Why the UK TuneIn judgments are a return to the dark ages

What happens when you let some old farts from the UK judiciary, fueled by a doomed Brexit, single-handedly decide the technological future, advances and boon to which UK users should have access to? Well, stupid business choices justified by perfectly elegant and intellectually stimulating legal decisions handed down by old timers on a rampage to make ‟Britain great again”. I am sorry that TuneIn had to pay such a hefty price, on the UK market but, oh boy, it did.

TuneInAs a daily jogger, I am an early adopter, and fervent user, of radio apps, such as Radio Garden and TuneIn, in order to listen to, in particular, Los Angeles’ radio stations such as KCRW Eclectic 24 and KPFK, while I am practising my daily and morning sport exercises. While at home, I listen to French radio stations such as FIP or Nova, or to LA channels, via Tunein which is accessible on my Sonos home sound systems, software (installed on my two iphones) and speakers.

However, over the last year or so, I could not help but notice that European radio stations, such as FIP or France Inter, were no longer accessible from either TuneIn station or Sonos Radio station, while I am in the United Kingdom (‟UK”).

Well, now I know why. Indeed, I read today the 3 latest issues from Music Confidential published by Susan Butler on the ‟TuneIn appellate decision” (sic).

Intrigued, I decided to delve deeper into this case and gulped (there is no other word) the 47 pages of the Warner Music UK Ltd and Sony Music Entertainment UK Ltd versus TuneIn Inc decision handed down by the High court of justice of England & Wales on 1 November 2019, as well as the 56 pages of the TuneIn Inc versus Warner Music UK Limited and Sony Music Entertainment UK Limited judgment handed down by the Court of appeal on 26 March 2021.

Whilst I admire the intellectual virtuosity of the first degree judge, Justice Birss, displayed in the above-mentioned first degree decision, as well as the ‟strong hand in a velvet glove” approach favoured by the appeal judge, Justice Arnold, in the appellate judgment, I can only conclude that this exercise in intellectual masturbation by the judiciary has led, yet again, to another castration of a technological product full of creativity, advancement, connectivity to the world and fantastic ubiquity.

Am I therefore pissed off?

Yes. Here is why.

Are you actually saying that TuneIn should ditch internet radio stations which are unlicensed in the UK?

The ‟modus operandi” of TuneIn is to operate an online platform, website and apps, which provide a service enabling users to access radio stations around the world. The service is called TuneIn Radio.

It is now available on over 200 platform connected devices, including smart phones, tablets, televisions, car audio systems, smart speakers such as Sonos, and wearable technologies.

TuneIn Radio has links to over 100,000 radio stations, broadcast by third parties from many different geographic locations around the world. It is monetised through advertising and subscriptions, although the subscription is free for many users of hardware products such as Sonos and Bose sound systems.

TuneIn Radio is awesome because, like Radio Garden, it allows users to save some radio channels as favourites, offers some curation services as well as some search functions, which a new user may use when he or she does not know what radio stations he or she may like. In addition, TuneIn Radio provides perks such as personalisation of content, collation of station information presented on individual station pages, and artist information set out on dedicated artist pages.

Even better, until a few years ago, TuneIn Radio offered a recording device, through its Pro app, which also included a curated repertoire of a large number of music internet radio stations.

As a user, you are therefore blissfully entertained, and your every musical needs catered for, when using the full gamut of TuneIn Radio’s perks and services.

Well, such users’ bliss was short-lived, however, since the High court decision, confirmed by the 2021 appellate judgment, found that by including internet radio stations which are either unlicensed, such as Capital FM Bangladesh and Urban 96.5 Nigeria, or not compliant with the local neighbouring rights regime, such as Kazakhstan station Gakku FM and Montenegro’s City Radio, TuneIn Radio was infringing under section 20 of the 1988 Copyright, designs and patents act (the ‟Act”) which provides:

20. Infringement by communication to the public
(1) The communication to the public of the work is an act restricted by the copyright in—
(a) a literary, dramatic, musical or artistic work,
(b) a sound recording or film, or
(c) a broadcast.

(2) References in this Part to communication to the public are to communication to the public by electronic transmission, and in relation to a work include—
(a) the broadcasting of the work;
(b) the making available to the public of the work by electronic transmission in such a way that members of the public may access it from a place and at a time individually chosen by them.

So not only those unlicensed and non-compliant internet radio stations are in breach of the right to communicate to the public, but TuneIn Radio is too, since it provides links to those streams.

Had TuneIn Radio not obtained a warranty from those internet radio stations that they operated lawfully in their home state? God forbid, TuneIn Radio could not rely on such warranty, of course, and the onus was on TuneIn Radio to double-check that such internet radio stations were either licensed or compliant with their local neighbouring rights regime.

So what is the direct consequence of such stance, taken by the UK High court and Court of appeal? Well, all those internet radio stations become unavailable to the public, in the UK but also probably in other European countries such as the 27 member-states of the European Union (‟EU”), via the TuneIn Radio platforms, websites and apps.

Indeed, all the reasoning made by Justice Birss, in the first degree case, as well as Justice Arnold, in the appellate case, revolved around article 3 of the EU Information Society Directive (the ‟Directive”), which was transposed into the above-mentioned section 20 of the Act, and the abondant, eye-wateringly complex and excruciatingly intricate related case-law of the Court of Justice of the European Union (‟CJEU”) on the right of communication to the public.

So, yeah, you bet, this TuneIn case is valid both for the UK (which has now exited the EU via its unwitty Brexit), and the 27 remaining member-states of the EU.

Therefore, users and customers lose because they cannot listen to all worldwide internet radio streams via TuneIn anymore, as a direct consequence of the UK decisions.

And it does not stop there! Perish the thought.

What about those music radio stations which are licensed for a local territory other than the UK, such as VRT Studio Brussel in Belgium, Mix Megapol in Sweden and MavRadio in the USA?

For these radio stations outside the USA, the countries operate various kinds of remuneration rights regimes and these stations are paying remuneration under these local schemes. The USA operates a statutory licence scheme conditional on paying royalties and the sample radio MavRadio pays those royalties. However, in all of these cases, the relevant body has not granted geographical rights for the UK.

Ahhh, the UK first degree judgement, confirmed in appeal says, that’s not my problem, my dear sir: TuneIn’s act of communication in relation to those sample radio streams which pay royalties to a body that does not grant geographical rights for the UK, is unlawful, unless licensed by the UK rights holder. Since it is currently not, TuneIn’s actions amount to infringement under above-mentioned section 20 of the Act.

