Will the Svea Court of Appeal reduce the occurrence of never-ending enumerations of covered ways of distribution in copyright related agreements?

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The Svea Court of Appeal will adjudicate two cases regarding interpretation of artist agreements. Due to the last decades’ vast digitalisation and development of the music business, interpretation of older agreements regarding the transfer of the artists’ and other right holders’ intellectual property rights have been in the spotlight for years. To avoid future interpretation problems parties to more recent agreements have been anxious to set out in detail the ways of distribution intended to be covered by the transfer along with language stating that all future ways of distribution are also covered. The Svea Court of Appeal now has a chance to spread some light of how clauses regarding the transfer of artists’ rights should be construed and the implications of the basic principle of specification (Sw. specialitetsgrundsatsen). The basic principle of specification means that the main rule when interpreting copyright related agreements is that only rights which explicitly follows from the agreement shall be deemed covered by the agreed transfer.

The two court cases regard transfers agreed in the 1970’s and the 1980’s of the artists’ rights from the artists to the record companies. However, the language of the transfer clauses in the cases differ and so does the district courts’ rulings. The Solna District Court concluded in September 2015 that, with regard to inter alia the basic principle of specification and the fact that no digital distribution existed at the time of the conclusion of the agreement, the lack of explicit limitations of the transfer (Sv. överlåtelse) of rights does not (as claimed by the record company) entail that the record company’s owning of the recordings included a right to distribute the recordings through online streaming and on-demand services.

The Stockholm District Court on the other hand concluded in February this year that the following language clearly indicates that the transfer of the rights of use were not intended to be limited to specific ways of distribution (in translation from Swedish) “the artist transfers to the company the recordings made for the company without any limitations of the proprietary rights and the rights of use”. This interpretation of the wording was also supported by evidence regarding the formerly common practice in the music business and the parties’ actions following the conclusion of the agreement. The Court thus concluded that the record company had obtained the rights to inter alia distribute the recordings by way of online streaming and on-demand services.

Both district courts took regard to other circumstances relevant for determining the parties’ intentions than the wording of the agreement. Thus, should the appellate court come to the same conclusions as the district courts, it is wise when drafting this kind of specific agreements to keep enumerating known ways of distribution along with language stating that all current and future ways of distribution is intended to be covered. However, if more general transfers of rights are at hand, language that the transfer is made with no limitations of the proprietary rights and the rights of use may be used to clearly indicate that a complete transfer is intended.

In the case appealed from the Solna District Court, the ruling will be declared on 17 June 2016. The main hearing in the case appealed from the Stockholm District Court is yet to be scheduled.

Want to know more? Please contact Fredrik Ståhl, partner at Time Advokatbyrå, +46 8 555 099 85, fredrik.stahl@timelaw.se or Emilia Hempel, lawyer at Time Advokatbyrå, +46 8 555 099 99, emilia.hempel@timelaw.se. Time Advokatbyrå regularly advices on media related matters such as artist agreements, producer agreements, cooperation agreements and publishing agreements.