The competing claim was for retransmission royalties in respect of a television series. Reliance was placed by the Production Company on section 98 of the Copyright Act 1968 (Cth) (Act) regarding the maker and owner of copyright in cinematographic films. Since 19 December 2005, the Act includes a limited retransmission right to directors (see the Copyright Amendment (Film and Directors’ Rights) Act 2005 (Cth), which recognises the director as a maker and owner of the film for this purpose but only if certain exceptions do not apply. One exception is where the director directed the film under the terms of his or her employment under a contract of service, in which case the employer is to be substituted for the director as the maker in the absence of any agreement to the contrary: s98(5).
In the present circumstances Screenrights is of the view that there was an agreement to the contrary. Specifically, while the Director’s Agreement referred to the relationship between the two parties as that of Employee and Employer as submitted by the Production Company, the following clauses were agreed in the Director’s Agreement :
Clause A: “Despite anything to the contrary in this Agreement, the Director retains the right to collect (and authorise others to collect) sums from time to time equal to the Directors Collecting Society Income.”
Clause B: “Directors Collecting Society Income means:
(a) the retransmission royalties in relation to the Mini-Series in Australia under Part VC of the Copyright Act 1968 (Cth) received by the Audio-Visual Copyright Society Limited trading as Screenrights which the Director is entitled to collect.”
Thus, even if it is accepted that the Director directed the film under the terms of his or her employment under a contract of service as submitted by the Production Company, read together the above clauses of the Director’s Agreement represent an “agreement to the contrary” for the purposes of s98(5).
The Production Company’s submission that based on the employment relationship no royalties are payable to the Director is not clearly supported in light of terms which evidence a contrary mutual intention.
The Director’s Agreement also included a clause in which the Director “assigns to the Producer the whole of his/her interest in the copyright in the Mini-Series.”
However, as a result of Clause A, “Despite anything to the contrary in this Agreement” which would include the assignment clause referred to above, the Director still retains rights to receive the retransmission royalties to which the Director would be entitled as an owner of copyright.
Accepting that the Director retains the right to receive retransmission royalties, the question becomes – what share of retransmission royalties is due to the Director?
The Explanatory Memorandum to the Copyright Amendment (Film Director’s Rights) Bill 2005 (EM) indicates that the director’s ownership of copyright under section 98 means that they are entitled to retransmission royalties jointly with the producer, subject to any agreement to the contrary. The EM refers to the allocation by Screenrights under its Distribution Policy of funds collected under the retransmission scheme to owners of copyright in the film and anticipates that this allocation will be divided between the producers and the directors (Para 78). The EM does not include any commentary on the individual shares.
The Director’s Agreement does not include any express transfer or assignment by the Production Company of its right to receive retransmission royalties. Therefore, a claim by the Director to 100% of the royalties is not clearly supported; rather the Production Company retains its share along with the Director retaining his/her share.
Accordingly, given that the contract is silent on the share and there is no agreement to the contrary, the better view is that the Production Company and Director are tenants in common of the retransmission royalties and are entitled to a proportional share, being 50%.