Therefore, TuneIn has to now remove all this pool of internet radio stations from its platforms, apps and websites too, until it has figured out how to strike a deal with the UK rights holders.

Probably, TuneIn’s best call is to reach out to the UK neighbouring rights collecting society, PPL, and start the licensing negotiations from there, immediately. Also, TuneIn better cooperate directly with labels Warner and Sony, to strike those licences, now that the UK first degree decision has been confirmed in appeal and since these two claimants ‟account for more than half the market for digital sales of recorded music in the UK and about 43 percent globally” (sic).

While I can understand that the UK courts would slam TuneIn for not proactively getting a UK neighbouring rights’ licence for its own premium radio stations, made available exclusively to TuneIn’s subscribers, I found it profoundly castrating to make TuneIn’s liable for primary infringement of the right of communication to the public for merely providing streams to unlicensed and non-compliant third party internet radio stations and to third party internet radio stations which do not pay royalties in the UK.

What about the right of UK and EU users to have access to as much culture, musical experience and knowhow, as possible, even in a geopolitical context where most countries in the world do not care about, and probably don’t even know what are, neighbouring rights?

This is directly discriminating UK and, probably, all EU listeners and users, because TuneIn will now have to geoblock all its links to non-compliant and unruly streams, which probably constitute at least 50 percent of the 100,000 internet radio stations available on its apps, platforms and websites.

So Justice Birss and Justice Arnold can now breathe a sigh of relief, at the thought of having saved European neighbouring rights in the face or barbarian non-British cultural invasion, but I am sure that most UK users of TuneIn only have a ‟fuck you” to respond in return, for their ill-advised, technologically-stiffling and Brexitist stance on the matter.

Now, by using TuneIn Radio, a UK user will only have access to music radio stations which are licensed in the UK by PPL, such as BBC Radio 2, Heart London, Classic FM and Jazz FM. Thank you very much, but we can already access those radio channels on our terrestrial radio sets or on their respective online platforms, from the UK, so what is the added value of TuneIn Radio in the UK now, pray tell?

So I can’t use the recording service on TuneIn anymore?

Of course, Justice Birss, and then Justice Arnold, went for the jugular with respect to the recording option by users of TuneIn’s Pro app.

Indeed, in terms of a user’s use of the recording function, the claimants contended that the Pro app was not just a recording device. It also included a curated repertoire of a large number of music internet radio stations. The purchaser of the Pro app would, reasonably, understand that TuneIne had sold them the Pro app (with its built in recording function) in order to allow them to record audio content offered by the TuneIn Radio service. There was also a point on the degree of control exercised by TuneIn. Only internet radio stations provided by TuneIn could be recorded and TuneIn could disable the record function at a station-by-station level.

While this TuneIn recording function was a very original, and unique, offered feature, in the competitive world of radio aggregators, the High court decision, confirmed in appeal, swiftly killed it, by finding that ‟TuneIn had authorised the infringements carried out by its users by recording using the Pro app” and therefore ‟TuneIn’s service via the Pro app when the recording function was enabled infringed the claimants’ copyrights under Section 20 of the Act”.

Even if Justice Arnold allowed the appeal, in his appellant judgment, against the conclusion drawn by the first degree judge, that TuneIn was liable for infringement by communication to the public in relation to the ‟category 1” stations (i.e. the internet radio stations which already are licensed in the UK via PPL) by virtue of providing the Pro app to UK users with the record function enabled, the outcome is the same: off with its head, with respect to the great recording function offered by TuneIn’s Pro app.

As Susan Butler wisely wrote, in her Music Confidential’s last three issues, ‟in my view, however, that does not mean that (intellectual property) must be disruptive to digital innovation across national borders”. ‟(…) the bad kind of disruption – the costly and destructive kind – seems to occur most often when anyone tries to drag old business models or entities built around old business models into new multi-national digital marketplace. (…) Everyone must become more pliable to truly reshape the market to support true innovation”.

Well, Susan, with the old farts who handed down the 2019 and then 2021 decisions (check them out on the audio-video recorded hearings here!), count on it.

Another example of UK splendid and backward looking isolation, my friends: where is my visa to move to Los Angeles asap, please?



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    Crefovi’s take on EFM online 2021: finally, the digital revolution has come to the film industry!

    Crefovi’s founding and managing partner, Annabelle Gauberti, attended, by way of her MacBookPro, the EFM online 2021 session from 1 to 5 March 2021. What are Crefovi’s key takeaways from the first European film festival and market of the year? Was this online session a success, managing to link buyers and sellers, as well as their respective service providers, together?

    EFM online 2021Distributors’ need for European content to meet the statutory ratios set out in the Audiovisual Media Services Directive (‟AVMSD”)

    As part of its push towards shaping Europe’s digital future, in the digital single market, the European Union (‟EU”) adopted the Audiovisual Media Services Directive (‟AVMSD”) in November 2018.

    This directive had to be transposed by September 2020 into national legislation in the 27 EU member-states. Yet, since only Denmark, Hungary, the Netherlands and Sweden notified transposition measures to the EU, the EU Commission sent formal notices to all the other 23 EU member-states, requesting them to provide further information, in November 2020.

    Be that as it may, the AVMSD is already impacting the buying strategy of distributors and other streaming companies (called ‟streamers” during the EFM online 2021 session).

    Indeed, the AVMSD governs EU-wide coordination of national legislation on all audiovisual media, both traditional TV broadcasts and on-demand services.

    Since one of the goals of this EU coordination, via the AVMSD, is to preserve cultural diversity, each EU member-state is currently figuring out how best to transpose into national law the new obligation, for video on-demand services (which include streamers), to ensure at least a 30 percent share of European content in their catalogues, and to give prominence to such European content. The provisions of the AVMSD also allow, under certain conditions, EU member-states to impose on media service providers that are established in other member-states, obligations to contribute financially to the production of European works. The new obligations do not apply to media service providers with a low turnover or a low audience, in order not to undermine market development and inhibit the entry of new market players.

    So, of course, the likes of Netflix, Amazon Prime, Disney+ are opening their large purses freely, in order to catch the best European titles, and therefore meet the 30 percent share of European works, which is a ‟sine qua non” condition for them to keep on, or start (in the case of Disney+, Hulu, HBO Max), offering their video on-demand services to EU consumers.

    This was a blessing for European film producers, directors and sales agents present at the EFM online 2021 session. Indeed, a lot of key deals were signed at the European Film Market, this year, for European titles such as French work ‟Petite Maman” from Céline Sciamma, Radu Jude’s Golden Bear winner ‟Bad Luck Banging Or Loony Porn” (from Romania), and many more.

