AUTHORS OF UNDERLYING LITERARY WORKS OF FILM

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    AUTHORS OF UNDERLYING LITERARY WORKS OF FILM

    An author of underlying literary works of a film would typically include a screenplay writer, dialogue writer and story/script writer.

    Typically, an author of underlying literary works of a film agreement from a producer’s perspective would be structured as follows:

     

    1. Title clause– this clause provides the names, addresses and other details of all the parties entering into the author agreement.
    2. Recitals– recitals provide a brief overview of the business of the parties and the intent behind entering into the agreement.
    3. Definitions- Some of the important definitions which should be captured in an author agreement are as under:
    • Definition of the works the author is engaged to develop. For instance, dialogues, screenplay, script, story etc. For example, a screenplay includes dramatic and literary works which comprise of a suitable shooting script of the film setting out the dramatic elements, presentation and flow of the film.
    • The term and territory of the agreement should be defined. Term of services could be a definite period. However, term of exploitation of works should be in perpetuity.
    • Derivative works should be defined. It is important to specify whether the producer has the ownership rights over the derivative works or only on the works developed by the author for the particular film. For instance, ‘Derivative Works’ mean all the subsequent works based on the works developed by the author including remakes, prequels, sequels, novels, stage plays, games and other adaptations.
    1. Engagement of the Author:
    • This clause should provide the services for which the author is engaged. For instance, to author screenplay, dialogues, story, etc.
    • Producer should have the ability to require the author to modify the draft as per the requirement of the Producer. Typically, a writer would want to negotiate this clause and restrict the number of re-drafts/ modifications which would be included within the scope of the agreement. Additional revisions may require additional consideration.
    • It is important to mention whether the engagement of the writer is on an exclusive or non-exclusive basis i.e. whether the writer can take up other projects at the time of working on the producer’s project or whether he would remain exclusive for the producer until submission of the works under the agreement. Exclusivity, if any should only be during the term of the agreement and not beyond the term and should be in the form of negative covenant since contracts of personal services are not specifically enforceable in India. However, negative covenants can be enforced. Restrictions should also be imposed on the author from developing similar works for any third party. The Producer should have the ability to engage other authors for developing the works.
    • Time should be of essence in the delivery of the works. Accordingly, timelines within which the author is required to submit the works should be stipulated in the agreement.
    • The agreement should have a no obligation clause i.e. the Producer should have no obligation to use the works of the author or to release the film as long as the author is paid for the services rendered. This clause is also termed as ‘Pay or Play’ clause.
    • The clause could be worded on the following lines: ‘The engagement of the Author’s services by Producer will be on a “pay or play” basis, such that the Producer shall not be obligated to actually utilize the services of the Author for which the Author is engaged. As a general matter, Author will be entitled to receive his/her fees for engagements under this Agreement only if and to the extent to which Author actually renders the services for the engagement, even if such services are not utilized.’
    1. Consideration:
    • The Consideration payable to the author should indicate whether it is inclusive or exclusive of indirect taxes such as GST. The payment tranches should be clearly mentioned. Further, it should be mentioned that the consideration would be subject to withholding taxes such as TDS.
    • An author of a literary work of a cinematograph film is entitled to a non-assignable right to receive royalty. Therefore, the agreement should clearly stipulate that the author shall be entitled to receive royalties in accordance with Section 18 of the Copyright Act, 1957, as amended from time to time, including the amendment introduced by Copyright Amendment Act, 2012 (to the extent the proviso remaining in force and applicable) as prescribed by the copyright society of which the Author is / shall become a member.
    • It is pertinent to note that the Screenwriters Rights Association of India has applied for registration as a copyright society.
    • It should be mentioned that the Author confirms the adequacy of the consideration as full and final consideration towards services required to be rendered by the Author under the agreement.
    • In India, stamp duty is payable on author agreements. In states like Maharashtra the stamp duty is as high as 0.5% of the consideration if the consideration exceeds INR 10 Lacs and 0.25% of the consideration if the consideration is below INR 10 Lacs [Article 5(h)(A)(v) of Schedule 1-assignment of copyright]. In other states it is relatively lower. It is therefore important to specify who would be responsible for payment of stamp duty.
    1. Ownership of rights:

    As discussed in my post here, the Copyright Amendment Act, 2012 which introduces royalty rights for authors is grossly flawed and ambiguous. It is therefore important for producers to safeguard their rights by having a watertight clause on ownership of rights. This would also depend on the contractual negotiations between the parties. Few important clauses which a producer should consider having in this clause are as under:

