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Beware of relationships with creatives!

  • Problematic profiles of the recent copyright reform

This information is intended to briefly illustrate some problems that arise in relation to the transposition of Directive (EU) 2019/790 by Legislative Decree 177/2021 which – among other things – introduced into the law on the right of Italian author a series of provisions which, as far as specifically relevant here, can significantly affect relations with the authors of intellectual works. I summarize below the content of the most relevant articles with also a section with a broader comment on them.

  • Art. 107, paragraph 2, Copyright Law

In a nutshell, this provision imposes (sanctioning the nullity of any contrary agreements) in relations with the author (whether transfer or license) of an intellectual work, a remuneration based on royalties and not on the basis of a payment. tantum (flat-rate remuneration), except in the case that the creative contribution can be considered merely accessory.

Amplius: This provision generally states that authors who license or transfer their exclusive rights to exploit their works or other protected materials are entitled to remuneration that is adequate and proportionate to the value of the licensed or transferred rights, as well as commensurate with the revenues deriving from their exploitation, also taking into account, as pertinent, the particularity of the reference sector and the existence of collective bargaining agreements. It should be noted that the agreements contrary to the provisions herein are void and that a flat-rate remuneration is allowed for the author only when his contribution to the work is purely accessory and the costs of the calculation operations (of the remuneration proportionate to the revenues) are disproportionate for the purpose.

  • Art. 110 quater, Copyright Law

This provision places a very heavy information obligation on the buyer / licensee of copyright, the non-observance of which is severely sanctioned. Any agreement contrary to this information obligation is unenforceable to the authors. It is textually provided that the provisions of this article will apply from 7 June 2022.

Amplius: in accordance with this provision, the subject to whom the copyrights have been licensed or transferred – and his successors in title – is obliged to provide the authors, at least every six months, with updated, relevant and complete on the exploitation of the works and the remuneration due. In particular, net of other information legally required, the following must be provided: a) the identity of all parties involved in the sales or licenses as well as the names of any sub-licensees; b) the methods of exploitation of the works; c) the revenues generated by such exploits, including advertising and merchandising revenues, and the remuneration contractually due, as established in the licensing or transfer of rights agreements; d) with specific reference to suppliers of non-linear audiovisual media services, the number of purchases, views, subscribers. It is envisaged that the subjects who receive this information are required to respect the confidentiality of the same, in particular of those that constitute company data and sensitive commercial information; it will be possible to request the signing of confidentiality agreements. It should be noted that on the fulfillment of the aforementioned communication and information obligations, the Authority for Communications Guarantees (AGCOM) supervises which, in the event of violation of these obligations, applies a pecuniary administrative sanction against the defaulting party until 1 percent of the turnover achieved in the last financial year closed prior to the notification of the dispute. Furthermore, it is expressly provided that the failure to communicate the aforementioned information constitutes in itself a legal presumption of inadequacy of the remuneration in favor of the rights holders.

  • Art. 110 quinquies, Copyright Law

This provision provides for an automatic adjustment of the remuneration initially established in favor of the author in the event that the same proves to be disproportionately low compared to the proceeds originating over time from the exploitation of his work. Any contrary agreement is unenforceable to the author.

Amplius: the Author has the right to an additional, adequate and fair remuneration from the party with whom he has entered into a contract for the exploitation of the rights or from his successors in title, in the event that the agreed remuneration proves disproportionately low compared to the proceeds originated over time from the exploitation of his work, considering all the possible types of income deriving from the exploitation of the work, for any reason and in any form

  • Art. 110 septies, Copyright Law

In case of non-exploitation of the author’s work by the transferee or the licensee in exclusive rights, the author may act for the termination, even partial, of the license agreement or the transfer of the rights of the work, or revoke any exclusivity granted in the contract. Any contractual provision derogating from the right to act for termination or revocation is void unless provided for by a collective agreement.

Amplius: According to the provisions of this provision, the author who has licensed or exclusively transferred his rights relating to a work, in case of non-exploitation, can act for the termination, even partial, of the license agreement or transfer of the rights of the work or other protected materials, or revoke the exclusivity of the contract. Furthermore, it is prescribed that, unless otherwise stipulated in the contract or otherwise provided by law, the exploitation of the work must take place within the term established by the contract, in any case not exceeding five years or two years following the availability of the work by the publisher or the producer. Failing this, the author assigns a reasonable deadline for the exploitation of the licensed or transferred rights. After the deadline, the author can revoke the exclusivity of the contract or terminate the contract.

As for the temporal application of these provisions, it must be said that, apart from the information obligation that verbatim runs from 7 June 2022 (we will see later if this term will be further moved forward, according to a well-established local tradition …), art. 3 of Legislative Decree 177/2021 establishes that “the provisions of this decree also apply to works and other materials protected by national legislation on copyright and related rights in force on 7 June 2021. without prejudice to the contracts concluded and the rights acquired until 6 June 2021 “. It follows, therefore, that the effects of these provisions will not only affect contracts concluded after the date of entry into force of the aforementioned legislative decree (i.e. 12 December 2021), but also those concluded from 7 June 2021.

The regulatory framework described above is the subject of intense debate due to the relevant concrete consequences it can have in economic relations with the authors. On the subject, it should also be noted that some industrial design works can also access copyright as long as they have certain requirements established by law. Therefore, these provisions may also be applicable in relation to industrial design works that access copyright.

As far as here is concerned, in the absence of any jurisprudential support on this point, one wonders whether the application of the aforementioned rule can be understood as general or without prejudice to the specific disciplines provided for by the author’s legislation itself. In particular, it may be questioned whether these provisions also apply to works created by an employee in the exercise of his duties or by external collaborators on commission or exploited on the basis of publishing contracts.

This document does not represent legal advice.