AV Best Practice Clause # 3 | Distributor/Collecting Society Contract

CONTEXT

In order to limit the risk of audiovisual productions being distributed which don’t have the necessary mechanical reproduction rights authorisation, the collecting societies could include in their contract with the distributor of the audiovisual production a clause demanding to consult the contract between the producer and the distributor in order to see who is held contractually responsible for the payment of the mechanical reproduction royalties.

If this contract doesn’t clearly state which of the two parties will be responsible for the payment of the mechanical reproduction royalties or if the contract states that the producer is the responsible party, but the latter hasn’t fulfilled this obligation, then, in those two situations, the collecting society will hold the distributor responsible for the payment of the mechanical reproduction royalties. This is called the principle of ‘Second Mechanical Liability’.

EXAMPLE of a ‘SECOND MECHANICAL LIABILITY’ CLAUSE

“In the event that the Licensee (meaning the distributor) is of the opinion that, not the Licensee but the producer of the Audiovisual Production (reference needs to be made) is responsible for the payment of the mechanical reproduction royalties for the Exploitation (reference needs to be made) in the Territory (reference needs to be made) in consequence of the Licensee’s contract with the producer of the Audiovisual Production, then the Licensee will without prejudicing any confidentially obligations, send digitally and without charges a copy of the relevant contract to the Licensor (meaning the collecting society).

If the Licensor cannot undisputedly deduce from that contract that the producer is responsible for the payment of the mechanical reproduction royalties, then the Licensee remains responsible for the payment of the mechanical reproduction royalties.

If that contract states that the producer of the Audiovisual production is responsible for the payment of the mechanical reproduction royalties, but the Licensor can demonstrate that no mechanical reproduction royalties have been paid to a relevant collecting society by the producer, then the Licensee will be held responsible for the payment of the mechanical reproduction royalties.”