Bestseller clause - Amendment of the Copyright and Related Rights Act

The bestseller clause is a copyright instrument regulated by Article 44 of the Copyright and Related Rights Act (the “Copyright Act”), which provides grounds for the court to increase the remuneration of a creator when this remuneration is disproportionately low in relation to the benefits of the purchaser of economic rights or the licensee. In other words, at the moment when the creator (e.g. the author of a book) transfers the author's economic rights to another entity (e.g. a publishing house) for remuneration, and then this entity, as a result of exploitation of the work (e.g. by printing the book and selling it), generates income exceptionally high in comparison with the creator's contractual remuneration, the creator under this provision may demand an increase of his remuneration. The bestseller clause may also be invoked by the performer, which Article 92 of the Copyright Act entitles the performer to do.

Importantly, the implementation of Directive 2019/790 ‘Digital Single Market’ (the “DSM Directive”), resulting in the adoption of the amendment to the Copyright Act, not only changes the editorial wording of the provision in question, but also specifies the situations in which the bestseller clause cannot be invoked.

The bestseller clause - when can a claim be raised?

Until now, a claim under Article 44 of the Copyright Act could be pursued in litigation in the following situation:

• the claimant is the author of the work,
• the defendant is the purchaser of the author's economic rights to that work or the licensee,
• there is a gross disproportion between the benefits of the rights purchaser/licensee and the remuneration of the author; and
• the amount claimed represents remuneration that has been appropriately increased.^[1]

According to the new wording of this provision, an author may demand an appropriate increase in remuneration when ‘the remuneration of the author is disproportionately low in relation to the benefits of the purchaser of the author's economic rights or the licensee’, so the changes introduced by the amendment to Article 44 of the Copyright Act appear to be mainly wording changes.

It is worth mentioning here that an author may demand a remuneration increase regardless of his/her financial situation^[2]. Moreover, the provision of Article 44 of the Copyright Act is peremptory in nature, which means that the parties may not exclude its application in a contract, and such exclusion will have no legal effect^[3]. It is also not excluded for an author to request an increase in remuneration more than once^[4]. Of course, in such a situation, it is necessary to demonstrate the existence of facts other than those previously established.

Another relevant provision in this context is Article 43 of the Copyright Act, which provides that, in principle, the transfer of author's economic rights or the granting of a licence is carried out for remuneration - unless the agreement provides that it is to be free of charge. Thus, when an author wishes to take advantage of the institution of the bestseller clause, he has this possibility if the agreement concluded between the author and the purchaser provides for remuneration for the author. On the other hand, the method of determining the remuneration itself is not relevant - it can be either percentage remuneration, a lump sum or a mixed remuneration.

The best-seller clause does not apply to agreements with collecting societies.

The lawmaker, following Article 20 of the DSM Directive, introduced the second paragraph to Article 44 of the Copyright Act, which introduces the exclusions of the application of the bestseller clause to agreements on the use of works concluded with a collecting society or an independent management entity referred to in Article 2(1)(3) of the Act on collective management of copyright and related rights. Although the preamble to the DSM directive and the grounds for the draft amendment to the Copyright Act do not directly indicate the reasons for such a decision, the doctrine suggests potential reasons for adopting this solution^[5].

The creator, when entering into a contract with a professional contractor, is often in a disadvantaged position. The bestseller clause is intended to guarantee him the right to remuneration commensurate with the benefits derived from the exploitation of the work^[6]. The situation is different in case of the collecting societies. These entities submit the remuneration tables to the Copyright Commission for the use of works and objects of related rights in the fields of exploitation whose rights they manage. The provisions of the Act on collective management of copyright and related rights shape the content of agreements concluded with the collective management organisations having such approved tables in accordance with the rates indicated in these tables, and thus they constitute a certain standardisation of the market. Moreover, the remuneration itself for the use of the different categories of assets should be equal and proportionate^[7]. Therefore, the elimination of the possibility of invoking the bestseller clause in respect of contracts concluded with the collecting societies or independent management entities seems fair and reasonable.

Pacta non sunt servanda?

It is worth noting that the bestseller clause - like Article 357¹ of the Civil Code (the so-called rebus sic stantibus clause ) - will only apply in exceptional, above-average situations. This is because it constitutes an exception to the principle of honouring contracts and allows for a demand for an increase in remuneration to which the creator originally agreed.

Theory and practice - Sapkowski's dispute with CD Projekt

A few years ago, the functioning of the bestseller clause could be seen in practice. In 2018, Andrzej Sapkowski, author of the Witcher saga, filed a claim directed at the game developer CD Projekt, for additional remuneration for granting the rights to exploit the Witcher universe for the purposes of video game production. As the author claimed, his original remuneration was disproportionately low in relation to the revenue from the game referencing the Witcher saga, which achieved huge commercial success^[8].

Undoubtedly, the writer, as the author of the Witcher saga, could have brought a claim for an increased remuneration against CD Projekt, in its capacity as the rights buyer or licensee using the work. In litigation, proving the last premise, i.e. the disproportionately low remuneration of the creator in relation to the benefit of the rights buyer or licensee, could be challenging. The creator bears the burden of proof when invoking the bestseller clause. Thus, he must obtain information showing that his remuneration was disproportionately low in relation to the purchaser’s benefit. How can he acquire the necessary knowledge in this respect? This is where the amended Article 47 of the Copyright Act and its newly added Article 47¹, regulating the author's right to information, come to the creator's aid, and about which you cand find out more in another article on our blog. In addition, it is also incumbent on the creator to spell out the amount of the claim, i.e. to determine and prove the amount it will demand from the rights purchaser or licensee as an increase in remuneration.

