November 2023
Jane Tsai and Yuki Chiang
In light of the evolving cultural diversity trends across countries, the contemporary entertainment industry is experiencing significant demands for cross-border and regional licensing of graphic and audiovisual works. In practice, many transactions are facilitated through licensing agents who handle sales and usage in respective countries. Recently, the Supreme Court of Taiwan has rendered the 112-Tai-Shang-2369 Criminal Decision on July 13, 2023 (the “Case”), holding that a determination of whether a copyright distribution contract is an exclusive license should not be confined solely to the circumstances where the contract specifically indicates that it is an exclusive license.
This case involved a criminal prosecution for a copyright infringement, wherein the plaintiffs, a Taiwanese company, and a South Korean copyright holder, entered into a “master agent contract” (the “Contract”) for granting exclusive general distributorship for the magazine in Taiwan. Subsequently, the plaintiff discovered the defendant had infringed upon their copyright and initiated an action against the defendant. The defendant argued that the Contract did not contain provisions that explicitly provide that the copyright is subject to “exclusive licensing,” and the plaintiff had no right to sue.
In this Case, the Supreme Court held that: “Since the ‘exclusive licensing’ under Article 37 of the Copyright Act implies a promise of exclusivity, once the copyright owner transfers the copyright to the licensee, he/she may not exercise his/her copyright, and shall not grant any further license to a third party within the scope of licensed exploitation. The exclusive licensee may, within the scope of the license, exercise rights in the capacity of the copyright holder, and may take legal actions in his/her own name. The licensing of copyright is not a formalistic act; it only requires an agreement between the copyright owner and the licensee regarding the licensed object, duration, and scope, and the rights holder may also give his/her consent or grant a license after the fact.” Accordingly, the court held that even though the Contract did not explicitly include exclusive copyright licensing provisions, Article 6 of the Contract explicitly stipulates that “the plaintiff is a legal person granted the copyright of the magazine in Taiwan area, and in the event of any copyright infringement by any organizations or individuals, the plaintiff is entitled of full authority to handle such matters pursuant to law.” In addition, the terms and scope of the Contract were specified. This unequivocally indicates that there existed an agreement on exclusive copyright licensing between the plaintiff and the original copyright holder. As such, the defendant’s assertions are considered groundless.
According to the Supreme Court’s opinion in this case, it is not necessary for a copyright licensing contract to explicitly state the wording “exclusive licensing.” However, copyright licensing contracts that do not clearly specify the license as an exclusive license may give rise to concerns regarding an agent’s entitlement to initiate legal proceedings, potentially leading to unnecessary complexities in asserting rights. Therefore, a better practice is to explicitly stipulate whether an agreement between an agent and a copyright holder constitutes an exclusive license and include vital provisions such as: (1) the specification of the licensed object (e.g., specific literary or audio-visual works), (2) the confirmation of the term of the license (e.g., a fixed term), and (3) a clear delineation of the scope and area (e.g., exclusive agency and exclusive licensing in Taiwan). This approach helps mitigate the risk of being construed as lacking establishment of exclusive licensing.
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