contract for the assignment of economic rights

Assignment of the Author’s Economic Rights

May 25, 2021 > Turkey > Intellectual Property

Erdem & Erdem Law Office | View firm profile

The author is the person creating the work and automatically becomes the owner of the economic rights on the work by the creation thereof. If the author does not have the resources to solely exercise the economic rights on the work, s/he may apply two different methods to benefit from the economic rights as regulated under Intellectual and Artistic Works Act numbered 5846 (“IAWC”). These methods assign the economic rights and assign the authority to exercise the economic rights; in other words, granting licenses for economic rights.

Assignment and License

The author has six economic rights, which are the right of adaptation, right of reproduction, right of distribution, right of performance, right to communicate a work to the public by devices enabling the transmission of signs, sounds and/or images, and right to payment of the sale of share proceeds, and pursue the same as designated under Articles 21 – 25 and 45 of the IAWC. If the author assigns an economic right, the assigned economic right leaves the assets of the author and becomes a value within the assets of the right holder who assigned the economic right. The assignee right holder becomes the owner of all rights attached to the assigned economic right, including the right to initiate an action. On the other hand, if the author grants a license on the economic right, such economic right remains under the assets of the licensor author. The licensee right holder only has the right to use and benefit from the licensed economic right.[1]

Assignment Agreement

Economic rights are assigned through a written assignment agreement. The rights to be assigned should be explicitly designated under the assignment agreement. Requirements of written form and explicit designation of the assigned economic rights are validity conditions; therefore, clauses, such as “all economic rights are assigned,” or “the right to reproduction etc. are assigned,” will not be deemed valid as per Article 52 of the IAWC.[2]

Economic rights may be assigned on a limited or unlimited basis with respect to location and duration. Economic rights may also be assigned with or without the requirement to pay any consideration for the assignment. Additionally, economic rights may be assigned to different persons by limiting the scope of the right. For instance, a photographer may assign the right of reproduction and right of distribution of his/her photographs only to be displayed within a certain catalogue. In this case, the assignee right holder may not use these photographs in any other environment, such as written press or the internet, except such catalogue as referred to herein.

The assignee right holder may not assign the economic rights to third parties without obtaining the written consent of the author or his/her heirs, unless the right to assign to third parties is set forth under the assignment agreement (IAWC Article 49/1). The reason why the consent of the author is required is to establish the connection with the author. The work is not severed, and the control of the author over the use of the work is established.[3]

License Agreement

The author may grant a license to exercise economic rights on the work without assigning economic rights (IAWC Article 48/2). Upon granting a license to exercise an economic right, such licensed economic right remains within the assets of the author (or the right holder), and the licensee will only be entitled to exercise such economic right.

The law regulates two different types of licenses, those being exclusive or non-exclusive license. A license is non-exclusive if it does not prohibit the holder of the economic right to grant the same license to others and is exclusive if it is granted to only one person. In the case of an exclusive license, unless otherwise determined, even the author (or the economic right holder) may not exercise such right. Unless to the contrary can be deduced from the law or agreement, all licenses are deemed to be non-exclusive. The provisions on usufructuary leases will apply to non-exclusive licenses, and those on usufruct leases shall apply to exclusive licenses. (IAWC Article 56)

The license to exercise an economic right is granted through a written license agreement in which all rights to license are explicitly specified. In the same manner, and with respect to assignment agreements, written form is a validity condition. Any vague expressions regarding licensed economic rights will be deemed invalid. The license right may also be assigned on a limited or unlimited basis with respect to location, duration and scope. Additionally, the license may be granted with or without the requirement to pay any consideration. For instance, an exclusive license on the right to reproduce the musical work of a symphony may be granted to a publishing house, a non-exclusive license on the right to perform the symphony may be granted to a concert organizer, and non-exclusive licenses on the right to communicate the work to the public may be granted to two different TV channels.[4]

Granting an exclusive license on an economic right does not create an obstacle for the assignment of such economic right, because the licensed economic right remains within the assets of the right holder; however, the rights of the exclusive licensee will be protected against the new right holder.[5]

The provision prohibiting the assignment of the assigned economic right by the right holder to third parties without obtaining the written consent of the author (or his/her heirs) also applies to license agreements. Accordingly, the exclusive or non-exclusive licensee may not grant a license to third parties without obtaining the written consent of the author (or his/her heirs), unless the right to grant a license to third parties is set forth under the license agreement (IAWC Article 49/1).

