On August 7, 2017, in the matter of CF 47957-12-13, Dotan Israel v. Twist Animation Ltd. et al., the Tel Aviv District Court held that a fundamental breach of a copyright assignment contract entitled the assignor to rescind the contract, resulting in the return of the rights to the assignor. The Court also imposed statutory damages for the infringement of the rights thus returned to their original owner.

Dotan Israel (the “Plaintiff”) wrote and arranged certain music for a children’s online animation series produced by Twist Animation Ltd. (respectively, the “Music”, the “Series” and the “Defendant”). The Series is available on YouTube and other media platforms and has garnered approximately 3 billion views since going on air in 2010.

The parties entered into a set of agreements, the last of which was signed in September 2012, which included the assignment of the copyright in the Music to the Defendant for the amount of NIS 12,800 (approximately $3,600) (the “Agreements”). It was also agreed that the Plaintiff would be given credit for the Music, which would be “appropriate in scope and extent in the circumstances”. From the first airing of the Series until December 2012, this credit was indeed given by means of a slide appearing at the end of each episode, which constituted an integral part of the Series as shown, with the words “Original Music By: Dotan Israel” in the middle of the screen.

Since December 2012, no credit was given to the Plaintiff on some of the fourth season English-language episodes, nor on any of the seasons made available on YouTube in other languages. In June 2013 counsel for the Plaintiff approached the Defendant, demanding compensation for the lack of credit and notifying the Defendant of the rescission of the Agreements between the Parties. Subsequent to this approach the Defendant uploaded a new form of credit at the end of each episode, which did not satisfy the Plaintiff as it was not an integral part of the episode and the viewers could choose not to see it. The Plaintiff petitioned the Court for declaratory judgment according to which the Agreements were properly rescinded, as well as a permanent injunction against the Defendant’s use of the Music and statutory damages for infringement of his rights.

The District Court held that both refraining from giving credit and giving credit in the lesser form constituted breaches of the Defendant’s obligation to give the Plaintiff appropriate credit. First, it stated, there was no justification for changing the scope of the credit without the Plaintiff’s consent; second, the credit given was not “appropriate… in the circumstances” as it was not sufficiently highlighted in view of the significance of the Music to the Series. The Court thus concluded that the Defendants had fundamentally breached the Agreements, entitling the Plaintiff to rescind the assignment of copyright in the Music. This breach also constituted a breach of the Plaintiff’s moral rights in the Music under Israel’s Copyright Law, 2007 (the “Law”).

The Law gives the court discretion to award up to NIS 100,000 in statutory damages for each count of infringement of copyright or of moral rights. The Court upheld the Plaintiff’s 2013 notice of rescission and awarded him statutory damages in a total amount of NIS 800,000 (approximately $223,000) for breach of copyright (by using of the Music after rescission of the Agreements), and for breach of moral rights, in four separate musical pieces. The Plaintiff was also awarded NIS 133,600 in legal costs.

The importance of this case lies in the fact that although the assignment of rights had been completed and paid for, the breach of the obligation to give appropriate credit constituted a fundamental breach sufficient to allow the Plaintiff to rescind the Agreements and “claw back” his rights in the Music. This underlines the fact that failure to comply in full with the terms of any agreement assigning copyright can result in rescission of the agreement and return of the rights to the original proprietor, with all attendant damages.