    COVID 19’s negative impact on the production stage of film projects and how the UK and French film industry stakeholders rebounded

    There is another reason why current new film content has not met the high demand (for European titles and other international works) in the supply chain. Well, you guessed it, the COVID 19 pandemic is the cause, of course.

    Due to health and safety issues, the logistics of going into the film production stage have, for a while, seemed unsurmountable. Almost all film productions shut down, during the first European lockdown in February to June 2020. Then, everybody took a hold of themselves and went back to work, putting in place extremely stringent health and safety precautionary measures, pre, during and post production, such as:

    • administering PCR COVID test to all above-the-line and below-the-line production staff upon entry in the UK and France, and then on each day of production;
    • mandatory wear of personal protective equipment for all staff other than actors currently filming;
    • keeping the mandatory 2 meters’ apart distanciation rule, between all team members.

    Major talents and film producers would have none of the nonsense that COVID deniers would throw their way, with Tom Cruise going on record for his outburst towards UK film crew members who were flouting social distancing guidelines, on the Leavesden set of the 7th instalment of his ‟Mission: impossible” franchise, in December 2020.

    The panel for EFM online 2021 session, from the British film commission, provides vivid description of how UK film producers and their staff had to adapt, at very short notice, when the pandemic hit in 2020, and how they are regularly reviewing and improving their health and logistics protocols, in order to ensure that they are compliant with the latest health news and information about the virus.

    Also, the cost of insurance went through the roof, for most film productions around the world, making it impossible for many a project to move onto production stage. This disproportionately impacted independent filmmakers, to the point that governments stepped in, such as the UK government issuing a ‟Film & TV production restart scheme” for UK film and TV productions struggling to get insurance for Covid-related costs.

    Of course, at the end of the film supply chain, a major change occurred, thanks to the pandemic: the tyranny, imposed by major film studios and European governments, consisting in forbidding ‟day-and-date” release (i.e. a simultaneous release of a film on multiple platforms – most commonly theatrical and on-demand videos services), dissolved. Cinemas have been closed for a while, now, since March 2020, on-and-off, due to the pandemic-induced lockdown. Therefore, there is a change of paradigm, for film producers and directors, from asking themselves ‟Should we go for a day-and-date release?”, to ‟On which video on-demand service and/or streamer, my film will shine most?”.

    Indeed, die-hard fans of the theatrical window have started to yield, such as film major Universal pictures which released big films on streamers from March 2020 onwards.

    Other major studios have preferred to hold back releasing many big titles indefinitely, such as Wes Anderson’s ‟The French dispatch”, much to the chagrin of end-consumers and fans.

    EFM online 2021: filling the gap for more top-quality content with VFX hacks such as virtual production

    One of the major takeaways from the EFM online 2021 is that, due to this huge demand for content, film professionals need to produce more, faster, at an affordable cost, and in very high production value.

    This is where virtual production is coming, to deliver this faster, smoother and enhanced quality.

    From the moment where the initial upfront cost and investment of acquiring top virtual production tools and material have been incurred, it is a no-brainer: virtual production specialists laude the cost and time savings, as well as agility, induced by this new technology, predicting that every filmmaker will irresistibly move to virtual production in the near future.

    So what is virtual production? Virtual production is the use and incorporation of visual effects (‟VFX”) and technology throughout the production life cycle. While this process is not entirely new, the film industry is now paying much attention to virtual production, because it enhances production planning, increases shooting efficiency and reduces the number of expensive reshoots. Through visualisation, motion capture, hybrid camera, and LED live-action, the virtual production techniques that belong to the toolset of modern content creation are perfectly adapted to a COVID 19-era of film production.

    Potentially, virtual production would allow actors, and crew members, to shoot and work from multiple locations, in a safe environment where they have set up their respective COVID-19 health and safety protocols and bubble.

    The challenge now is for film professionals to jump on the bandwagon and swiftly obtain appropriate training on virtual production and other VFX tools and technologies, so that they can hit the ground running and offer their new much-needed skills to French and UK film productions.

     

    To conclude, while I would have liked all presentations and virtual events to be accessible to all participants, during the EFM online 2021 (festival organisers cannot pretend that the room has a limited number of seats, anymore, right?), I deeply enjoyed the virtual attendance of this film market and festival, getting a lot out of it, from catching up on the latest trends to catching up with our film clients and prospects via Cinando and the online EFM platform. We will be back!



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      Why getting an agent is critical, to make it in the creative industries

      In the creative industries, the talent is often represented by middle men, who reach out to end customers, and find avenues whereby, and marketplaces on which, the products and/or services and skillset of the talent they represent are marketed, sold, distributed, licensed, etc. So, in the art world, these middle men are art galleries and auction houses. In the book publishing sector, these middle men are called literary agents, while in the film industry, those representing the above-the-line talent (actors, directors, writers) are called acting agents and agencies. Even music composers have their own composer agents, with a handful of players in this niche, in France and the United Kingdom (‟UK”). So, why do you need an agent, as a creative? How do you find an agent? How will your relationship with the agent work?

      agent1. Why do you need an agent, as a creative?

      As a creative, as a talent, you have mostly honed your creative skills, be it your painting skills, your sculpting skills, your acting skills, your writing and literary skills, your fashion design skills, etc.

      This is a completely different skill set than the one needed to:

      • getting substantial work in your creative field, relying on smooth marketing tactics, social media and public relations skills;
      • networking with the major players in your creative field, be it the most bankable film directors, the most skilled film producers, the stalwart book publishers, the most wealthy art collectors, the largest fashion brands who will hire you as a model for their catwalk presentations, etc.
      • negotiating sales, licensing, distribution agreements;
      • negotiating service providers agreement to act in a film or write the musical composition and soundtrack to a film;
      • negotiating publishing agreements of a literary work with books publishers and online content providers;
      • managing, in a strategical and optimal manner, the career of the talent, and
      • doing some reputation management work, when and if the career and image of a talent is getting tarnished for some reason.

      Well, in a nutshell, you have the required job description of an agent, set out above!

      This is why you need an agent: because he or she will do all the things mentioned above, for you, in order to enhance your career as a talent, and get you some jobs, some bookings or some sales, depending on what you have to offer.

      Also, there are very low barriers to entry to most creative fields, since everyone can become a player in that field without having to obtain a particular practising license or authorisation from one’s government to become an artist, a book author, a painter, an actor, a film director, etc.