Acts of Disposal on Incomplete Works

Only the completed works may be the subject of an assignment or license agreement (i.e. acts of disposal), and assignment or license agreements with regard to incomplete works are invalid. However, commitments regarding the acts of disposal are valid even if they are made prior to the creation of the work[6] (IAWC Article 48/3, 50/1).

In the case of a commitment regarding the acts of disposal, assigning or granting a license on the economic rights of the work following the completion of the work constitutes the subject matter of the commitment. Thus, the right holder may request the assignment or license of the economic right on the work once the work is created. For instance, an artist may undertake to grant a gallery with a license, or assigning the right of performance, on the painting s/he is then painting by executing a contract with the gallery. Once the work is completed, the gallery is entitled to request the transfer of the economic right, for which the artist and gallery must conclude a second agreement, whereby the terms and provisions of the assignment and/or license are indicated.

As assignment and license agreements, commitments regarding the acts of disposal on incomplete works are also concluded in writing, and the economic rights that are subject to a commitment should be explicitly indicated thereby. A written form requirement is a validity condition.[7]

Although concluding an assignment and license agreement on the economic rights of an incomplete work is deemed invalid by law, such assignment and license agreements are frequently encountered in practice in Turkey, due to the impact of Anglo-Saxon law. In the events where the economic rights on the incomplete work are assigned or licensed, the Supreme Court, by considering the facts of the concrete cases, has either resolved that such assignment or license agreement is deemed to be considered as a commitment to assign or grant license on the incomplete work within the scope of Article 50/1 of the IAWC, or is deemed to be invalid due to Article 48/3 of the IAWC. Therefore, if the economic rights of the incomplete works are to be assigned or licensed, such agreement should be drafted as an undertaking to assign or license, rather than an assignment or license agreement. Furthermore, as the economic rights will not be automatically transferred to the right holder during the commitment period, a second agreement on the assignment or license should be executed after the work is created.

Right of Rescission

If the acquirer of an economic right or a license exercises his/her rights and authorities, insufficiently, within the agreed period, or where no period is determined within a reasonable time, and if thereby the author’s interests are significantly violated, the author may rescind the agreement (IAWC Article 58). The right to rescind is a formative right, and the economic right returns to the author by exercising the right to rescind.[8]

In order for an author to exercise the right to rescind, the statutory requirements as to form must be fulfilled. Accordingly, the author wishing to exercise the right to rescind must grant the other party, upon notifying him/her through a notary public, a period of time adequate to exercise its contractual rights. The notice issued by the notary public gives effect to the rescission of the agreement, if the expiration date for the granted period is exceeded, or if it is not necessary to grant such period. The granting of such a period is not necessary, if it is impossible for the other party to exercise such right, or if he/she refuses to exercise it, or if the granting of such period would significantly jeopardize the author’s interests.

The other party does not have to be at fault in order for the author to exercise the right to rescind. However, if the other party is at fault, then the author may request compensation in accordance with the provisions of Turkish Code of Obligations numbered 6098. On the other hand, if fault is attributable to the author, he/she may not exercise the right to rescind.

The right of rescission may not be waived in advance, and limitations precluding its exercise for more than two years are null and void (IAWC Article 58/5). Action of objection may be pursued in the four weeks following the service of the rescission notification. If no action of objection is initiated within the four weeks, it should be concluded that the rescission was just.[9]

When the author does not have the financial resources to benefit from the economic rights on his/her work, he/she may assign or grant a license on the economic rights to third parties. Economic rights may be assigned or licensed on a limited or unlimited basis in terms of location, duration and scope. Also, there is no legal requirement to pay any consideration for the assignment or license. Assignment or license agreements regarding incomplete works are deemed invalid. However, an undertaking may be given for the assignment or licensing of the economic rights to have arisen from the creation of the work. If the author assigns or grants a license on the economic rights, and the assignee or licensee fails to exercise these economic rights as designated under the agreement during the term of the agreement and, thus, the interests of the author are materially violated, the author may use the statutory right of rescission to terminate the assignment or license agreement.

