Still actual – Amendments to the Copyright Law, their impact on works created by authors

The amendments entered into force on April 5,2023 to transpose into Latvian law the Single Digital market Directive (Directive (EU) 2019/790) and the Broadcasting Directive (Directive (EU) 2019/789). In our practice, we still face the employment contracts and contracts for provision of some services concluded with contractors – authors in IT, design or other creative professions where the employer or customer has not thought about the ownership of the economic rights of the work created by the employee or author and has not disclaimed the exercise of his personal rights. The Copyright Law maintains the same basic rule that if an author creates a work (other than a computer program) within the scope of his employment, both the personal and economic rights in that work belong to the author, unless otherwise agreed between the employer and the employee.

Under the previous redaction of the law, a simple notification of the transfer of the economic right was sufficient, however, the amendments to the Copyright Law make it clear what must be provided for in the terms of transfer of copyright:

(i) the nature of the economic rights; (ii) the territory in respect of which the right is transferred. According to Article 39.2 of Copyright Law, if this is not done, the right is deemed to be transferred in respect of the country in which the contract is concluded; and (iii) the duration of the transfer (rights may also be transferred for a limited period). A new article has been added to the Copyright Law, which requires the author to be fairly remunerated both in the contract by which the economic rights are alienated and in the licence agreement (Article 39.1). In the event of a dispute, the author is entitled to require the assignee or licensor to amend the contract to provide for fair remuneration and to pay the remuneration (the difference). The amendments also include a presumption that remuneration received by an author for a work created in the course of his employment with his employer constitutes fair remuneration. This presumption assumes that an author in an employment relationship generally enjoys the guarantees inherent in such a relationship (e.g. payment of taxes and national social security contributions, provision of a workplace and necessary equipment), unlike authors working as self-employed on various projects based on short-term contracts. Authors employed based on an employment contract are thus considered to be better protected than self-employed authors.

Application of the new rules:

As a general rule, contracts concluded in the past are not affected by subsequent changes in the law, unless otherwise stated. The amendments to the Copyright Law do not have retroactive effect, although the transitional provisions of the law give authors the right to exercise certain rights, such as the right to request payment of additional royalties and the right to revoke an assignment or licence agreement for continued non-use of a work in respect of “acts performed after 25 April 2023”. The amendments to the Copyright Law entered into force on 5 April 2023. This means that contracts concluded on and after this date are most directly affected by the new requirements. All of the above provisions mean that the transfer of economic rights from employees carries with it certain obligations and risks:

• to provide, on request, information on the income derived from the employment; and
• potentially adjust the amount of the royalty (e.g. the employee may request an additional payment on top of the regular salary already received);
• possible revocation of the assignment if the work is not used for a long period.

Recommendations:

Review existing agreements and author contracts on the transfer and exercise of authors’ economic rights, including whether they include the type of economic rights to be alienated, specify the territory and the time period for which they have been alienated.  Note that an employee may both alienate and license his copyright. If the employer is not granted exclusive rights, the employer may lose its competitive advantage and the protection of its trade secrets may be jeopardised; Agree with the author to waive the exercise of the author’s personal rights – to withdraw the work, to require cessation of its use, to prohibit modification of the work, the right of retaliation, i.e. to oppose modification or distortion of the work which the author considers prejudicial to his honour and dignity, the right to require his or her name to be appropriately indicated on all copies and at any public event associated with his or her work, or to require the use of a pseudonym or anonymity; In the absence of any agreement between the employee and the employer, be aware that the employer has no right to use the work for a purpose other than that for which it was created and to an extent that is incompatible with that purpose; When concluding architectural, construction or landscaping projects with a company, the client must also ensure that the contractor’s employees and authors engaged both assign the author’s economic rights and undertake not to exercise their personal rights as authors.