      Indeed, unlike regulated industries, such as the legal profession, the medical profession, the accountancy profession, the banking and finance profession, creatives do not need to pass any stringent test or exam to be granted the right to work their creative jobs.

      Therefore, the gatekeepers in the creative industries are the agents: since it is in their interest to only work with the best talent, they will pick and choose only the most successful and skilled gamers, designers, artists, painters, actors, film directors, writers, models, music composers, etc. to represent.

      So, if you want to be part of the club, in your creative field, and land those big fat contracts, you must find yourself a good agent.

      2. How do you find an agent?

      Most of the time, it is by word of mouth, or through connections that one finds an agent.

      Of course, being an alumni from a prestigious creative school, such as the National Film and Television School (‟NFTS”), in the UK, or the Royal Academy of Dramatic Art (‟RADA”) helps tremendously, especially since agents love mingling with young graduates there, attending their final and graduation presentations and reviewing their final graduation projects, to assess the amount of talent such graduates may have.

      Think Alexander McQueen, the famed, and now deceased, fashion designer who was immediately spotted as a major player among top fashion designers, by the most elitist fashion press, when he presented his MA graduation collection, at his college Saint Martin’s in 1992.

      Having a family member or friend in the business also helps, and there are countless examples of film actors who gave a major push to their offsprings, in France, the UK and the United States (‟US”) by ‟connecting them” to their agents.

      If you are not one for nepotism, then you could also approach and cold-call the best agents for your particular creative field, and present them with your portfolio of works and CV, in the hopes that they will retain you as their client. However, this route is the toughest one, and you will probably get a lot of rejections, if and when you get picked by an agent.

      The web is an excellent source of information to find the best agents in your creative field, in France, the UK and the US.

      For example, on the best articles I have ever read on the highly-secretive agenting business is ‟Le fascinant business des agents de stars”, which dissects the rarified group of famous acting agents in Paris, France.

      3. How will your relationship with the agent work?

      The agenting business is mostly an unregulated one, although France, ever the formalistic one, has put in place some rules and regulations relating to the agenting profession in its labour code and a decree on the remuneration of artistic agents, which caps the agents’ earnings at 10 percent of the gross remunerations paid to the talent.

      The excellent French streaming series, ‟10 pour cent (‟Call my agent” on English streaming channels) gives a great example of what acting agents do, for a mere 10 percent of the actors’ earnings.

      In the UK and the US, there is way more of a ‟laissez-faire” approach to the agenting business, although the UK has some statutory regulations set out in the Employment Agencies Act 1973 and the Employment Businesses Regulations 2003, which set some standards in terms of:

      • providing relevant information and advice to the agents’ clients (i.e. the talent);
      • conducting all affairs on behalf of the agents’ clients, and
      • keeping records, in particular of the contracts and visa application processes, entered into by the agents’ clients during the course of the creative activities.

      UK and US agents usually get 15 percent commissions, although I have seen percentage rates going as high as 50 percent, in the case of art galleries selling consigned art works on behalf of artists they represent.

      These discrepancies in the commission rates, and the various obligations owed by the agent to the talent, are caused by the variance in the provisions set out in the representation agreements entered into between the talent and his or her agent. Since the ‟freedom to contract” principle applies, the terms of the contractual agreements entered into between the parties are left mostly to the freedom of those parties, except for the rare statutory points mentioned above.

      Very often, at our law firm Crefovi, we get approached by creatives who signed very poorly drafted, and very unbalanced, representation agreements with their agents in the past. Therefore, we support them in terminating such agenting agreements, while attempting to recover any earning unpaid to them by these agents.

      Therefore, as a talent, it is always advisable to instruct an entertainment lawyer, in order to review, amend and negotiate the terms of any draft representation agreement sent by the agent, before such talent signs it.

      Also, it is useful to become a member of a trade union for creative practitioners, such as Equity, which may provide you with ongoing career, business and legal advice, along the way.

      If you want to be successful in the arts, you need a top agent in your creative field to represent you. However, an agent is not your friend, but your future business partner, so you need to establish some clear, transparent and fair working conditions with him or her, from the outset. The best way to achieve this is to instruct a seasoned entertainment lawyer, like us at Crefovi, to negotiate such representation agreement for you. Then, it should be plain sailing, a lot of hard work and, hopefully, success and recognition at the end of the line, in your creative field!



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        Monetising copyright in the book publishing industry

        During the ‟Lawfully Creative” podcast recorded with Joe DiMona, Crefovi’s founding and managing partner Annabelle Gauberti and Joe briefly discussed how hard it can be, for book authors such as Joe’s late father, Joseph DiMona, to earn a steady income as professional authors. We also queried what the main income sources for book authors were, and how they could be maximised to avoid a ‟peaks and troughs” lifestyle, which has unfortunately come to be associated with a life dedicated to literary works and creativity. Here is Crefovi’s take on income streams for authors and book publishers, in the publishing industry, and how to maximise copyright in the book publishing industry.

        Copyright in the book publishing industry1. Transfer of copyright in the book publishing industry

        The first owner of copyright, in any literary work (i.e. a novel, a biography, a letter, an essay, some lyrics for a song, a film script) is the person who wrote it (leaving aside national legislation, such as the one in the United Kingdom (‟UK”), which gives the employer the copyright in an employee’s work created in the course of employment). Therefore, the first owner of copyright in the book publishing industry, is the author.

        At the international level, copyright in literary works is recognised, and protected, by:

        There are also some national laws, relating to the recognition, and protection, of copyright in literary works, such as:

        Therefore, the first owner of copyright has the exclusive right to do certain restricted acts in relation to his or her literary work, such as to:

        • copy the work (known as the reproduction right);
        • issue copies of the work to the public (known as the distribution right);
        • rent or lend the work to the public (known as the rental and lending rights);
        • perform, show or play the work in public (known as the public performance right);
        • communicate the work to the public (known as the communication right), and
        • make an adaptation of the work, or do any of the above acts in relation to an adaptation of the work (known as the adaptation right),

        which, collectively, are referred to as primary copyright rights.

        Moreover, the first owner of copyright has the right to make a commercial use of his or her literary work, by:

        • importing copies;
        • possessing copies;
        • selling, exhibiting or distributing copies;
        • dealing with items that are used for the making of copies of the literary work, and
        • permitting premises to be used for a performance, or providing apparatus for such performance, of the literary work,

        which, collectively, are referred to as secondary copyright rights.

