Expiry Date of Copyright Assignment Contracts

An assignment is generally considered to be a transaction that results in the permanent transfer of copyrights. While this is a common belief, the Copyright Law in India provides for a default term of assignment when the assignment agreement does not specify a term. Section 19 of the Copyright Act of 1957 governs the mode of assignment of copyrights. Under Subsection 5 of this provision, it is stated that “If the period of assignment is not stated, it shall be deemed to be 5 years from the date of assignment”. Questions as to whether such default period is necessary and if yes, to whom and for what purpose must be deliberated upon. At the outset, the provision seems to be in favour of the author (usually the assignor) and against big house publishers/producers (usually the assignee).

Judicial position on Section 19(5) of the Copyright Act, 1957:

The copyright law, in India, is crisp and clear about the default duration of the assignment and it does not allow for any contradicting interpretations. The judiciary has tried to shed light on this provision’s application in specific scenarios. The following cases are key to understanding the said provision:

In the case of Dorling Kindersley (India) Pvt. V. Sanguine Technical Publishers, the Delhi High Court held that Section 19(5) must be read judiciously and not mechanically. It was highlighted that more weightage must be given to the intention of parties as against the clauses mentioned in the agreement. The Court, verbatim decided that

"The fair and meaningful reading of the agreement is essential in order to find out what the parties actually intended and whether they intended to assign the rights in perpetuity or for limited period and what is the indication of the term under the agreement. Thus, the judicious approach should be adopted while interpreting the agreement."

In Shemaroo Entertainment Ltd V. Amrit Sharma and Ors, the Delhi High Court placed importance on the words used in the contract to determine the intended term of an assignment rather than the strict application of Section 19(5). The court stated the following

"We think that the term of the copyright is defined by the wordings used as "absolutely", "worldwide" and similarly the royalty clause provides for payment of royalty for the period not exceeding the term of legally protectable copyright in the country. The usual term of copyright is for 60 years after the death of the author. Thus, if the royalty is intended to be paid for such period, coupled with the usage of the word "absolutely" and "worldwide", for prima facie view, it can be said that the said agreement is not the one which assigns the rights for limited period but assigns the rights absolutely."

In the case of Ilaiyaraja vs B.Narsimhasn, the Madras High Court mentioned that the act of receiving royalty past the 5 year default period is not sufficient to prove that the assignment is valid. It was clarified that assignment agreements must be written and signed to be enforceable. The court stated

“…the plaintiff had received the royalty under the license agreement, it does not mean that the act of receiving the royalty would amount to ratifying the original contract.”

In Saregama India Ltd. vs Suresh Jindal and Ors., the Calcutta High Court highlighted that the absence of a time period cannot mean absolute assignment by default. In order to understand the intentions of the parties, one has to look at all clauses of the contract and not just the one defining the duration. The court mentioned that

“…an assignment does not automatically mean it is an absolute assignment. The intention of the parties with regard to the nature the extent of assignment is required to be ascertained from the agreement itself. If upon proper construction of the agreement it means that the assignment is for a limited period then it cannot be contended that simply because an assignment of copyright has been made given absolute ownership with regard to the copyright it has to be for an unlimited period.”

In the case of M/S.Agi Music Sdn Bhd vs Ilaiyaraja, the Madras High Court specified that the law under Section 19(5) is a norm and that it has to be applied unless the contrary is evident. The implication of an assignment cannot be made just by virtue of receiving royalties. The court held that

“Any variation thereto would have to be the exception, and such exception is liable to be proved not merely by implication but conclusively. This is for the reason that the purpose of the prescription in Section 19 is the protection of rights of the assignor and this assumes paramount importance.”

Interpretation of Contracts:

Interpretation of contracts, in general, is governed by certain globally recognised principles. Guidelines such as interpreting technical terms in the context of the contract and awarding general meanings to words unless explicitly mentioned are some examples of such principles.

The study on how contracts should be interpreted is extensive and vast. No clear body of rules exists to govern the same consistently. The approaches towards the interpretation of contract are divided into objective, subjective, and literal approaches. Each of these differs in how much lenience the judge can take while interpreting the words in a contract.

In addition, the principles and approaches for interpreting contracts often contradict each other if applied simultaneously. Under such pretext, the application Section 19(5) must not depend completely on the interpretation of contracts.

A principle from the same body of guidelines states that the court must not accept the fact that there has been a mistake in the language of the contract easily since it is reviewed multiple times and then signed. If this principle is applied consistently, most cases would call for the application of Section 19(5) as the absence of the “term of contract” clause cannot be construed as a mistake.

Conclusion:

In a nutshell, the operation of Section 19(5) is usually favoured if the terms of the contract are not clear on the intention of the parties on the period of assignment. The courts have placed more weight on interpreting contracts to construe whether the parties had intended to assign the contract for a longer period. This approach seems to be mildly flawed as the purpose of Section 19(5) was to protect assignors from assignees who wish to take unfair advantage of perpetual assignment contracts. If there is an intention to continue the contract for a long period, the contract must mention the same clearly. In its absence, the court must apply Section 19(5) as a norm.

In the majority of cases mentioned above, the assignees are well-known producers with adequate access to lawyers and materials on contract drafting and vetting, therefore, a greater amount of responsibility must be placed on such corporate parties to ensure that the terms of the assignment contract are clear. A key point to ponder over is why such habituated producers would miss out on such an important clause in a copyright assignment agreement.