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Licensing and Assignment of copyright

A business may not always be capable of utilizing the full commercial potential of a copyrighted work all by itself. It is also possible that others in the market are better placed to commercially exploit the work. In such cases, besides exploiting the copyright itself, it may grant others the right to do so too, for payment of a fee. Depending on its needs and the commercial circumstances, it may also decide to sell the copyright completely, or grant exclusive licenses in which case it will not retain any rights in the work.
There are two modes of commercialization of copyrighted works – assignment and licensing (which may be exclusive or non-exclusive).
In real-life, assignment is usually done when the full gamut of the economic rights under copyright law are intended to be transferred (although partial assignment is also permitted under copyright law as discussed below). The duration is also typically kept as perpetual. When the commercial intent is to transfer limited rights only, licensing is preferred.
Consideration for either of the methods can be received either as a lumpsum amount or by way of a periodic royalty.
A. Assignment of copyright
When the creator of a copyrighted work intends to ‘sell’ the right to exploit the work, he can assign the copyright in the work. As per the Copyright Act, copyright in a work can also be assigned partly i.e. for a particular duration, or with a geographical limitation. For instance, you can assign the rights to a certain documentary film or graphics you have designed to a company for the next 5 years, only for the region of continental Europe.
The assignee is treated as an owner of the copyright with respect to the assigned rights. Therefore, an author of a book may either assign all rights in the book, including the right to make a movie, game, compilations, etc. out of it, or assign it in a limited way - such as the right to translate in French language only.
When a company is acquired, the acquirer may require assignment of copyright in all the works as a pre-condition to the deal. For example, if Harper Collins Publishers India Ltd. intends acquires a law books publisher (e.g. Eastern Book Company or EBC), it may require EBC to assign the copyright in the books published by it.
Copyright can also be assigned in a future work, that is, a work which in not in existence at the time of assignment. In such a case, the assignment takes effect when the work comes into existence. This provision is useful in real-life situations as it enables businesses to assume copyright over any material produced by consultants, freelancers or employees even prior to commencement of the work.


NOTE: In case of work done by employees, copyright vests with the employer by default, if there is no provision in the employment agreement, under the Copyright Act.


For example, a construction company may want copyright over designs of the building produced by architects, a technology startup may require copyright on all material produced by any experts engaged as online marketers, copywriters, software developers etc. In each of these cases, the work is created much after the consultant is engaged for his services. For this purpose, agreements between the business and the consultant (executed at the time of engaging the consultant) state that copyright in any work created by the consultant will be automatically assigned in favour of the business.
As per the Copyright Act, all assignments must be in writing to be valid. Therefore, assignment is either undertaken by executing an assignment agreement or incorporating a clause for assignment in another contract, such as a consultancy contract.

Under the Copyright Act, the assignment instrument must mandatorily contain certain terms. The agreement should contain the description of the work that is assigned, the nature of rights, and any consideration or royalty amount. For the purpose of discussion here, these will be referred to as Compulsory Assignment Terms in the rest of this document.
The assignment can be revised, extended or terminated on mutually agreeable terms. In addition, the geographical area over which the assignee can exploit the copyright, duration of assignment (the copyright may be assigned perpetually as well) and the consequences if he does not exercise the rights assigned should also be specified (these shall be referred to as the Optional Assignment Terms).


If the Optional Assignment Terms are not specified, the copyright act applies certain ‘default’ provisions.
For example:
  1. If no duration is specified, the assignment is considered to be valid for 5 years.
  2. If no territorial limit is specified, the assignment extends all over India (but not internationally).
  3. If there is no stipulation on the consequence of not exercising the assigned rights, the assignment terminates in one year.


If there are disputes related to the assignment, either party can file a complaint with the Copyright Board established under the Copyright Act. Such disputes could relate to non-use of the copyright, or other matters. The Copyright Board has powers to revoke the assignment, if 5 years have lapsed after assignment and the board is of the opinion that the terms of assignment are harsh to the assignor.

No filings are required for assignment of copyright under Indian law.
(See Sections 18-19A of Copyright Act)

B. Licensing

In an assignment, the assignee is considered to be the owner of the copyright (to the extent of the assignment) and is free to exercise his rights under the assignment in any way he/she/ the entity wishes. However, in case of a license the licensee’s use of copyright must be strictly as per the terms and conditions of the license agreement.  License is typically given for a limited period of time. It may also have territorial limitations, and its renewal may also be contingent on performance by the licensee. A copyright is licensed by entering into a license agreement which typically includes provisions identifying the work to be licensed, duration of license, rights licensed, territorial extent, royalty or lumpsum payments, conditions for revision, extension, etc.
Note that a person who has been assigned a copyright may choose to license his rights over the copyrighted material to others.
A license may also be granted on an exclusive basis - in case of an exclusive license, no other license can be granted by the owner of copyright and the licensee is the only one allowed to produce, distribute or otherwise benefit from the intellectual property. The copyright owner cannot exploit the copyright himself if he has granted an exclusive license, for the term of the license. An exclusive license curtails the freedom of the owner to grant a license to other entities and leads to his dependency on the exclusive licensee, therefore it is granted in limited cases, and may be subject to obligations such as taking mandatory steps and incurring certain minimum expenditures to promote the work, meeting minimum sales requirements, etc.
A copyright or trademark license need not always be entered into as a separate legal document. A license clause may also be a part of other commercial agreements, e.g. a marketing agreement for publication of books – where the copyright owner licenses the right to use limited portions of the content of the book for promotion, such as a preview of a chapter or the table of contents (as is done on Amazon.com).
In such arrangements, the license is often granted

i) on a non-exclusive basis, that is, the copyright owner may provide a similar license to other entities, and
ii) on a royalty-free basis, that is, no royalties are payable by the marketer to the copyright owner for the use of the copyrighted work in promotion of the material.

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