        Finally, there are personal rights, called moral rights, conferred upon the author of primary copyright works, which are quite distinct from the economic interests in the literary work. There are four moral rights, as follows:

        • Right to paternity: authors of literary works have the right to be identified as such, by requesting that their name be tied, or associated, with the work. In order to benefit, the author must assert his or her right.
        • Right to integrity: this is the right for the author of literary works to object to the derogatory treatment of his or her work, that is, that the work has been added to, altered or deleted in such a way to amount to a distortion, mutilation or otherwise prejudicial treatment. In other words, that is the right to respect his or her creation.
        • Right to disclosure: this is the right for the author to let go of his or her intellectual asset, which then goes from the private sphere to the public space. The author is the sole judge of the moment, and form, of the first communication to the public of his or her literary work.
        • Right to object to attribution: any person has the right for literary works not to be incorrectly attributed to him or her. The attribution may be express, but it can also be implied. Also, the author may, after the publication of his or her literary work, decide to repent and withdraw from the attribution of this literary work. This provides the author with a unilateral right to terminate his or her contractual obligations, and terminate any exploitation of his or her intellectual asset, provided that this author first indemnifies the publisher of the damages and consequences suffered by such publisher, upon termination of exploitation of his or her literary work.

        While the moral rights cannot be transferred from the first owner of copyright of a literary work, to another person, the primary and secondary copyright rights can be transferred to a third party, either temporarily or permanently, as bundles of rights.

        Usually, in the book publishing industry, the author/writer of a manuscript enters into a legal relationship with a publisher in order to publish the work and issue copies of it in sufficient quantities to satisfy the needs of the public.

        The author does this by virtue of a contract in which it either assigns, or grants an exclusive or non-exclusive license, to the publisher. In the case of an assignment, the transfer of copyright is permanent and irreversible, while in the case of a license, the transfer of the copyright in the literary work will terminate, and revert back to the author, on a termination date set out in the license agreement.

        The publishing agreement mainly grants the publisher primary copyrights, such as the rights of reproduction and distribution over a literary work, thus providing the publisher with the legal means necessary to publication.

        However, the publishing agreement often also specifies how secondary and subsidiary rights are to be dealt with. The author may decide to grant the publisher the right to exploit his or her work in other ways, by selling translation rights, for example, or negotiating with a magazine or newspaper to serialize extracts from his or her work, or organising the digital and electronic exploitation of a printed work.

        Sometimes, though, the author and/or his or her agent, will reserve these rights. In these cases, the agent of a successful and widely-known author may have very good contacts with TV and film companies and be better placed to negotiate options or deals directly with them. Or the agent and/or author may prefer to negotiate directly with the best players in the digital and electronic publishing space, rather than leaving an unsophisticated publisher of the print work do these negotiations or even exploit such digital rights.

        Regulation of the contract between the author and publisher is left to national legislation (i.e. the Berne convention and the WIPO treaty do not apply with respect to contracts between authors and publishers). While in some legal traditions there are few, if any, rules on the form and content of that contractual relationship, other countries dispose of detailed legislation on the formalities of the publishing contract and its content, as well as the rights and obligations of the parties and the way the contract ends.

        Indeed, on the one hand, the French IPC sets out several rules which narrowly explain what is allowed, and what is not allowed, in a French law-governed publishing agreement, since the French legislator has always the content creators’ best interests at heart. These are articles L.131-1 to L136-4 IPC.

        On the other hand, the UK CDPA is way more permissive, letting the parties fend for themselves when negotiating their contractual publishing arrangements, except for the obligation to have the license or assignment set out in a written agreement (section 90(3) CDPA) and that any license granted by the author is binding on every successor in title to his or her interest in the copyright (section 90(4) CDPA).

        So, how do book authors get paid? And how much?

        2. Work for hire payments

        The simplest form of payment, of an author, is a fee paid in exchange for work completed – whether it is an article for a magazine, contributions to an encyclopaedia, or a short non-fiction title for children. These ‟work-for-hire” payments are not normally repeated. In other words, it is a one-off fee for a specific job.

        This method almost always applies to artists and photographers providing illustrations (i.e. drawings, pictures) to accompany a publication.

        Additionally, in a ‟work-for-hire” contractual relationship, copyright is often assigned to the publisher, and this transfer of copyright can be a condition of payment.

        More specifically, many professional writers work to a standard range of payments based on the number of words, usually calculated per thousand. The sum per 1,000 words could be, for example, between Euros 200 and Euros 300, though much lower – and higher – figures are common, since the publisher may have to pay more if the writer is an expert in his or her field, or is required to do the work quickly because there is pressure on a deadline.

        Some kinds of publishing projects almost always carry a fixed fee. For example, authors of non-fiction titles for school pupils or children are typically paid a fee for the whole job, and this includes help with finding illustrations or photographs, writing captions, producing a glossary and index, as well as researching and writing the book. Hence, a 32-pages 6,000-words book might earn a fee of Euros 2,500 (a little over Euros 300 per 1,000 words). Writing a film script also carries a fixed fee.

        Usually, fees are paid once only. However, they can also be broken down into staged payments: for example, 25 percent paid on signature of the publishing agreement, 50 percent when the publisher receives an acceptable manuscript and the outstanding 25 percent balance when the additional work (including checking proofs and layout) has been completed. This is cash in hand, paid regardless of how the book sells when it is published.

        The writer, a ‟work-for-hire”, will not normally be paid anything further, even if the title is translated into many different languages.

        Consequently, the gross margin for reprints or translations can be substantially higher than the gross margin of the first print. This is because the writer’s fee and other one-off costs do not recur in the reprint costs.

        3. Royalties

        However, for authors of full-scale works (i.e. novels, essays, poetry books or textbooks), the usual method is to pay a royalty.

        Paying authors a royalty in the form of a percentage of sales revenue can favour publishers in two important ways:

        • First, authors may identify more closely with the progress of their book and will therefore make a greater commitment to its success. Also, publishers may want to build a long-term relationship with their authors in the hope that they will write several books and build on the reputation of their earlier titles, and royalties can contribute to that sense of partnership.
        • Second, paying authors as and when sales revenue is created can support cash flow.

        This royalty takes the form of a ‟pro-rata” percentage based on actual sales of the book. Typically, a novelist may receive a share of the sales price, expressed as a percentage of the local published, or retail, selling price for each copy sold.

        Educational and scientific publishers, however, often pay royalties based on the net sums received (i.e. net receipts) by publishers after discounts to booksellers or retailers.

        There is no such thing as a ‟normal” royalty rate, although many publishers use 10 percent as a reasonable benchmark.