(Authored by Hazel Coskun Baylan and first published by Erdem & Erdem, April 2021)

[1] Bozbel, Savaş: Fikri Mülkiyet Hukuku. On İki Levha Yayıncılık, 2015, p. 198-199.

[2] Tekinalp, Ünal: Fikir ve Sanat Eserleri Hukuku, Vedat Kitapçılık, 2012, p. 232.

[3] Karahan, Sami; Suluk, Cahit; Saraç, Tahir; Nal, Temel : Fikri Mülkiyet Hukukunun Esasları, Seçkin Yayıncılık, 2012, p. 117.

[4] Tekinalp: p. 232.

[5] Karahan; Suluk; Saraç; Nal : p. 117.

[6] Commitments regarding the acts of disposal may also be given if the work is completed.

[7] Tekinalp: p. 232.

[8] Bozbel: p. 220.

[9] Bozbel: p. 220.

More from Erdem & Erdem Consultancy Ltd

Transfer Of Economic Rights On The Work

contract for the assignment of economic rights

TRANSFER OF ECONOMIC RIGHTS ON THE WORK

Pursuant to the Intellectual and Artistic Works Law (“IAL”) , work is any intellectual or artistic product bearing the characteristic of its author and deemed as a scientific and literary or musical work or work of fine arts or cinematographic work . Therefore, in order for an intellectual product to be protected as a work, it must be involved in one of the types of works that are considered as objective elements and carry the characteristics of the author, which is the subjective element.

An intellectual product may only be deemed as a work if it becomes qualified to appeal to the senses of third parties. In other words, it is not the thoughts, but the way they are reflected to the third parties is protected as a work. [1]

The owner of the work is the author of it. The rights of the author are divided in two as moral rights and economic rights. These rights are absolute rights and the authority to exercise and power of appeal against anyone belongs exclusively to the author.

Although economic and moral rights are protected side by side without getting mixed and connected, in reality these rights on the work are various powers provided by a single absolute right (copyright) arising from the ownership of the work, which cannot be easily separated from each other.

The economic and moral rights of the author on the work arise naturally as soon as it is formed without the need for public presentation or registration. The right to benefit from these rights on a work that has not been made public yet belongs exclusively to the author. The work will be made public when it is presented to third parties with the permission of the rightful author.

Moral and economic rights on the work are limited and no other moral or economic right can be created other than the rights listed in the IAL ( principle of numerous clausus ). Within this scope the economic rights granted to the author are;

Right of Adaptation
Right of Reproduction
Right of Distribution
Right of Performance
Right to Communicate a Work to Public by Devices Enabling the Transmission of Signs, Sounds and/or Images.

Although it is regulated in a different part of IAL other than provisions governing economic and moral rights; the right of share and lien, the right of withdrawal and the right to opt out are also the rights granted by IAL to the author. [2]

Moral rights over the work are strictly personal rights. Therefore, moral rights cannot be limited or waived by the author.

Economic rights on the work on the other hand can be inherited be subject to transfer, pledge, attachment, retention, etc.. The author or his/her heirs may transfer their economic rights on the work to others, either periodically or indefinitely, with or without consideration. [3]

Contracts regarding the transfer of economic rights or use licences shall be written in order to be valid. In addition, which economic rights/rights are being transferred should be clearly stated in the contract. Otherwise, the transactions will be deemed as void.

Acts of disposition (such as transfer) on economic rights with regards to a work which is not created yet or will be completed in the future shall be void pursuant to the Article 48 of IAL. Nevertheless, there is no impediment to making a promissory act regarding the transfer of economic rights on a work that will be created and completed in the future.

Although there are decisions to the contrary, according to the recent precedents of the Court of Cassation, economic rights or use licenses for the works created by the author during the promise period shall not be transferred to the directly and without any further act of disposition. In this context, the promissory acts made before the work created are considered valid, but a written act of disposition is also needed after the completion of the work in order for the transfer to take place. Transfer can be carried out by the author and his/her heirs or by the person whom author transferred the economic rights of the work. Although economic rights are protected separately from moral rights under IAL, acts of disposal carried out on economic rights are capable of damaging moral rights. Therefore, if a person who has the power of disposition only on economic rights wishes to transfer these economic rights to a third party, there must be a written approval by the author or his/her heirs in order for the transfer to take place.

