Introduction
Artists may not own their works
Transfers versus licensing
Sole licences versus exclusive licences
Advice for creators
Much discussion has arisen in recent years regarding the copyright dispute between Qing-feng Wu, frontman of Taiwanese band Sodagreen, and his former manager and mentor Will Lin. The two-year dispute temporarily came to an end in September 2021, after Lin decided not to appeal a first-instance criminal judgment following civil and criminal actions against Wu being dismissed by courts one after another.
Many fans expressed surprise at the notion that singers could be prevented from performing their own songs. In order to bridge the gap between such an anomaly and the legal reality, it is essential to understand copyright legislation and practice in Taiwan.
Artists may not own their works
According to the Copyright Act, a "musical work" can constitute a song, its lyrics, its melody, or both its lyrics and its melody. A musical arrangement thereof, however, is regarded as a "derivative work". In addition, a vocal or instrumental performance of a work in public is deemed to be a "public performance" protected by the Copyright Act. Who is entitled to utilise the copyright of the resulting work and performance? The following section of this article examines how an author is different from an economic rights holder with regard to a musical work.
Who is the author of a work?
The author of a work is the creator thereof. The creator can be an actual person or a juristic entity (ie, a legal organisation that can become the subject of rights and obligations, such as a company, a consortium or an association).
In principle, the author of a song or musical arrangement is the creator (ie, the singer). If, however, an agreement (eg, in the form of employment and commission) exists between the creator and a record label, management company or other entity, the terms thereof defining authorship during the effective period are critical. If the agreement makes no stipulation as to how authorship is defined during the effective period, the provisions of the Copyright Act shall be considered to govern – specifically, the creator of the song is deemed the author.
According to articles 15 to 17 of the Copyright Act, the author of a work shall enjoy the moral rights thereof, including:
- the right of disclosure – the right to decide whether and when the work is to be publicly released;
- the right of attribution – the right to decide whether and how to indicate their name in the credits; and
- the right of integrity – the right to prohibit others from distorting, mutilating, modifying or otherwise changing the content, form or name of the work.
Who is entitled to economic rights from a work?
An "economic rights holder" is defined as the party entitled to exploit the economic rights of a work. In terms of derivative works and performances of a musical work, the economic rights holder enjoys:
- the right of reproduction;
- the right of distribution;
- rental rights;
- broadcasting rights;
- the right of public performance; and
- the right of public transmission.
When it comes to a creator performing their own songs, the right of public performance is invoked.
In principle, the ownership of economic rights for a work is enjoyed by the author of the work. If the author is a singer, this principle is maintained. In, however, the presence of an agreement (eg, in the form of employment or commission) between the singer and a record label, management company or other entity, attention should be paid to any stipulation in the agreement defining ownership of economic rights to work created by the author during the term of the agreement. If a singer is an employee, the employer (ie, the record label or the management company) enjoys ownership of economic rights according to article 11 of the Copyright Act, unless the agreement stipulates otherwise. Further, the economic rights holder is entitled to transfer or license the diverse economic rights in whole or part. It is thus entirely possible for economic rights to a work to be shared among multiple parties.
Accordingly, the author (the creator) and the economic rights holder (the beneficiary) can be the same or different entities. Different economic rights may even be enjoyed by different entities. If a creator establishes any kind of agreement, it is important to clarify which parties will enjoy authorship and economic rights of the work.
A common doubt for creators in disputes over the enjoyment of copyright occurs when a creator allows a company to use a work without wishing to give it to the company. The practices of transfers and licensing are vastly different, with notably divergent legal effects arising therefrom.
Transfers
Provisions on transfers are set out in article 36 of the Copyright Act. A "transfer" involves the ownership in a work being transferred to another person. For example, if A transfers to B the economic rights in the 20 musical works of A's best-selling songs, B becomes the holder of the economic rights to those 20 musical works.
Licensing
Provisions on licensing are set out in article 37 of the Copyright Act. When it comes to licensing, the ownership does not transfer. For example, if A licenses C the economic rights in the 20 musical works of A's best-selling songs, while A remains the economic rights holder to the 20 musical works of the hit songs, C is the licensee thereof and may exploit them pursuant to the licence agreement between A and C.
Accordingly, an author collaborating with others to make their works stand out in the marketplace should identify whether they are transferring their works to others or just licensing others to exploit them. When copyright has been transferred, the author will have little or no control over how the work is exploited in the future. In the case of a licence, the author retains copyright and the licensee is allowed to exploit the work only within the scope of the licence, affording the author considerable control over the exploitation of the work.
Sole licences versus exclusive licences
Under the licensing structure, an author may choose to grant an exclusive or non-exclusive licence to others for the economic rights in their work.