        Authors of consumer titles, particularly those whose agents negotiate the publishing contract, may demand that royalties are paid on the selling price of their book (i.e. ‟recommended retail price”). However, publishers will remind such authors and agents that some sales channels can only be serviced by way of very large discounts. For example, a chain bookstore that takes important quantities of a lead title, holding stock as well as promoting the book in-store, may demand large discounts. So if the publisher pays a 10 percent royalty based on a selling price of Euros 20, but is receiving only Euros 10 in sales revenues, then the Euros 2 payment such publisher is making to the author (10 percent of Euros 20) is, in effect, a 20 percent royalty on the sum received (20 percent of Euros 10). A compromise can be reached, by which the royalty rate is lowered if the discount exceeds a certain level. From a publisher’s standpoint, paying authors on ‟net receipts” means that payments are kept more closely in line with the funds available from actual sales. However, authors reply back that their income should not be dependent on how big a discount the publisher has to make – they should be getting, as much as possible, the same amount on every copy of their book which is sold.

        Royalty accounts for authors are prepared at an agreed time or at regular intervals, for example, every six months, and any payments due remitted after that.

        These royalty payments may have some deductions made. For example, authors may have to pay for any of their own corrections in the proofs that exceed 10 percent of the setting cost. This is partly to discourage them from making last minute changes to the set text (which is an expensive process for the publisher).

        4. Advances

        Publishers will consider paying authors an advance on this royalty, if such authors write for a living.

        This money on account does two things:

        • it is a statement of commitment from the publisher, and
        • it supports the author to live and pay bills and living costs, while writing the book.

        Many authors of educational, business and scientific books do not write for a living. The books, or contributions to publications such as journal articles, represent an important part of their reputations and career advancement, but their main source of income derives from their practice as teachers, researchers, lawyers. Consequently, publishers of books for these sectors seldom pay any advance to such authors.

        An advance is not an additional fee. It is an up-front payment that has to be ‟earned out” (i.e. paid back) before further payments are made. Unearned advances will need to be written down, in the accounts, and will constitute a loss on the ‟Profit and loss” account.

        It is considered wise to only pay an advance that amounts to less than half of that which would be paid in royalties, when the first printing has been sold. Therefore, an advance rarely exceeds half the amount that would have been earned in royalties from a complete sell-out of the first printing.

        Advances are usually paid in stages: for example, 25 percent on signature of the head agreement, 25 percent on delivery of an acceptable and publishable manuscript, and the outstanding 50 percent balance on publication. Authors (and/or their agents) will demand a larger share upfront, while publishers will try to keep their cash by paying the largest portion of the advance nearest to the date when revenue starts to come in to cover that advance. A compromise could be a division into equal shares – a third on signature, a third on acceptance of the manuscript, and a third on publication.

        Large advances paid to celebrity authors can sometimes only be recouped if substantial additional income is derived from sales of film and TV options or serialization rights.

        5. Additional income

        Publishing contracts should specify what share of any additional and subsidiary income the author is going to receive.

        This money may come from translation rights or sales of editions to publishers in another country.

        Large lump sums may come from serialization rights sales to newspapers and magazines, or options on film, TV and broadcasting rights.

        Substantial sums can also come from merchandising rights, based on sales of goods showing famous children’s characters or personalities.

        Often, income derived from sales of subsidiary rights is shared between the publisher and author.

        In other cases, the role of the publisher is solely limited to traditional publishing without further involvement in other forms of exploitation.

        Money received as subsidiary rights income is remitted at the next accounting period, in addition to royalties owed to the author, and is set against any remaining advance or any expenses the author may have incurred.

        6. Monetising copyright in the digital environment

        Dealt with above was the primary agreement between the author and publisher (sometimes called the ‟head contract”), through which the author grants the publisher a license, or assigns his or her rights, to reproduce and distribute a literary work in tangible form (in print or by means of digital copies contained in tangible carriers such as CD-roms).

        However, making the manuscript into a print book, or even an e-book, is by no means the only way in which the potential in a manuscript can be exploited to the mutual financial benefit of author and publisher.

        Depending on the nature of the literary work, the publisher can do much more to take full advantage of the intellectual property entrusted to him, than merely publish a book, especially in the digital economy we live in today. There are many ways of raising secondary income by exploiting the assets represented by the book.

        Indeed, the potential may exist for the book to be serialized in a newspaper or magazine, digitized in whole or in part.

        The rights that enable the publisher to exploit these, and other possibilities, are known as subsidiary rights, one of the most commonly used of which is the right to reprographic reproduction, or the making of a photocopy.

        Crucially important in the digital era, are the electronic version/publishing rights because more and more print books are also published as e-books, and the mechanical reproduction rights (i.e. audio and video rights) because more and more print books are also published as audio books (even Spotify is diversifying further outside music with audiobooks).

        When the head contract is an assignment, the author assigns copyright to the publisher and therefore he or she transfers permanently over to the publisher the entire bundle of rights (subsidiary rights included), which the publisher is free to exploit, or not. Therefore, often, an assignment means the author receives no share of any subsidiary rights income. However, in some cases, the publisher will be obliged to pay the author his or her share of the financial rewards of such exploitation. The head agreement will then need to stipulate the proportion paid to the author, on the one hand, and to the publisher, on the other hand, with respect to this exploitation of subsidiary rights. For example, the split could be 50/50 and if so, the clause in the contract setting this out would be known as the ‟half profits clause”.

        When, however, the head agreement is an exclusive license, rather than an assignment, author and publisher are at liberty to negotiate the grant of rights – including the management of subsidiary rights. If the author authorises the publisher to exploit any or all of the subsidiary rights on his or her behalf, he or she will also determine in the contract the proportions in which the proceeds from the sale of these rights are to be divided.

        7. Collective administration of copyright in the book publishing industry

        To a large extent, the relationships in the book publishing industry are traditionally managed on an individual, or rather on a one-to-one basis, between the author and the publisher.

        Yet, the increasingly widespread use of the photocopier has led to an explosion of the unauthorised reproduction of printed works.

        As copying takes place everywhere and by everybody, it is a massive use of intellectual property which, if unauthorised and unpaid, represents huge losses to right holders. However, seeking permissions for every individual act of copying is materially impossible.

        Consequently, rights holders mandate organisations to manage their rights collectively. Such organisations issue licenses for the reproduction of literary works. These licenses permit copying only of extracts, and are not substitute for the purchase of a book. These organisations collect the fees and channel them back to the authors and publishers. In the case of literary works, such collecting societies are known as Reproduction Rights Organisations (‟RROs”).

