Copyright: Reversion and Contract Adjustment Rights

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Jane Lambert

Had the United Kingdom remained a member of the European Union, it would have been obliged to transpose into the laws of England and Wales, Scotland and Northern Ireland arts 20 and 22 of Directive (EU) 2019/790 of the European Parliament and of the Council of 17 April 2019 on copyright and related rights in the Digital Single Market and amending Directives 96/9/EC and 2001/29/EC (Text with EEA relevance.) OJ L 130, 17.5.2019, p. 92–125 ("the Digital Single Market Directive") by 7 June 2021, Art 20 provided a contract adjustment mechanism and art 22 a right of revocation.

The justification for a contract adjustment mechanism is set out in para (78) of the Directive's recitals:

"Certain contracts for the exploitation of rights harmonised at Union level are of long duration, offering few opportunities for authors and performers to renegotiate them with their contractual counterparts or their successors in title in the event that the economic value of the rights turns out to be significantly higher than initially estimated. Accordingly, without prejudice to the law applicable to contracts in Member States, a remuneration adjustment mechanism should be provided for as regards cases where the remuneration originally agreed under a licence or a transfer of rights clearly becomes disproportionately low compared to the relevant revenues derived from the subsequent exploitation of the work or fixation of the performance by the contractual counterpart of the author or performer."

Art 20 (1) provided:

"Member States shall ensure that, in the absence of an applicable collective bargaining agreement providing for a mechanism comparable to that set out in this Article, authors and performers or their representatives are entitled to claim additional, appropriate and fair remuneration from the party with whom they entered into a contract for the exploitation of their rights, or from the successors in title of such party, when the remuneration originally agreed turns out to be disproportionately low compared to all the subsequent relevant revenues derived from the exploitation of the works or performances."

Art 22 (1) was as follows:

"Member States shall ensure that where an author or a performer has licensed or transferred his or her rights in a work or other protected subject matter on an exclusive basis, the author or performer may revoke in whole or in part the licence or the transfer of rights where there is a lack of exploitation of that work or other protected subject matter."

The reasoning for this provision is in para (80) of the recitals:

"When authors and performers license or transfer their rights, they expect their work or performance to be exploited. However, it could be the case that works or performances that have been licensed or transferred are not exploited at all. Where those rights have been transferred on an exclusive basis, authors and performers cannot turn to another partner to exploit their works or performances. In such a case, and after a reasonable period of time has elapsed, authors and performers should be able to benefit from a mechanism for the revocation of rights allowing them to transfer or license their rights to another person. "

Following this country's departure from the EU, Kevin Brennan MP  introduced a Copyright (Rights and Remuneration of Musicians, Etc.) Bill into the House of Commons.  This bill contained just 5 clauses:

• Clause 1 would have entitled performers to equitable remuneration when the making available right is transferred by inserting a new s.191JA into the Copyright, Designs and Patents Act 1988.
• Clause 2 would have introduced rights of transparency, contract adjustment and revocation into contracts with composers and songwriters by inserting new sections 93D, 93E and 93F into the 1988 Act;
• Clause 3 would have introduced similar rights into contracts with performers by introducing new sections 191N, 191O and 191P into the Act;
• Clause 4 would have facilitated applications regarding equitable remuneration, transparency and contract adjustment by inserting a new S142A; and
• Clause 5 would have extended the Act to the whole UK.

The bill got as far as a second reading in the House of Commons on 3 Dec 2022 (see Hansard Vol 704  the Copyright (Rights and Remuneration of Musicians, Etc.) Bill). Mr Brennan's bill appears to have gained a lot of support from all three parties.  

Mr Brennan withdrew the bill but his proposals for new revocation and contract adjustment rights have been considered by the government.  The Intellectual Property Office commissioned Dr Richard Osborne and Dr Hyojung Sun to carry out research on the effect of the introduction of those rights into copyright law.   The authors have now completed their research and published their paper Rights reversion and contract adjustment on 6 Feb 2023.  This report does not make any recommendations but it informs the debate.

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