In the Witcher game case, the parties reached a settlement^[9], but based on the publicly available factual elements of the dispute between A. Sapkowski and CD Projekt, there have been many interesting discussions in legal science.

Among other matters, it was discussed whether the bestseller clause applies to derivative works, particularly in the regard to the need to demonstrate the extent of the benefit to the rights buyer or licensee from the use of the work of the author invoking the besteller clause. It was pointed out that it is important to establish whether the game series benefits from creative elements taken from Sapkowski's novel. Assuming that this is the case, the application of Article 44 of the Copyright Act could be justified even if the games do not constitute an exploitation of the original work in its entirety. A book is usually a homogeneous work of a single author, whereas a computer game - as a multimedia work of a complex nature - contains numerous creative contributions from many authors (e.g. audiovisual or musical creators).

In this context, the question has also been raised as to whether an author may also claim an increase in remuneration when an element taken from his or her creation only plays a subordinate role (e.g. an easter egg based on another work, which is not relevant to the plot of the game). In such case, it is accepted in doctrine that the key criterion is whether the author's creative contribution had a significant impact on the success of the work. If his or her role was subordinate and substitutable, Article 44 of the Copyright Act should not apply as a basis for claiming an increase in remuneration^[10].

The further question was as to whether the creator of the original work could successfully raise a claim under the bestseller clause, particularly in the context of determining the benefits of the purchaser of rights from the use of the work and the existence of a gross disproportion between them and the creator's remuneration, and the function of the bestseller clause when the success is primarily the result of the promotion of the game conducted by its creators? Undoubtedly, it would be extremely difficult, if not impossible, to determine to what extent the success of the games is due to CD Projekt's investment rather than the recognition of the Witcher saga as such. It would therefore seem that, given the evidentiary difficulties, this premise could not play a significant role in the case at hand.

In the context of A. Sapkowski's case, it was also discussed whether, in determining the amount by which the writer's remuneration should be increased, the court would take into account the likely impact of the game's popularity on increased sales of books about Geralt of Rivia, which undoubtedly also benefited the author^[11].

It was also considered whether a factor affecting the amount of the increased remuneration would be the fact that neither the author nor CD Projekt could have foreseen the scale of the game's success. According to some authors, this is a typical situation where the creator can invoke the bestseller clause^[12]. According to others, on the other hand, the risk associated with the production of the game assumed by the Polish developer should be taken into account when calculating any increase in remuneration on the basis of the bestseller clause^[13].

The above considerations indicate that the application of the bestseller clause in practice is by no means straightforward and raises many problems, primarily concerning proof of disproportion or disproportionately low remuneration of the creator and the amount by which the remuneration should be increased. The amendment of the Copyright Act has not made this task significantly easier for authors.

^[1] A . Sewerynik Prawa autorskie: art. 44 to koło ratunkowe w razie niekorzystnej umowy https://www.rp.pl/opinie-prawne/art3589221-prawa-autorskie-art-44-to-kolo-ratunkowe-w-razie-niekorzystnej-umowy (accessed 30.09.2024).

^[2] Niewęgłowski Adrian, Copyright Act. Commentary. Article 44. Published: WKP 2021

^[3] Ruling of Court of Appeals in Poznan, 12.8.2009 r., ACa 502/09, Legalis

^[4] Flisak Damian (red.), (ed.), Copyright and Related Rights Act. Commentary. Art. 44. Published: LEX 2015

^[5] Prof. J. Błeszyński, Spór o słuszne wynagrodzenia https://www.rp.pl/rzecz-o-prawie/art40306611-jan-bleszynski-spor-o-sluszne-wynagrodzenia (accessed: 25.09.2024 r.)

^[6] Ruling of Court of Appeals in Poznan, 12.8.2009 r., ACa 502/09, Legalis

^[7] Prof. J. Błeszyński, Ibid.

^[8] CD Projekt stock exchange report 15/2018 https://www.cdprojekt.com/pl/inwestorzy/raporty-gieldowe/raport-biezacy-nr-15-2018/ (accessed 7.10.2024).

^[9] CD Projekt press release https://www.cdprojekt.com/pl/media/aktualnosci/cd-projekt-podpisal-porozumienie-z-andrzejem-sapkowskim/ (accessed 7.10.2024).

^[10] Dr Tomasz Targosz, And his name is ‘The Witcher’ (44). Some remarks on the bestseller clause, https://www.traple.pl/a-imie-jego-wiedzmin-44-kilka-uwag-o-klauzuli-bestsellerowej/ (accessed 25.09.2024).

^[11] The impact of increased book sales on the scope of the remuneration increase is favoured by Prof. R. Markiewicz, Andrzej Sapkowski może żądać dodatkowej zapłaty za „Wiedźmina” https://www.prawo.pl/biznes/andrzej-sapkowski-domaga-sie-60-mln-za-wiedzmina-opinia-prof,308376.html (accessed 25.09.2024), while the opposite view is taken by Dr. Roman Targosz, A imię jego....

^[12] Dr Tomasz Targosz, Ibidem

^[13] Prof. R. Markiewicz, Ibidem

Grafika:

"The money writes with white chalk is hand draw concept " w serwisie Freepik.

 Authors:

Adam Misztal, aplikant adwokacki

Oliwia Szatkowska, praktykantka