        RROs exist in some 50 countries around the world, and are linked by their umbrella organisation, the International federation of reproduction rights organisations (‟IFRRO”).

        For example, the Copyright Licensing Agency Ltd (‟CLA”) and NLA Media Access Limited (‟NLA”) are the two UK RROs, while the Centre Français d’exploitation du droit de Copie” (‟CFC”), the Société des Editeurs et Auteurs de Musique” (‟SEAM”) and the ‟Société Française des Intérêts des Auteurs de l’Ecrit” (‟SOFIA”) are the three French RROs.

        Further links, indeed a network of rights and obligations, stem from the bilateral agreements that RROs conclude between each other so that, for example, when a license is granted in France for a work published in the UK, the French RRO transmits the fees collected to the UK RRO, which disburses them as royalties to UK right holders. And vice versa.

        In a voluntary system, such as in the UK, the RRO gets its authority from the mandates of its participating rights holders, which means that its repertoire could be limited by the exclusion of non-participating publishers or authors. In this case, users would still need to apply directly to rights holders in respect of excluded works.

        In other countries, such as in France, the national legislation supports collective management, and deals with the problem of non-represented rights holders by stipulating that, where an agreement is concluded, it covers the works of both represented and non-represented rights holders. This is an extended collective license, which creates compulsory collective management. The French RRO therefore collect royalties on behalf of participating and non-participating publishers and authors, and then distribute such royalties to all of them.

        In certain countries, such as in France, a legal, or statutory, license, means that although rights holders cannot prohibit the use of their material (under limitations of private use), they have the right to be remunerated for that use. This regime is therefore based on the existence of a copyright limitation that allows reproduction for private use, which takes place in a private sphere, on a non-commercial scale and from a legitimate source. Remuneration may take the form of a fee negotiated by rights holders and users, or ir may be set by law. In some cases, the legislation finds an indirect way to generate remuneration, by imposing a levy on copying equipment.

        Remuneration for reprography is part of the publishers’ return on their investment and creates revenue streams that enable them to bring new products to the marketplace. Moreover, even when a book is out of print and a return no longer accrues to the publisher, or royalties to the author, revenue streams from licenses may continue to flow. This applies equally to back issues of journals, magazines, and backlists of book publishers.

        Some RROs, such as the UK RROs NLA and CLA, and the French RRO CFC, have been mandated to manage reproduction in the digital environment. In this case, RROs need to be authorised to exercise this right on behalf of creative workers, when their mandate includes digital rights. It covers the transmission of content over the internet.

        Public performance rights (such as poetry readings) can also be managed by RROs. Some RROs are also authorised to administer mechanical reproduction rights such as the licensing of audio books. However, in France and the UK, such public performance rights and mechanical reproduction rights are not directly managed by French and UK RROs, so it is the respective syndication offices of French and UK publishers who deal with the management of those rights.

        In France, CFC manages exclusively the royalties on reprography (both for photocopy and digital reproduction), on behalf of all French publishers, while SOFIA manages the royalties collected on the right to borrow and lend books, on behalf of all French authors and publishers.

        In the UK, NLA manages the royalties on reprography rights, lending rights as well as the reproduction rights in the digital environment on behalf of its registered magazines and newspapers. CLA covers royalties on reprography rights, lending rights as well as reproduction rights in the digital environment, on behalf of its registered book publishers and certain registered magazines.

        The future is bright for book authors and publishers who know how to make the most of their copyright, and we, at Crefovi, are here if you need a hand in maximising income streams from your portfolio of copyright and other intangible assets!



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          How to remedy a breach of license which term is overran?

          In the creative industries, many intellectual property rights, such as copyright, trademarks, registered designs and patents, are subjected to licenses, in order for right owners and creators to monetize such rights. However, things do not always go smoothly during and after the term of the licensing agreement, between the licensor and the licensee. Therefore, what are the remedies that the licensor may put in place, in order to ensure that his or her intellectual property rights are fairly monetised? How to remedy a breach of license which term is overran?

          How to remedy a breach of license which term is overran?1. What is a license agreement?

          A license is the contract which authorises the use of a certain intellectual property right (‟IPRs”), be it copyright, a trademark, a design or a patent, for commercial purposes, by a licensee, in exchange for the payment of royalties to the licensor, i.e. the right owner. These royalties are usually computed as a percentage of the turnover generated by the sale of products manufactured, or services provided, by the licensee under this license agreement.

          A license is different from an assignment agreement, in that the former has a limited term, whereby the authorisation to use the IPRs granted to the licensee by the licensor will expire, after a period of time explicitly set out in the license agreement. On the contrary, an assignment is a perpetual and irreversible transfer of ownership of some designated IPRs, from the assignor to the assignee, in exchange for the payment of a consideration (usually, a one-off sum of money).

          To resume, a license is temporary and reversible upon expiry of a term, while an assignment is irrevocable and irreversible if made for consideration.

          2. How are licenses used in the creative industries?

          Licenses are often used in the creative industries, in order for creatives to monetise the IPRs that they created.

          For example, in the music industry, many copyright licenses are entered into, in order for music distributors to distribute the masters of sound recordings to new territories, which are difficult to reach for the music label which owns such masters because this label is located in a totally different geographical area. Therefore, the licensor, the music label, relies on the expertise of the local licensee, the national distributor, to put in place the best local strategy to broadcast the masters of its sound recordings, via radio plays, local streaming websites, TV broadcasting, and then to generate revenues through these various income streams and local neighbouring rights collecting societies.

          Another example of a copyright license, in the fashion and luxury sectors, is when a brand commissions an artist or designer to make some drawings and designs, which the brand will then display on its website(s), as well as in its various stores. These drawings and designs being protected by copyright, the brand, as licensee, will enter into a license agreement with the artist, as licensor, to obtain the right to use these drawings and designs in set locations and premises of this brand.

          Licenses are also extremely widely used in the context of trademarks, especially with respect to distribution of luxury and fashion products on new geographical territories by local distributors (who need to have the right to use the trademark to advertise, market and open retail locations), and also with respect to deals where the licensee manufactures products in which it has a lot of expertise (such as perfumes, cosmetics, children’s garments), which the licensee then sells under the trademark of a famous fashion or luxury brand, i.e. the licensor.

