An amended version of the bill regarding copyright contracts (Wetsvoorstel auteurscontractenrecht) was submitted to the Second Chamber of the Dutch parliament on 19 June 2012. The bill's objective is to improve the contractual position of authors and performers (together "authors") in relation to producers or publishers (together "producers") exploiting their work. Pursuant to this bill, the position of authors will be aligned with those of neighbouring countries.
Assignment of copyright
Under the pending bill, the author can grant the producer the right to exploit the work by either assigning the copyright to the producer or by granting permission (a licence). Assignment of rights on future methods of exploitation remains possible. Currently, a deed ("akte") is required for assignment of copyrights, but under the new legislation this will also be required for granting an exclusive licence.
The bill provides that an author is entitled to a reasonable compensation for exploitation of his work. The Minister of Education, Culture and Science may determine, after consultation with the Minister of Security and Justice, a reasonable fee for a specific branch and specific period at the joint request of author's associations and producer(s). The Explanatory Memorandum to the bill explicitly states that under certain circumstances such reasonable compensation can also be nil, a payment in kind or deemed to be incorporated in the author's fee.
Further, the bill introduces a "bestseller clause": the author is entitled to a higher compensation if his work becomes a success and the amount originally agreed upon is seriously disproportionate ("ernstig onevenredig") compared to the producer's revenues. Whether this is the case is to be decided from an objective point of view and taking into account all the circumstances of the matter. The Explanatory Memorandum indicates that the producer should be able to recoup its investments. Also, if the parties have agreed upon a royalty fee linked to the volume of sales, in practice this will probably set aside the bestseller clause. An additional fee can be claimed if the method of exploitation was not known at the signing date of the agreement. If the producer has transferred the copyright to a third party, the author can claim the bestseller/additional fee from this third party.
The presumption of assignment of rights in favour of the film producer remains unaltered under the new legislation. However, persons who delivered a substantial contribution to a film ("een wezenlijke bijdrage van scheppend karakter") (e.g. the main director, scriptwriter, writer of the dialogues and composer) will be entitled to a pro rata fee if they assign their rights to the producer. This means that it will not be allowed to pay such authors a (one-off) lump sum. What exactly is meant by a "substantial contribution" is not clear yet (e.g. the special effects creator); this is to be further decided in case law.
Non use clause
The bill further provides for a non use clause: if the producer does not exploit the author's work within a reasonable period, the author has the right to dissolve the contract. Such right can, however, only be invoked if the author alerts the producer in writing granting him the opportunity to (re-)exploit the work within a reasonable period following such notice.[i] The non use clause does not apply if the non-exploitation can be imputed to the author or if the producer has a major interest in continuation of the contract that overrules the author's interests according to the principles of reasonableness and fairness. In practice, interpretation issues can be avoided by adding a clause that specifies what the parties consider to be a reasonable period.
Also, under the new legislation, unreasonable clauses can be declared void in court, including but not limited to the clause compelling an author to assign rights to his future work to the producer for an unreasonably long or insufficiently determined period. Under Dutch law it is already possible to have such clauses declared void on the basis of 6:2 Dutch Civil Code. However, according to the Explanatory Memorandum, by introducing this specific provision, this might indicate that a lower threshold will apply than is currently the case.
The new provisions regarding exploitation contracts[ii] solely apply to contracts between authors and producers that have the main purpose of granting a producer the right to exploit the work.[iii] Hence, the rules do not apply to contracts between operators or if no author is involved. Further, licence agreements with end users that solely grant rights to such end users (e.g. use of signs, websites, and software licences) do not fall within the scope.
Irrespective of the law governing the agreement, these new provisions will apply to (foreign) producers if the contract contains no choice of law and it is governed by Dutch law or if the work is exploited mainly in the Netherlands.
Dispute resolution committee
Finally, the bill creates the basis for establishing a dispute resolution committee. Following a committee's decision, the parties have three months to initiate legal proceedings. After expiry of this period, the committee's decision is considered an agreement between the parties.
The exact scope of many of the provisions introduced under the new legislation is still unclear. Case law should bring clarity in this respect. However, we feel that a substantial part of potential (interpretation) issues between the parties can be prevented by including proper wording in the agreement. In respect of (exploitation) agreements with authors currently running, we advise to carefully review these to verify if they have to be revised.
[i] Unless exploitation is no longer possible, see art. 25e sub 3.
[ii] The provisions set out in chapter 1a, see art. 25b sub 1.
[iii] Unless art. 3.28 BOIP applies or if art. 25f applies, see Art. 25b sub 1 and sub 2.