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How to Protect a Copyright in a Licence Agreement

A number of people encounter copyrights on a daily basis, whether they create their own work or handle other authors’ creative pieces. What rights do you have as an author, and what as a licensee? What must a licence agreement contain? Read on to become familiar with the answers to these and other questions.

Muž řešící u notebooku autorská práva a licenci
9 minutes of reading
30. 1. 2022

Article chapters:

What’s a creative work?

As its name suggests, a creative work must be the result of its author’s creativity. Moreover, it must come in an objectively perceptible form (digital forms included).

Examples of creative work:

  • a musical piece,
  • a film,
  • literature,
  • fine artwork,
  • an architectural or urbanistic piece,
  • software,
  • a photograph,
  • a dramatic piece,
  • others specified in the Copyright Act.

Tip: What about pictures downloaded from the Internet – when can you use them and when is a licence required? Watch this video to find out.

What isn’t creative work:

  • the work’s theme as such,
  • daily news,
  • a principle, technique, method or procedure,
  • a discovery, a scientific theory,
  • a mathematical formula, a statistical graph.

Tip: A copyright extends to both a complete piece of work and its phases or parts, including its title and character names.

The purpose of a copyright

Upon creating a piece of work, its author gains moral rights, which can’t be transferred, and economic rights, which may be licensed to a third party. We’ll examine both in detail later on.

Tip: One of our previous articles recommends the steps to take when your copyright is infringed.

Employees’ and freelancers’ copyrights

Besides any valid agreements that the contractor or employee entered into with the order party, their business relationship at the time of creating the work plays a significant role. The employer automatically gains the copyright when their employee creates some work. On the other hand, a freelancer who creates work for their customers claims the authorship. Authorship itself can’t be sold or donated; the only option to make such a work available for use by a third party is a licence agreement.

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A summary of economic and moral rights

When a creative work is completed, its author gains the copyrights defined in the Copyright Act. These are divided into two categories: economic and moral.

Economic rights

These entitle the author to exclusively decide about the further use of their work. No other person may use it in any way without their permission. However, the author may grant a licence to use their work. Economic rights apply during the author’s whole life, plus an additional 70 years after their death.

An interesting detail regarding copyright economic rights: With an audio-visual piece of work, the 70-year period begins on the day the last of the following persons becomes deceased: the director, screenplay writer, or music composer.

The rights to use a copyrighted work include:

  • the right to reproduce the work,
  • the right to distribute the original or a copy, e.g., publishing an article or e-book on the Internet,
  • the right to rent the original or a copy,
  • the right to lend the original or a copy,
  • the right to communicate the work to the public (e.g., via television or the radio).

Moral rights

These are directly connected with the author’s personality and therefore can’t be transferred to anyone else. These rights apply only as long as the author lives. However, this doesn’t imply that the work may be used freely when the author becomes deceased, as their death has no effect on protecting the authorship itself – it can’t be appropriated (the author’s name must always be stated when further distributing their work) or used in a way that would decrease its value. The author’s relative or another close person may claim the right to protect the authorship even when the property rights are no longer valid.

The moral rights include:

  • the right to decide about making their work public,
  • the right to claim authorship (including the right to decide whether or not it will be indicated upon publishing and further use),
  • the right to the work’s inviolability – the author is entitled to make decisions regarding any alteration of the work; when another person uses the work, they must not decrease its value in any way.

An example from the practice of copyright: You might have heard about the dispute between the Prague Zoo and the painter Michal Cihlář, who took action to have fine artwork removed from the zoo’s premises. Although he wasn’t its author, the artwork strongly resembled his original work that he had created for the zoo. The Prague Municipal Court took Cihlář’s side and ordered the zoo to remove the exhibited artwork, upon the grounds that the zoo had negotiated an unclear licence agreement with the painter. In the end, the zoo managed to win the case in 2018, but only after ten years of dragging legal disputes.

Licence agreement

In a licence agreement, an author grants to a third person an authorisation to exercise intellectual property rights within the stipulated extent. i.e., the licensee may use the work as if they owned it themselves. Naturally, the agreement must be well-drafted to accommodate its purpose. And although, according to Czech law, a non-exclusive licence needn’t come in writing, we do recommend it to avoid one of the many possible complications connected with a verbal agreemen

Exclusive vs. non-exclusive licence

An exclusive licence forbids the licensor from granting the same licence to a third person, and from exercising themselves the right to which they have granted an exclusive licence. To illustrate, once an author signs a publishing contract, they may no longer publish their book themselves – they must leave this up to the publisher. A non-exclusive licence allows the author to grant this kind of licence to third persons as well.