          In the technology sector, patent and/or copyright licenses are the norm. Indeed, softwares and sources codes are protected by copyright, so many tech companies make a living licensing their copyright into such inventions, to their retail or business customers, in exchange for some royalties and/or licensing fees. As far as technological products are concerned, those can be protected by patents, provided that they are novel, that an inventive step was present in creating such products, and that the invention is capable of industrial application. Therefore, most technological hardware products, such as mobile phones, computers, tablets, are protected by patents. And whenever there is a dichotomy between the creator of these products, and the manufacturers and distributors of such products, then some patent license agreements are entered into.

          Technology licenses are, indeed, so critical, that fair, reasonable and non-discriminatory terms (‟FRAND”) have been set up in order to level the playing field: FRAND terms denote a voluntary licensing commitment that standards organisations often request from the owner of an IPR (usually a patent) which is, or may become, essential to practice a technical standard. One of the most common policies, is for the standard- setting organisation to require from a patent holder that it voluntarily agrees to include its patented technology in the standard, by licensing that technology on FRAND terms. Failing or refusing to license IPRs on FRAND terms could even be deemed to infringe antitrust rules, in particular those of the European Union (‟EU”). For example, the EU commission sent a statement of objections to Motorola Mobility, for breach of EU antitrust rules, over its attempt to enforce a patent infringement injunction against Apple in Germany. The patents in question relate to GPRS, a part of the GSM standard, which is used to make mobile phone calls. Motorola accepted that these patents were standard essential patents and had, therefore, agreed that they would be licensed to Apple on FRAND terms. However, in 2011, Motorola tried to take out, and enforce, a patent infringement injunction against Apple in Germany, based on those patents, even although Apple had said that it was willing to pay royalties, to use the patented technology. Samsung was also the recipient of a statement of objections from the EU commission, after it sought patent infringement injunctions to ‟prevent Apple from infringing patents”, despite Apple apparently being willing to pay a license fee and negotiate a license on FRAND terms.

          3. How to remedy a breach of license which term is overran: what to do if the license has expired but your licensee keeps on using your IPRs?

          Due to poor management and in-house record-keeping, as well as human resources disorganisation and high turnover rate of staff, the licensee may breach the licensing agreement by keeping on using the licensed IPR, although the license agreement has reached its term.

          For example, in the above-mentioned case of the copyright license on some masters of sound recordings, the French local distributors and licensees of such masters overran the term of the license and kept on collecting royalties and revenues on those masters, in particular from French neighbouring rights collecting societies, well after the date of termination of this license. How, on earth, could have this happened? Well, as I experienced first hand at the music trade show Midem, many music distributors, labels and catalogues’ owners, such as music publishers, often mingle together in order to buy and sell to each other music catalogues, be it of copyrighted musical compositions and lyrics, or of copyrighted masters of sound recordings. Therefore, the terms of the first license agreement, between the licensor and the initial first licensee, become more and more blurry and forgotten, with basic provisions, such as the duration of the initial license, being conveniently lost into oblivion by the generation of successive licensees. Yes, I guarantee you, it happens very often.

          Another example, relating to the above-mentioned case of a copyright license granted by an artist, on his drawings and designs commissioned by a luxury brand, which used these drawings on its website(s) and stores, in order to promote its luxury products … even after the termination date of the license!

          So what can a licensor do, when he or she notices that the licensee has, or is, breaching the terms of the license agreement by overrunning its duration? How to remedy a breach of license which term is overran?

          First and foremost, the licensor must gather as much pieces of evidence as possible of such breach of the term of the license agreement, by the licensee. For example, the music label, licensor, may reach out to French neighbouring rights collecting societies and ask for the royalties statements for the French distributor, ex-licensee, up-to-date, in order to have some indisputable evidence that this ex-licensee kept on collecting the neighbouring rights royalties on the sound recordings which were the subject of the license, even after the termination date of this license. The French artist, whose designs and drawings kept on being used by the luxury brand after the term of his license with this brand expired, instructed our law firm to liaise with a French bailiff, in order to have this bailiff execute a detailed report of copyright infringement on internet, by taking snapshots of the webpages of this brand’s website displaying his drawings and designs.

          These pieces of evidence are indispensable, in order to prove the IPR infringement (since the license expired), to show it to the ex-licensee, if necessary, and to use it in any future lawsuit for IPR infringement lodged with a local court, if and when the ex-licensee refuses to settle further to receiving the ex-licensor’s letter before court action.

          You will have guessed by now that, indeed, once the ex-licensor has gathered as much conclusive evidence as possible that his or her IPR is being infringed by the ex-licensee because the latter keeps on using such IPR outside the contractual framework of the now-expired license agreement, the second stage is to instruct counsel, in the country where such IPR infringement is taking place, and have such counsel send a robust, cordial yet frank letter before court action to the ex-licensor, asking:

          • for the immediate cessation of any IPR infringement act, by stopping using the IPR at once;
          • for the evidence of, and information about, turnover and sales, relating to the sale of products and/or services, generated thanks to the use of the IPR beyond the term of the expired license, and
          • for the restitution of all those revenues generated by the sale of those products and/or services, generated thanks to the use of the IPR beyond the term of the expired license, as well as accrued late payment interests at the statutory interest rate,

          within a short deadline (usually, no longer than 14 days).

          Here, the ex-licensee has an option: either it decides to cave in and avoid a tarnished reputation by immediately complying with the terms of the ex-licensor’s letter before court action, or it may decide to act as a blowhard and ignore the requests set out in this letter. The first approach is favoured by anglo-saxon companies, while the second option is usual among French, and all other Mediterranean, ex-licensees.

          If the dispute may be resolved out-of-court, a settlement agreement will be drafted, negotiated and finalised, by the lawyers advising the ex-licensor and the ex-licensee, which will provide for the restitution of a very clearly defined sum of money, representing the sales generated by the ex-licensee during the period in which it overran the use of the litigious IPR.

          If the dispute cannot be resolved out-of-court, then the ex-licensor will have no other option left than to lodge a lawsuit for IPR infringement against the ex-licensee, which – provided the former has strong evidence of such breach of licensing agreement – it will won.

          Once the slate is clean again, i.e. after the ex-licensee has paid damages or restituted sums to the ex-licensor with respect to its use of the IPR after the termination date of the first license agreement, then ex-licensor and the ex-licensee may decide to resume doing business together. Here, I strongly advise that the parties draft a transparent, clear and straightforward new license agreement, which clearly sets out the termination date of this new future license, and foreseeable consequences in case the future licensee keeps on using the IPR beyond the end of such termination date. Using the services of either in-house lawyer or external counsel is very much advisable, in this instance, in order to avoid a repeat of the messy and damaging business situation which occured in the first place, between the licensor and the licensee.



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