Exclusive licences
Provisions on exclusive licences are set out in article 37(4) of the Copyright Act. If an economic rights holder A exclusively licenses their musical work to a licensee B, only B may exploit the licensed musical work. Even the original rights holder is not allowed to do so, unless the agreement states otherwise. As a result, within the scope of an exclusive licence, only the licensee (eg, a record label, a management company, a music collective management organisation, or a media or streaming media platform) may exploit the musical work, its derivative works and/or performances in the future unless otherwise stipulated by the author or a third party that enjoys the economic rights to the musical work. Neither any third party nor the author A is allowed to freely exploit the musical work, its derivative works and/or performances.
Non-exclusive licences
Provisions on non-exclusive licences are set out in article 37(3) of the Copyright Act. If an economic rights holder A non-exclusively licenses their musical work to a licensee B, not only is B allowed to exploit the licensed musical work in the future, but the economic rights holder A is also entitled to exploit the licensed musical work themselves and may grant a non-exclusive licence of the said licensed musical work to a licensee other than B. B may not sublicense the rights under the licence to any third party for exploitation without the consent of A. Consequently, in the scope of a non-exclusive licence, the author enjoying the economic rights to the musical work, the licensees (eg, a record label, a management company, a music collective management organisation, or a media and streaming media platform) and any other third parties with a non-exclusive licence may exploit the musical work, its derivative works and/or performances. A non-exclusive licence can serve as an option for singers who want to perform their own songs freely while making profits (in terms of royalties from licensing) from their songs at the same time.
Sole licences
When creators decide how to collaborate with others, doubts often arise with regard to whether they have to get permission from the company to which they licensed their work in order to perform it. In fact, there is a difference between a sole licence and an exclusive licence.
Sole licensing permits the exploitation of a work by a single entity. The original rights holder is unable to license any third party to exploit the work but is allowed to also exploit it themselves. When the economic rights holder A solely licenses their musical work to a licensee B, not only is B allowed to exploit the licensed musical work in the future, but the economic rights holder A is also entitled to exploit the licensed musical work themselves, while A can no longer license the licensed musical work to any other third party.
Hence, a sole licence is essentially a non-exclusive licence, except that there can only be one licensee.
To avoid the situation where a creator cannot freely exploit their own creation, the following strategies are recommended.
Get to know partners to avoid disputes
When deciding how to collaborate with others, a creator should confirm the role they want to play in the collaboration (eg, whether they wish to retain full control over the work or authorise others to manage the work) and what they wish to achieve through the collaboration – for example:
- whether profit matters;
- whether the emphasis should be put on wide exposure; and
- whether higher profits or collaboration with the company are most important.
Such concerns are affected by various aspects of copyrights:
- the enjoyment of copyright;
- whether it is transferred or licensed; and
- whether a licence is an exclusive licence, a non-exclusive licence or a sole licence.
There are also conditions for licensing and profit-sharing. The more a creator understands their own needs, the better they can articulate their expectations and embody them in their collaboration.
A creator should also clarify whether any form of contractual agreement exists between the creator and others regarding the copyright of their creation. It is important to note that a contract is not necessarily a written document signed by both parties. Verbal discussions, faxes, messages on social media and other things that reference the intentions of the involved parties can be considered to create a contractual relationship or serve to interpret doubtful terms of the contractual relationship under Taiwanese law.
If the economic rights to a creator's work are to be enjoyed by another party, the creator should check whether all economic rights to their work are enjoyed by the same person or by others as well, either by transferring or by licensing. For instance:
- rights to the reproduction of a song's lyrics and melody may be enjoyed by a record label;
- rights to derivative works of a musical arrangement may be enjoyed by a music production company; and
- rights of broadcast, public performance and public transmission may be enjoyed by a music collective management organisation, in whole or in part.
In this way, the creator can be fully aware of whether the exploitation of their work (eg, a performance thereof) infringes on the economic rights of others.
Disputes can only be avoided when creators fully understand themselves and their collaborators.
Prevention is better than cure
A good agreement elevates the creator, while a bad agreement results in discord and disputes.
Special items that creators should pay attention to when they negotiate with others include:
- the process of creation;
- how to retain evidence of communication with partners during the negotiation;
- whether the wording of the agreement is sufficiently clear to avoid any doubts over its interpretation;
- whether there are conflicting or contradictory clauses that may cause future disputes;
- whether there are any difficulties or doubts in the implementation of the mechanisms for:
- the calculation and payment of royalties;
- the mechanism for checking royalty books; and
- the mechanism for terminating the partnership.
It is beneficial for creators and all parties involved if they are able to agree with one another on any controversial item in advance and to reflect the negotiated solution in the text of the agreement.
In the event of a copyright dispute between a creator and other parties, it is important to set the stop-loss point immediately. Subsequent actions include:
- identifying the possible rights involved and the scope of the dispute;
- confirming the object and duration of the dispute;
- collecting and preserving relevant evidence;
- estimating the possible damages and the amount of money involved; and
- assessing possible legal action.
To minimise the loss, remedial actions must be quick, exact and decided on a case-by-case basis.
For further information on this topic please contact Winona Chen at Lee and Li Attorneys at Law by telephone (+886 2 2763 8000) or email ([email protected]). The Lee and Li website can be accessed at www.leeandli.com.