    • First ownership of copyright in the works– this clause should state that the author is engaged on a work for hire/ commissioned work basis and that the Producer is the first owner of copyright in the works developed by the Author
    • Derivative works– Subject to the contractual understanding between the parties, the parties should clarify whether the producer would have ownership rights in all derivative works of the works developed by the Author.
    • Without prejudice assignment of copyright in the works in all modes, mediums and formats– In view of the ambiguity surrounding Section 17 and 18 of the Copyright Act, it would be prudent for the producer to obtain a without prejudice assignment of copyright in works for exploitation on all modes, mediums and formats. The modes, mediums and formats should be identified in the agreement (which is typically done by way of an annexure). As mentioned in my post, the first new proviso to Section 18 restricts assignment of copyright to any medium or mode of exploitation of the work which did not exist or was not in commercial use at the time when the assignment was made, unless the assignment specifically referred to such medium or mode of exploitation of the work. As a result of the First Proviso, in all agreements where assignment of copyright is taken, the assignee needs to take caution that it mentions all possible modes and mediums of exploitation in existence and commercial use as on the date of the agreement. This has resulted in all assignment agreements mentioning all possible modes, mediums and formats which could be as wide to include language such as the following: “physical; mechanical; magnetic; analogue; optical; electric; electronic; wireless; terrestrial; satellite; cable; landline telephony; mobile telephony; data services such 2G, 3G, 4G, VOLTE, LTE; internet telephony; internet; streaming; webcasting; simulcasting; downloading; uploading; P to P; internet telephony; radio; television; biotechnological; nano-technological; nuclear; molecular…..”
    • Perpetual license in future modes and mediums of exploitation– Further, since Section 18 is not applicable mutatis mutandis to Section 30 of the Copyright Act which deals with licenses by owners of copyright, typically all assignment agreements capture a perpetual license of rights in future modes and mediums of exploitation which are not in commercial use and existence on the date of entering the agreement. The language of such perpetual license clause typically reads as under:

    The Author is aware and hereby acknowledges that new rights in addition to the rights assigned to the Producer may come into being and/or be recognized in the future, under the law and/or in equity (hereafter the “New Exploitation Rights”), and Author is also aware and does hereby acknowledge that new (1) technology, (2) uses, (3) media, (4) formats, (5) modes of transmission and (6) methods of distribution, dissemination, exhibition or performance (hereafter the “New Exploitation Methods”) are being and will inevitably continue to be developed in the future, which would offer new opportunities for exploiting the assigned work. In the event the Author has any rights in and to the assigned work including New Exploitation Rights and New Exploitation Methods that cannot be assigned to Producer by operation of law and cannot be so waived, the Author, in lieu of the consideration, the sufficiency of which is hereby acknowledged, hereby grants to the Producer an exclusive, irrevocable, worldwide, license during the term of copyright to reproduce, distribute, modify, publicly perform and publicly display, with the right to sublicense and assign such rights in and to the Producer including without limitation, the right to use in any way whatsoever the assigned works.  To the extent any of the foregoing provisions is ineffective under applicable laws, Author hereby provides and shall provide any and all ratifications and consents necessary to accomplish the purposes of the foregoing.’

    • Waiver of Section 19(4) of the Copyright Act- Section 19(4) of the Copyright Act provides that if the assignee does not exercise the rights assigned to him within one year from the assignment then the assignment shall lapse and rights shall revert to the assignor. It is therefore important to have a clause to state that Section 19(4) shall not apply to the rights assigned by the Author in favour of the Producer and take a waiver from the author of such application.
    • Waiver of Section 19(8) of the Copyright Act- Section 19(8) requires that the assignment by the author should not be contrary to the terms and conditions of the rights already assigned by the author to the copyright society of which he is a member. It is therefore essential to take an acknowledgement from the author that the rights granted in the Agreement will not be contrary to the terms and conditions of the rights already assigned to a copyright society in which the Author is a member or would become a member in the future. As mentioned earlier, the Screenwriters Rights Association of India (SRAI) has applied for registration as a copyright society. If the author is a member of SRAI then a specific reference of the same may also be added.
    • Waiver of moral rights– It has been a debateable issue as to whether moral rights can be waived or not. The issue of enforceability of waiver of moral rights of authors has not been tested in the Indian courts. From a producer’s perspective, a producer would want to obtain a waiver of moral rights of the author to ensure that the Producer is free to modify, alter the works without any obstruction. However, since moral rights is an equitable right, in all likelihood a waiver of moral right clause may not be enforceable. The best solution for such negotiations would be to have the ability to modify the works but not distort or mutilate it in a manner that would be prejudicial to the honor and reputation of the Author.
    1. Representations and warranties

    Some of the representations which a Producer must take from an Author are:

    • Representation on originality of the works and the works not violating any third party right including moral rights, privacy and publicity rights, works not being defamatory, etc.
    • Representation on Author not developing a similar work for any third party.
    • Representation on full compliance with applicable laws.