[1] Court of Cassation General Assembly of Civil Chambers numbered 2017/137, 2020/806

[2] Court of Cassation General Assembly of Civil Chambers numbered 2017/137, 2020/806

[3] 11 th Civil Chamber of the Court of Cassation numbered 2004/11266, 2005/10524

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Sep 8, 2020

TRANSFER OF THE AUTHOR’S ECONOMIC RIGHTS

Authors who create intellectual and artistic works and their moral and economic rights concerning works which they created are regulated in the Law and Intellectual and Artistic Works w.no 5846 (“FSEK”) . The author of a work is defined as the person who has created the work under the FSEK. The author has the two types of rights that moral and economic rights regarding its work and these rights belonging to the author from the date of creation of the work. The moral rights of authors are the right to disclose the work to the public, the right to designate the name, the right to give inform about the content of the work, the right to prohibition of modification and the right to preserve the integrity of the work.

The economic rights of the author are the right of adaptation (FSEK m. 21), the right of reproduction (FSEK m. 22), the right of distribution (FSEK m. 23), the right of performance (FSEK m. 24), the right to communicate a work to public by devices enabling the transmission of signs, sounds and/or images (FSEK m. 25) and the right of share and tracking (FSEK m. 45). These rights were determined by legislator within the scope of the principle of limited number.

Economic rights are absolute rights and can be exercised against everyone. However, the owner of the work can transfer his/her economic rights concerning the work to a third party or grant a license or give permission. Pursuant to Article 48/1 of the FSEK, “ the author or his heirs may transfer to others the economic rights granted them by law, unrestricted or restricted as regards duration, place or scope, with or without consideration.” The person who takes over the economic right could use all the powers regarding the said right if the work transferred. Also, if it is not prevented by the contract, the assignee can transfer the said rights partially or completely to third parties . Also, the authority only to exercise the economic rights may also be granted to another person by granting a license under Article 48/2 of the FSEK. In the License Agreement, the assignor transfers only the right to use, and this right continues to be in the assets of the assignor. The difference between license and transfer is that the license only provides authority to exercise specific right or rights. In Article 80 of the FSEK, the third method called “permission” is regulated in terms of neighboring beneficiaries.

Therefore, in order to use any intellectual and artistic work, a contract must be signed with the owner of the work or their heirs. Pursuant to Article 52 of the FSEK, “Contracts and disposals concerning economic rights shall be in writing and the rights constituting their subject matter shall be specified individually.” Regulating these contracts and disposals concerning economic rights in writing and specifying the rights constituting their subject matter individually are the condition for validity within the scope of the FSEK. However, the Supreme Court has not sought the condition of a written contract in some special cases by specifying it is contrary to Article 2 of the Turkish Civil Code. Making contracts concerning economic rights is important in practice, and the fact that the producers sign a written contract for the first season and do not pay attention to this issue in the following seasons cause many disputes to arise. At this point, it is important to sign a contract regarding the transfer of economic rights for each season. Another issue considered in the Supreme Court's decisions and doctrine is that the powers and permissions given for economic or moral rights should be specified one by one in the relevant contracts. Since each right to be transferred should be counted individually in the contract, the expressions such as "I transferred economic rights," or "I have transferred all my rights" will be deemed invalid.

The ownership of the economic right or the right to exercise passes to the other party when an author of the work transfers his/her economic right or grants a license. However, in these cases, the disposals regarding the said economic right can be limited. Under Article 49/1 of the FSEK, “A person who has acquired an economic right or a license to exercise such right from the author or his heirs may transfer such right or license to another person only with the written consent of the author or his heirs.” Pursuant to this provision, the person who has acquired an economic right or license to exercise from the author cannot transfer these rights to another person without the written consent of the author.

Another important issue is that the author of the work can make promissory and disposal transaction regarding the economic rights of the work created. However, the disposal transactions regarding the work that has not yet been created or will be completed are deemed invalid under FSEK. Only commitments related that the disposal transaction will be made can be valid even if the work has not yet been created. However, this promissory transaction must also be made in writing.

As a result, in order not to face any violation of their rights, the owners of the work should prepare their contracts very carefully during the transfer process or granting the license. In order not to cause any confusion, it is extremely important to specify all transferred rights individually in written contracts.