The available royalties were from the Australian retransmission statutory scheme and the Australian educational copying and communication statutory scheme and there were royalties in respect of the Script and the Film.
In the Co-Production Agreement, it is acknowledged that “the underlying rights which comprise the chain of title for the Film and which will grant exclusive rights in the script for the Film…reside with” Agents for Co-Producer B and are to be “acquired by” Co-Producer A.
On the basis of the documents available, it was not clear whether there was an acquisition of copyright in the script by Co-Producer A from the Agents for Co-Producer B, because Screenrights was not provided with a copy of the “Underlying Rights Agreement” referred to in the Co-Production Agreement. However, it is clear from the Co-Production Agreement that the grant of a share to Co-Producer A in the exclusive licence to exploit the script was subject to payment by Co-Producer A of a financial contribution in accordance with the Financing Plan.
It was uncontested that Co-Producer A paid a partial amount of the proposed financial contribution. The Co-Production Agreement did not contemplate a proportional adjustment of shares in the exclusive licence in the event that a party does not contribute the full amount.
As Co-Producer A did not pay the full financial contribution, it was considered reasonable to conclude that all relevant rights to exploit the script were retained by the Agents for Co-Producer B.
The Assignment Deed stated that the Agents for Co-Producer B assigned to the Production Company “all present and future, right, title and interest in the Film, and any and all other intellectual property including copyright which they own and which is governed by the terms of the Co-Production Agreement or which is related to the Film or created as part of the process of producing the Film.”
While the script is not specifically referenced it could reasonably be concluded that it falls within the scope of the Assignment Deed. Therefore, in the absence of a competing claim to the Agents for Co-Producer B to the Script royalties, it was found that all relevant rights to exploit the Script were assigned to the Production Company to the extent they were held by the Agents for Co-Producer B.
The Co-Production Agreement outlined the parties’ respective ownership of the copyright in the Film, which is to be an equal share subject to “each party advancing its respective financial contributions in accordance with the Financing Plan”.
The Co-Production Agreement clause did not contemplate a proportional adjustment of ownership of copyright in the event that a party does not contribute the full amount. Accordingly, Co-Producer A did not qualify for copyright ownership in the Film.
The Co-Production Agreement goes on to state that subject to a clause X relating to rights to exploit the Film and the financial contribution “the parties acknowledge and agree that any Australian investors… shall each own a share of the copyright in the Film in reduction of the shares of copyright of” the Agents for Co-Producer B on one hand and Co-Producer A on the other.
Therefore, it was found that the better view is the Agents for Co-Producer B held 100% of the copyright in the Film.
However, clause X to which the above is subject appeared to have the effect that the exclusive rights to exploit the Film in Australia and New Zealand are shared equally between the parties, subject to Co-Producer A making payment in full of the minimum contribution, and otherwise “all rights will be calculated in proportion to the contributions actually made”.
Therefore, notwithstanding ownership of copyright by Agents for Co-Producer B, it was reasonable to conclude that Co-Producer A was granted a proportionate share of the exclusive rights to exploit in the Film, albeit less than 50%. Given that an exclusive licensee may claim Screenrights royalties for Film, it was necessary to determine the proportion of each claimants’ claim.
It was accepted that in light of Co-Producer A’s financial contribution of one third of the proposed contribution, then Co-Producer A was to be allocated one third of the proposed 50% share of the exclusive rights to exploit the Film, being 16.67%.
In light of the Assignment Deed and in the absence of a competing claim by the Agents for Co-Producer B to the Film royalties, it was accepted that the copyright comprised in the Film as well as the share of the exclusive licence to exploit the Film held by the Agents for Co-Producer B was assigned to the Production Company.
Conflicting accounts of the claimants in relation to whether the Co-Production Agreement was terminated, by whom and with what outcome were difficult to reconcile and neither was more compelling than the other. Screenrights considered the actions of the parties in jointly entering into the Licence Agreement between the Production Company and the Broadcaster as evidence that the Co-Production Agreement as still on foot at the relevant times.
Accordingly, in relation to Script royalties, the better view is that the Production Company holds the relevant rights.
In relation to Film royalties, the better view is that Co-Producer A holds one third of the proposed 50% share of the relevant rights, with the remainder held by the Production Company.