Licensing of creative content like cinematographic films or sound recording through digital platforms forms an integral part of the entertainment business. This post is in continuation of our previous post about the structure of a Digital Licensing Agreement. In addition to the definitions, grant of license and the consideration clauses in a standard license agreement, the parties must ensure that the following clauses are also included in the Digital License Agreement:
- Representations and Warranties : It is essential to ensure that both parties give representations regarding their validity, good standing and organization as well as their right and authority to enter into the license agreement. Further, it is required to obtain warranties with respect to the capacity and ability of both parties to perform the agreement.
Generally, the following representations are taken from the Licensor:
- The licensed content is original in nature and use of the content will not result in intellectual property infringement.
- The licensor is the owner or rights holder of the licensed content and has authority to grant the licensed rights
- The licensed content is in accordance with the applicable laws of the country.
From the Licensee’s end the following representation shall be taken:
- The Licensee shall not use the contents in any manner other than the form and manner specifically agreed between the Parties.
- If sub-licensing of contents is not permitted, then a representation stating that the licensee shall not allow any third party use the content.
- To stop use of all contents upon expiry or termination of the Agreement.
- The Licensee shall not directly or indirectly make any claims over the title of the content and shall given an acknowledgment that all rights, title and interest of the content shall at all times remain solely with Licensor.
- Digital Fingerprinting: Digital fingerprinting is a technology that assists content owners to exercise greater control on their copyrighted content through effective identification across various digital distribution platforms. The digital license agreement shall specify whether the Licensee shall have the right to fingerprint the content or not. If fingerprint rights are granted to the Licensee then the position of such rights in case of a conflict with Licensor shall also be specified in the license agreement.
- Term and Termination: Term of the license granted under the Agreement shall be clearly specified. Further, the agreement shall specify the procedure for renewal, while auto renewal clauses must be avoided if possible. The agreement shall also define the event upon which both parties can terminate the agreement. In order to maintain the relationship between the Parties, it is advisable to grant a 30 days grace period to the defaulting party to rectify its breaches, prior to termination of the agreement. The termination clauses shall also specify the consequences of terminations. Some of the key consequences of termination are listed below:
- Licensee to refrain from using or exploiting the licensed contents
- Licensee to destroy or return the licensed contents
- The Licensee fees already paid to be refunded on pro-rata basis or to be forfeited by the Licensor
- The details of clauses that will survive the termination of the agreement.
- Intellectual property rights: This clause shall specify that all rights, interest and title in the work shall at all time remain the sole and exclusive property of the Licensor. It is important to specify that there is no transfer of ownership of rights under the license agreement and only certain limited rights in the contents are transferred to the licensee which shall be used strictly in accordance with the form and manner specified in the agreement.
In addition to the aforementioned key clauses, a digital license agreement must also contain the following standard clauses:
- Governing Law and Jurisdiction
- Arbitration, if parties opts for arbitration
- No Partnership Clause
A legal contract shall come into existence only if it is signed by both parties. Hence, on execution of the agreement the parties shall affix their initials on each page of the Agreement. Further, it should be noted that all annexure and schedules attached to the Agreement should also be signed along with the agreement.
Authored by Nithin V. Kumar.
Contributed by Entertainment Lawyer Group of BananaIP
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