    Some other standard representations which each party could give are:

    • The execution and performance of the Agreement not conflicting with any other agreement of each party;
    • The Parties not being under any disability or restriction which would prevent them from performing or adhering to any of its obligations under the Agreement.
    • Neither Party using any derogatory remarks or defaming the other party in any interview.
    1. Credits

    The agreement should record the credits which the author would receive in the film. Credits should be given subject to complete and timely performance of services by the Author. In case other writers are being engaged by the producer, the same should be mentioned that the credits of the Author would be shared. Producer should reserve the right to take decision on the credit titles at its prerogative.

    1. Termination

    The Producer may choose to terminate the agreement on occurrence of the following events:

    • Breach of representations and warranties of the Author and failure to cure the breach within a cure period, in case of remedial breaches and immediate termination in case of non-remedial breaches.
    • Works not being to the satisfaction of the Producer.
    • Occurrence of Force Majeure Events or incapacity of the Author for a given duration of time
    • Film being abandoned/ shelved
    • Legal incapacity such as insolvency, criminal proceedings, etc of the Author
    • A termination for convenience clause may also be added

    With respect to the Author’s right to terminate, the following could be the events of termination:

    • Producer failing to make timely payments of the consideration and failing to cure such breach within a cure period
    • Depending on whether the agreement is a contract of service or a contract for service, other events of termination on transgression of rights could be added.
    • Liquidation/ winding up/ insolvency of the producer

    Consequences of termination: The consequences of termination should be recorded in the Agreement. Some of the consequences could be:

    • Pro rata payment of the consideration for the works developed until such date. In case of termination for breach, the Producer may choose to seek refund of the consideration.
    • All works developed including research materials should be furnished to the Producer.
    • Termination not affecting the ownership of intellectual property rights of the Producer in the works developed by the Author.
    • Survivability of clauses, nature of which should reasonably require the survival such as representations and warranties, confidentiality, indemnity, jurisdiction and governing laws etc.
    1. Indemnification– Producer should seek indemnification from the Author from and against any claims, proceedings, damages, etc resulting from any breach of representation and warranties of the Author or any third-party claims arising due to infringement of intellectual property rights or any other rights of such third party.
    2. Force Majeure-Neither party should be liable for non-performance of their obligations due to a force majeure event. A force majeure event includes acts of God such as earthquake, flood, epidemic, strike, lockout, etc and acts which are beyond the control of either party.
    3. Confidentiality– Producer should have restrictions on non-disclosure of any information in relation to the film and underlying works from the Author. Further no public announcement in relation to the Film and no public statement being given without consent from the Producer. The Author should also undertake to keep all literary works, research materials in a safe and secure place.
    4. Remedies– The Producer may seek to have a clause on damages being adequate relief for the Author for any remedy the Writer may seek against the Producer and the Author not being entitled to rescission, injunctive or other equitable relief.
    5. Boiler plate clauses
    • Governing law and jurisdiction– the governing law and jurisdiction should be mentioned. If the parties agree to arbitration as a dispute resolution mechanism then an arbitration clause should be added and the jurisdiction clause should be subject to such arbitration clause.
    • Assignment-Neither party having the right to assign the agreement or any of its rights and obligations without the prior written consent of the other party.
    • Relationship of parties– Each party remaining independent with respect to the other and nothing in the agreement amounting to partnership, agency, joint venture, etc.
    • Waiver – failure of any party to demand strict performance by the other of any of the terms, covenants or conditions of the agreement shall not be construed as a continuing waiver or relinquishment thereof and either may at any time demand strict and complete performance by the other party of the said terms, covenants and conditions.
    • Modification-No modification or amendment of any provision shall be valid or binding unless executed and delivered by the parties in writing.
    • Severability– in the event any provision of the agreement is declared to be void, invalid or unlawful by any court or tribunal of competent jurisdiction, such provision shall be deemed severed from the remainder of this agreement and the balance shall remain in full force and effect.
    • Notices- all notices should be in writing. Mode of sending the notice and the contact details should be mentioned.

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