Creators’ Contracts – unfair?

“The existing contractual protection of authors, as included in copyright law and, indirectly, in general contract law, appears not to be sufficient or effective to secure a fair remuneration to authors or address some unfair contractual provisions.

Besides the causes that are generally put forward to explain this unbalance and lack of protection, new elements have emerged. Firstly, the increasingly dynamic markets for exploitation, notably digital markets, lead to the quick obsolescence of a contract agreed upon at any point in time. Secondly, due to the multiplicity of forms of exploitation and of undertakings exploiting works in the current environment, the contract between the publisher/producer and the author is only but one element in a web of contractual relationships and revenues streams. The examples given in this study of the difficulty to secure a fair remuneration in digital exploitations, of the practice of buy-out contracts, of the invocation of the presumption of transfer, of the refusal to pay CMOs remuneration for authors of audiovisual works, are illustrative of the shifting power among the stakeholders to the detriment of creators. A last factor is the cross-border dimension that increasingly characterises the exploitation and use of works, which is likely to enhance the discrepancies of the contractual protection of authors depending on the level of protection they enjoy in each of the countries involved.

The digital economy is based on creative works. A basic principle is that authors should be associated in the exploitation of their works and receive a fair remuneration each time the economic value of their work is exploited. The rules existing in some Member States to protect the creator aim, on the one hand, to define the conditions of negotiation so as to balance the bargaining power of both parties (acknowledging that such a balance is tilted against the author) and, on the other, to impose some basic obligations inherent to the bargain itself. Despite the additional recourse to the general principles of contract law, such rules do not address the following key issues:

  • the adequate remuneration of the author is not sufficiently ensured by provisions on copyright contracts;
  • the weaker position of the author in the enforcement of the protective legal provisions is largely ignored;
  • no adaptive or corrective measures allow to amend contracts governing a dynamic and evolving situation;
  • the obligation of an explicit determination of the scope of transfer of rights proves inefficient in preventing an all-encompassing, and time unlimited, assignment.”

This is the conclusion (pages 13-14) of a recently published study commissioned by the European Parliament’s committee on Legal Affairs on “Contractual arrangements applicable to creators: law and practice of selected Member States” which was conducted by KEA and CRIDS (University of Namur). Following this far-reaching conclusion, some recommendations were put forward to improve the level of fairness in copyright contracts such as imposing minimal formalities, an obligation of exploitation, obligations of transparency and reporting of financial streams and revenues related to the exploitation of works, unwaivable rights to remuneration for some kinds of digital exploitations, etc.

After several calls from European authors’ organisations (here and here) to put an end to buy-out contracts, this study provides evidence of the rights’ confiscation phenomenon that many European authors experience in their professional life. The study’s proposed remedies are particularly timely and should be taken into account by the European Commission in the current review of EU copyright rules.

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