights to exploit their works in all other manners — or in any territories where “use” is found not to have taken place. This could threaten the business model of those platform operators, who do not exploit the works in other windows.
Many academic experts in copyright law argue that if a work is merely made accessible to the public via an Internet-based platform, but is not exploited in any other manner, then this does not amount to “sufficient use” for the purpose of copyright reversion, so the author should be allowed to reclaim any rights in the work which are not exploited (e.g., the use in feature films or stage plays), as both the authors and the public would benefit from the broader dissemination of the creation.
Countering this argument is the more general but similarly well-founded principle that contracts should be honored, so authors should not be allowed to wriggle out of contracts granting exclusive rights. Such unbalanced rights should only be conferred on a party by law if it is absolutely necessary to protect the interests which the weaker party likely cannot defend during contract negotiations and which are at least as important as the smooth and reliable flow of commerce.
Second, in many European countries, copyright reversion cannot be “bought out.” European copyright legislation is less monetization-oriented and more “principle”-driven. Creative works are regarded as expressions of the authors’ personality. This explains why European copyright law is more sensitive to the author’s subjective (and, cynics might remark, not particularly business-savvy) desire to not simply be “silenced by cash,” but rather, to be allowed to freely determine to which public and in which manner they wish to have their works presented. This applies also to works that form the basis of derivative creations.
Adaptations of pre-existing copyright-protected work cannot be exploited without the consent of the underlying work’s authors. It should follow that if certain exploitation rights in the underlying work revert to the author, then the adaptations may also not be exploited in the manners affected by the reversion — unless a new license is granted to the underlying work or the applicable laws or contracts stipulate otherwise.
Third, while content producers and streaming libraries can attempt to contractually exclude the applicability of European countries’ laws, if a dispute were to arise, the court would first determine whether it concerns contract, copyright, or personal (moral) rights. Especially in the latter two cases, judges might not heed the parties’ contractual choice of law. Therefore, especially when producing locally, it is wise to consider the local copyright laws as well — they may just be the key to re-stabilizing shifting landscapes.
(By Anna Beke-Martos)
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