The Law of Ukraine “On Copyright and Related Rights” (Section IV, as amended on 15.04.2023) (hereinafter – the Law), as well as the Civil Code of Ukraine (Chapter 75), provide for provisions on the possibility of disposing of intellectual property rights by copyright and related rights holders.
In particular, Article 48 of the Law stipulates that the disposal of proprietary rights to copyright or related rights objects may be carried out on the basis of relevant transactions – contracts, namely:
- an employment agreement (contract) – in terms of the conditions for the distribution of proprietary rights to a work for hire or work performance, a work phonogram, a work videogram;
- a contract for the creation and use of a copyrighted work or related rights object;
- an agreement on the transfer (alienation) of economic rights to a copyright or related rights object;
- a license agreement for the use of a copyright or related rights object;
- a public license for the use of a copyrighted work or an object of related rights;
- any other transaction concerning the disposal of property rights to a copyright or related rights object.
In this article, we will consider in detail the peculiarities of a license agreement for the use of a copyright or related rights object (hereinafter – the license agreement), and in the next article (in order not to burden you with a large number of complex and boring concepts) we will focus on the agreement for the transfer (alienation) of exclusive property rights to a copyright or related rights object.
License agreement for the use of intellectual property rights
A license agreement is an agreement where one party (the licensor) grants the other party (the licensee) permission to use an intellectual property object (license) on the terms and conditions mutually agreed upon by the parties in such agreement.
The license agreement is related to the use of the relevant intellectual property rights object, which implies that the person who receives the relevant rights to use the intellectual property rights objects on the basis of such an agreement will receive commercial benefits from such use. In addition, a license agreement is related to the restriction of distribution of the relevant intellectual property rights in the form of the possibility (if provided for in the license agreement) of further granting a sublicense to the relevant intellectual property.
Main features of the license agreement
- The parties to the agreement are the licensor and the licensee, who may be both individuals and legal entities. The licensor grants the relevant permission, and the licensee undertakes to use the object of intellectual property rights under certain conditions (e.g., payment of remuneration).
The law does not require that such an agreement be paid for, i.e., a license agreement may be either paid or gratuitous.
- A license agreement is considered to be concluded if the parties have agreed on all material terms and conditions.
- The license agreement shall specify the type of license (exclusive or non-exclusive), the scope of use of the intellectual property object (listing the specific rights granted under the agreement, the methods of use of the said object, the territory and term for which the rights are granted, etc.), the amount, procedure and terms of payment of remuneration for the use of the intellectual property object, as well as other terms and conditions that the parties consider appropriate to include in the agreement.
- The license agreement covers both the license to use the intellectual property object and those additional conditions of its use that are required from the parties to the agreement to satisfy their interests.
- Both the Law and the Civil Code of Ukraine contain a number of provisions designed to deal with cases where the parties to a license agreement have not agreed on the terms and conditions regarding the type of license, territory and term for which the rights are granted. Thus, it is believed that:
– a non-exclusive license is granted under a license agreement, unless otherwise provided by the license agreement;
– if the license agreement does not specify the territory of the license agreement, the license applies to the territory of Ukraine;
– if the license agreement does not specify the term for which the license agreement applies, the agreement shall be deemed concluded for the period remaining until the expiration of the exclusive property right to the intellectual property object specified in the agreement, but not more than for five years.
- The subject matter of the license agreement shall be the respective rights to use the intellectual property object. These rights must be in force at the time of entering into the license agreement. In other words, a license agreement cannot grant the right to use an object that will arise for the licensor only in the future.
- The license agreement must clearly set forth the rights to use the object granted to the licensee and the methods of such use. Under the license agreement, the licensee is granted only those rights to use the object and only in the ways expressly provided for in the license agreement. All rights to use the intellectual property object and methods of its use that are not specified in the license agreement shall be deemed not granted to the licensee.
- A license agreement is not subject to mandatory state registration. However, such registration may be carried out at the request of the parties in accordance with the procedure established by the legislation of Ukraine. Therefore, the absence of registration does not affect the validity of the rights granted under the license agreement and other rights to the relevant intellectual property.
Advantages of entering into license agreements for the disposal of intellectual property rights:
- The licensor remains the owner of exclusive property rights to the relevant intellectual property. That is, the licensee receives the right to use the relevant object in the ways specified in the license agreement, and does not become the owner of copyright or related rights to the relevant object
- It is possible to limit the transferred rights to use the relevant intellectual property object (in terms of the scope of rights, territory, term)
- You can enter into an unlimited number of license agreements if they are non-exclusive licenses. That is, for example, you can simultaneously grant permission, by entering into the relevant license agreements, to use your same work to different persons, in different ways, for different periods of time
- It is possible to use the respective intellectual property rights object in parallel with licensees
- It is possible to choose the optimal license fee (royalty, lump sum payment or a combination thereof)
- It is possible to issue a sublicense
Thus, license agreements are one of the main types of agreements in the field of intellectual property, which is widely used to regulate legal relations between authors/artists and labels/publishers, between users of copyright and related rights (production companies, advertising agencies, television, producers in the television, film, entertainment and entertainment events industry, etc; between users of computer technologies/inventions/industrial goods, etc. and owners of software copyrights/patents/trademarks/industrial designs; between writers/artists/architects and respective users of the results of creative and intellectual activity of such copyright holders – publishing houses, galleries.
An important feature of the license agreement defined by the new Law of Ukraine “On Copyright and Related Rights”
After the Law came into force on January 01, 2023 (as last amended on April 15, 2023), a significant update was introduced, which declares the right of the author, performer, phonogram and videogram producer to receive fair remuneration for the use of the relevant copyright and related rights objects in the appropriate ways determined by the Law and the Law of Ukraine “On Effective Management of Property Rights of Copyright and (or) Related Rights Holders”.
This right is guaranteed by Article 12(3), Article 38(3), Article 39(3) and Article 40(3) of the Law, respectively.
As for the disposition of this right to fair remuneration, there is a corresponding restriction relating to the license agreement and the agreement for the transfer (alienation) of intellectual property rights. Namely, the terms and conditions of transactions on the disposal of property rights to copyright or related rights objects regarding the transfer (alienation) or granting of a permit for use (license) with respect to the property right to fair remuneration provided for in Article 12(3), Article 38(3), Article 39(3), Article 40(3) of this Law, respectively, are void (Article 48(1)(2) of the Law).
In the context of entering into a transaction such as a license agreement, this means that such an agreement cannot contain a condition that the licensee (the one to whom the license is granted) also receives the right to receive fair remuneration for the use of the relevant intellectual property rights in the ways specified in the license agreement.
In other words, the right to fair remuneration belongs exclusively to the author, performer, phonogram and videogram producer, respectively, and is transferred only to the heirs or successors of the author, performer, phonogram and videogram producer, and cannot be licensed to other persons.
We have extensive experience in drafting intellectual property license agreements on individual terms and conditions determined by the client, as well as provide written comments on the specifics of further use of such a license agreement, taking into account the practical details of our client’s business activities. So, please contact us, we will be happy to assist you.
