A new Copyright Contract Act entered into force in the Netherlands on 1 July 2015. Its objective is to improve the contractual position of authors and performing artists. These provisions are mandatory law and cannot be waived, which means that circumvention by an explicit choice of foreign law is not possible. The provisions on non-use and on unreasonably onerous clauses, which are voidable, apply retroactively. All other provisions only apply to contracts concluded after 1 July 2015. While the new legislation contains a lot of open definitions, case law should bring clarity in this respect. However, many interpretation issues between contract parties can be prevented by accurate, precise and complete wording.
The major part of the new legislation is incorporated in a new chapter of the Dutch Copyright Act (Chapter 1A. The exploitation agreement). The new provisions cannot be waived and are intended to strengthen the position of authors and performing artists. And they apply equally to their heirs and legatees. Irrespective of the law governing the agreement, the provisions apply if the agreement contains no choice of law and is governed by Dutch law, or if the exploitation of the copyright takes place mainly in the Netherlands.
Expansion of requirement of deed
A written document is now required not only for assignment of copyright, but also for granting an exclusive licence. The assignment/grant has to be interpreted restrictively. The Explanatory Memorandum to the new legislation states that doubts about the interpretation have to be decided in favour of the author.
Authors are entitled to fair compensation for granting a right of exploitation. The Minister of Education, Culture and Science can set a reasonable fee for a specific sector and a specific period of time at the joint request of an authors’ and a producers’ association.
Additional fair compensation
Additional compensation can be claimed if the method of exploitation was unknown when the agreement was signed. To qualify for this compensation, there has to be an “independent, distinguishable new medium from a technical and economic viewpoint”. This means that the author could not have foreseen this method of exploitation and its economic significance. If a new method of exploitation is regarded as a substitute – for example, DVDs instead of video-cassettes – there is no room for additional compensation. A claim for additional compensation can be made against a successive assignee. It is unclear if this could also be a licensee.
The author is entitled to higher compensation if the work becomes a success (foreseen and unforeseen), and the amount originally agreed is seriously disproportionate to the producer’s revenue. This is to be decided objectively and taking into account all of the circumstances. The Explanatory Memorandum to the new legislation indicates that the producer should be able to recoup his investments. Where the parties have agreed on a royalty fee linked to the volume of sales, a claim under the bestseller clause is less likely to succeed. An author can also enforce his or her rights arising from the bestseller clause against a successive acquirer of his or her copyright. A successive assignee could prevent the claim by stipulating the inclusion of an indemnity clause.
If the producer does not exploit the author’s work within a reasonable period, the author has the right to terminate the agreement. But this right can only be invoked if the author alerts the producer in writing, granting the author the opportunity to exploit or re-exploit the work within a reasonable period following the notice (unless exploitation is no longer possible). The non-use clause does not apply if the non-exploitation can be attributed to the author or if the producer has a major interest in continuing the contract that overrules the author’s interests, all according to the principles of reasonableness and fairness. In practice, interpretation issues can be avoided by adding a clause that specifies what parties consider a reasonable period. The non-use clause applies retroactively.
Unreasonably onerous clauses
Under the new legislation, unreasonable onerous clauses can be declared void in court including, but not limited to, the clause compelling an author to assign rights to his or her future work to the producer for an unreasonably long or insufficiently specified period. The Dutch Civil Code already allows for these types of clauses to be declared void. However, according to the legislature, by introducing this specific provision, the threshold may be lower. If the agreement contains an early termination clause for the benefit of the producer only, the author now has that same right under the same conditions. This provision applies retroactively.
The new legislation contains a lot of open definitions. 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 accurate, precise and complete wording in the agreement. Due to the retroactive effect of some of the new provisions, existing exploitation contracts should be checked carefully and, if necessary, be revised.