Co-producers of films spar over profit distribution, intellectual property rights
- Several Indian film producers have been involved in legal disputes with each other lately with differences arising over final intellectual property rights, commercial disagreements and breach of revenue-sharing arrangements.
Several Indian film producers have been involved in legal disputes with each other lately with differences arising over final IP (intellectual property) rights, commercial disagreements and breach of revenue-sharing arrangements. Many of these stem from poorly drafted co-production agreements, or commercial understandings that have not been recorded in writing, often leading to ambiguity and potential for disputes. Earlier this year, Super Cassettes Industries Pvt Ltd (SCIPL), also known as T-Series, wanted to halt the release of Amar Singh Chamkila, that is streaming on Netflix, claiming a stake in the film’s revenue owing to a loan agreement SCIPL had signed with Reliance Entertainment, producers of the movie. Prior to that, the OTT release of T-Series’ own film Animal had run into trouble with Cine 1 Studios claiming entitlement to a profit share and intellectual property rights. Producers of upcoming Ranbir Kapoor-starrer Ramayana, too, are embroiled in copyright infringement disputes.
“We have observed a surge in legal disputes among co-producers in the Indian film industry recently. These typically revolve around specific intellectual property rights, commercial disagreements, distribution rights, and creative differences. Many of these issues stem from contracts that are either inadequately drafted or lack specificity. Additionally, the absence of comprehensive legal guidance during the formation of these agreements often leads to grey areas and subsequent conflicts,” Dhiraj Mhetre, partner, Khaitan Legal Associates said. It has been observed in the past that legal proceedings are filed a day or two prior to the release as a tactic to put pressure for settling, since the delay in release amounts to huge financial loss, said Ruby Singh Ahuja, senior partner at Karanjawala & Co adding that mostly cases are filed alleging violation of copyright or defamation.
Royalty disputes due to misuse of the intellectual property
Legal disputes between co-producers can commonly take the form of royalty disagreements which arise due to misuse of the intellectual property without proper authorization or original author acknowledgement by the other party. “Unfair credit dispute causes many common altercations. It is the feeling of not been adequately credited or if there is disagreement over payment or royalty. Breach of contract is one of the common areas of dispute as well. This happens knowingly and unknowingly, most commonly with respect to deadlines, deliverables, and the scope of work,” Amit Panigrahi, partner designate at Luthra and Luthra Law Offices India, said.
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To be sure, legal experts say typical repercussions of a dispute between producers include delays in the release or even restrictions on the screening and distribution of such content. These frequently lead to prolonged legal battles, resulting in the blocking of both the producers' and investors' capital with no returns for extended periods.
“A project that is delayed may eventually force the sale of distribution rights at undervalued prices, resulting in significant losses for all parties involved. Such a situation also impacts liquidity for studios and production houses, as well as causing missed opportunities and loss of goodwill,” Aishwarya Kaushiq, advocate, BTG Advaya said.
Legal experts say while studios seek legal help on a regular basis, sometimes they rely on outdated contracts or use legal teams that lack expertise in film-specific legalities, leading to issues. Lack of clarity regarding significant terms such as the qualification of a party as the "producer" under the Copyright Act, 1957 and the subsequent distribution of revenue and profits considering the same is at the crux of these disputes.
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Anupam Shukla, partner, Pioneer Legal, said considering the quantum of amounts involved and fate of the film at stake, studios and production houses should always involve experienced entertainment lawyers to draft robust and effective co-production agreements reflecting their specific legal understanding. Clear watertight contracts can significantly reduce the potential for conflicts.
“Understanding the risks, studios and production houses have sought to employ legal expertise guiding them from the very nascent phases of contract negotiation and production to the latter stage of dispute resolution," Ranjana Adhikari, partner, INDUSLAW, said. However, while legal assistance can help clarify terms and obligations, conflicts naturally can still arise due to differing interpretations of contract clauses, changes in circumstances, and so on. To avoid such conflicts from arising in the first place, it is crucial to have clear, comprehensive, and enforceable contracts that address all aspects of the collaboration, including revenue sharing, net profits, intellectual property rights, dispute resolution mechanisms and exit strategies, she added.
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Business NewsIndustryCo-producers of films spar over profit distribution, intellectual property rights
First Published:10 Jun 2024, 07:00 AM IST
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