The question of remuneration is undoubtedly one of the most important issues to be regulated in a licence agreement. However, what happens if the parties do not say anything about remuneration in the agreement? The licence agreement is effective and the right holder is entitled to remuneration for the use of the work in each separate field of exploitation. However, on what basis to determine the amount of remuneration if the parties have omitted this element from the agreement? The law sets out the criteria to be taken into account:

©    scope of the right granted

[the scope of the right granted depends on a number of factors, mainly: the fields of exploitation indicated in the agreement, the temporal and territorial scope of the licence, the intended use of the work, the nature of the licence (exclusive/non-exclusive), the possibility of granting a sub-licence]

©    benefits resulting from the use of the work.

However, to gain certainty and avoid potential conflicts, it is definitely worth detailing the remuneration to be paid to the right holder who grants the licence.

 

The licence may be granted free of charge or against payment.

Free licence - If the right holder wishes to grant a free licence, such a provision must be indicated in the agreement. If no free licence is stipulated, it is assumed that the author shall be entitled to remuneration for the use of the work.

Licence against payment - The parties have a great deal of discretion in determining remuneration. The law leaves room here to tailor the type of remuneration to the specific needs of the parties to the agreement. In practice, we encounter the following types of remuneration: 

©    flat-rate remuneration (a specific, one-off amount payable independent of the licensee’s profit from the use of the work),

©    proportionate remuneration (usually an amount representing a certain percentage of the licensee’s revenue from the use of the work),

©    hybrid remuneration (a combination of the above methods).

! The author is entitled to separate remuneration for the use of the work in each separate field of exploitation. A single amount for “all use” may be indicated in the agreement but it must correspond to all fields of exploitation covered by the agreement.

Flat-rate remuneration does not present major practical concerns. Very often, however, it will be more attractive for the parties to provide in the agreement for a remuneration proportionate to the proceeds of the use of the work. To effectively determine this remuneration in the agreement, more elaborate regulations are required. Let us take a closer look at them.

Proportionate remuneration - When this remuneration calculation option is introduced into the agreement, the rate—the percentage of the proceeds of use due to the right holder—should be indicated. In addition, one must remember to provide:

 ©    a precise description of the base to which the rate will be applied—e.g. the proceeds of the beneficiary from the sale of copies of the work less VAT (any other exclusions, if chosen by the parties, should be mentioned),

©    an indication of the frequency of remuneration payments—e.g. monthly or quarterly.

©    regulation on the provision of information on the amount of the beneficiary’s proceeds, as well as inspections allowing the right holder to verify the correctness of the accounts.


Is the remuneration agreed by the parties “final”? What is the “bestseller clause”?

Even in cases where a valid and effective agreement with a correctly determined remuneration has been entered into, in certain situations the author can request an increase of the agreed remuneration by a court on the basis of the so-called bestseller clause. The provision will apply if there is a gross disproportion between the author’s remuneration and the licensee’s benefit, e.g. if the work unexpectedly becomes commercially successful and the author has only received a low flat-rate remuneration. This mechanism is only provided for the benefit of the author. If it was the author who received a high remuneration and the work did not profit the licensee, the licensee would not be able to claim a reduction of the contractually agreed remuneration from the author. One should bear in mind that bringing about an increase in remuneration on the basis of the “bestseller clause” requires the initiation of legal proceedings and the demonstration of certain grounds. In practice, this can prove very difficult.