Thus, a non-exclusive licence to one piece of work may be granted repeatedly. If a non-exclusive licence was granted before an exclusive one, the latter doesn’t void the former, unless the parties agree otherwise.

Another licence may be granted even with a valid exclusive one already in place. However, the exclusive licensee’s written permission is required – without it, the new licence agreement is null and void.

A tip from solicitor Ondřej Preuss: “Licensees will benefit from an exclusive licence further allowing them to alter the work. I also recommend expanding the licence validity outside the Czech Republic.”

Limiting the licence

A licence agreement needn’t entitle the licensee to use the work to a full extent – the licensee’s rights may be limited not only regarding the scope, but also the time and place of using the work. Unless the agreement clearly stipulates the ways of using the work, the licence is usually valid only within the Czech Republic and for the time usual for the particular work type.

Termination of a licence and withdrawal from a licence contract

A licence needn’t terminate upon the dissolution of the licence-holding legal entity or upon the death of the licence-holding physical person. Unless the contract specifically proscribes this, the rights and obligations stemming from a licence agreement are transferred to the legal entity’s successor or the physical person’s heir. If proscribed, the licence terminates.

Alternatively, a licence may be terminated by the licensor’s withdrawal from the contract for either of the following two reasons:

  • inactivity of the licensee – the licensee has an exclusive licence at their disposal, however, makes no use of it, which aggrieves the licensor. Prior to withdrawing from the agreement, the licensor must warn the licensee of this fact and demand remedy. However, the omission of this step may be negotiated in the agreement.
  • change of the author’s conviction – the author may withdraw from the agreement if an unpublished copyrighted work no longer corresponds with their opinions. Naturally, they’ll have to reimburse any and all damages to the licensee.

Publishing contract

A publishing contract is one of the sub-categories of a standard licence agreement, and allows the licensee to reproduce and distribute a musical piece, a work of literature, fine artwork or a photograph. In contrast to a standard licence agreement, an exclusive licence is granted by default. However, the author has the right to an authorial revision prior to publishing their work, which enables them to modify some of its details.

Sublicence agreement

Another legal term connected with licensing is a sublicence agreement. It functions as an amendment to a standard licence contract, and entitles the licensee to assign the rights obtained by the licence agreement to a third person with the author’s written permission, which needs to be a part of the licence agreement.

Muž dávající razítko na autorskou licenci

Licence fees

The licensee must pay into the hands of the author the licence fees stipulated in the agreement. These come in several forms:

  • A non-recurring fee – this form, although convenient for the licensee, isn’t widespread. It’s used mainly with licences that aren’t particularly valuable, and their period is of little importance.
  • Instalments – for the duration of the licence, the licensee makes regular repayments of the total fee stipulated in the agreement.
  • A fee based on the yields from the use of the licence – e.g., a portion of the total value (for instance, the total sales of a book).

Some final recommendations regarding licence agreements

  • If you’re planning to sign a licence contract, be mindful regarding its type – exclusive or non-exclusive.
  • Keep in mind to check its period – fixed or indeterminate term.
  • Clearly stipulate the provisions on withdrawal, remuneration, and the scope of the licensee’s authorization.
  • Avoid licence agreement templates downloaded from the Internet, as these aren’t guaranteed to protect your rights under all circumstances, whether you’re a licensee or licensor.

A custom-drafted licence agreement is undoubtedly the best option here – each work is specific and therefore needs to be protected thus to avoid complications, whether they be sanctions or loss of profit. Prevent copyright disputes and entrust us with drafting your licence contract. We’ll have it ready for you within 48 hours; what’s more, our package also includes a 60-minute consultation to ascertain that all matters are resolved.

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Author of the article

medailonek-preuss

JUDr. Ondřej Preuss, Ph.D.

Ondřej is the attorney who came up with the idea of providing legal services online. He's been earning his living through legal services for more than 10 years. He especially likes to help clients who may have given up hope in solving their legal issues at work, for example with real estate transfers or copyright licenses.

Education

  • Law, Ph.D, Pf UK in Prague
  • Law, L’université Nancy-II, Nancy
  • Law, Master’s degree (Mgr.), Pf UK in Prague
  • International Territorial Studies (Bc.), FSV UK in Prague

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