Transfer of rights vs. Licensing: how intellectual property rights are managed

In a context in which streaming and video-on-demand (VOD) platforms have established themselves as the main channels for content consumption, replacing traditional models, the audiovisual industry is undergoing an unprecedented period of production. However, this evolution has not been accompanied by an improvement in the contracts that regulate the transfer and exploitation of rights. These often include contractual inaccuracies or omissions that are particularly problematic in a constantly evolving digital environment.

For example, the difference between a transfer of rights and a license remains a mystery to many professionals in the sector. The result is screenwriters who lose control of their works and production companies that believe they own rights to which they only had permission to use. To avoid conflicts and protect the value of these creations, it is essential to understand what each concept entails and how to apply it correctly.

Firstly, we must be clear that copyright protects creators from the moment they produce their work, granting them exclusive rights that allow them to decide how their work is used and, if they so choose, to obtain financial compensation for it. 

These exclusive rights are divided into two broad categories: 

• Economic rights, which allow owners to receive financial compensation if a third party uses their work:
  • Exploitation rights.
    • Reproduction (Article 18 of the Intellectual Property Law).
    • Distribution (Article 19 of the Intellectual Property Law).
    • Public communication/making available to the public (Article 20 of the Intellectual Property Law).
    • Transformation (Article 21 of the Intellectual Property Law).
  • Simple remuneration rights (for example, the right of participation, Article 24 of the Intellectual Property Law).
• Moral rights(Article 14 LPI), those that protect the author's personal connection to their work, and are inalienable and irrevocable. They cannot be waived, as they are inherent to the author and exist to protect their reputation, the most important being the right of paternity and integrity.

Nothing prevents an author from directly exploiting their work, but in sectors such as the audiovisual sector, which requires large investments and collaboration between multiple agents, it is common for the author to resort to third parties whom they authorize to exploit the work through contractual agreements.

Here we can ask ourselves the question, do these types of agreements take the form of a transfer or a license?

A transfer of rights entails a transfer of ownership

The transfer is a legal transaction whereby the transferor transfers, in whole or in part, the exploitation rights to a third party (the transferee), who becomes the derivative owner of those rights. Although ownership is transferred, the author retains his or her moral rights, which remain linked to him or her indefinitely. 

The scope of assignments is usually broad, covering all uses and modes of exploitation of the work, normally for all countries worldwide and for an indefinite period (unless otherwise agreed).

A key element in defining control over the work and its exploitation in economic transactions is the exclusivity regime. For this reason, the agreement must be defined as:

• Exclusive assignment (Art. 48 LPI): the assignee exploits the work to the exclusion of any other person, including the author.
• Non-exclusive assignment (Art. 50 LPI): the assignee shares the exploitation with others, including the author.

In this regard, it is interesting to note the example of director-screenwriters such as Pedro Almodóvar, who, in order to maintain control over his films, created the production company El Deseo together with his brother, thus avoiding transferring the exploitation rights over his scripts and direction of his films to third parties.

Similarly, in the music industry, artists such as Amaral have opted for a similar model by creating their own record label, Discos Antártida.

Both cases reflect the goal of many authors: to achieve a certain degree of creative autonomy that allows them to reduce their dependence on major record labels or production companies and retain control over the management of their intellectual property rights.

When we talk about a license, we are referring to a limited permission to use something

A license is an agreement that affects a work but, unlike a transfer, does not transfer ownership of the rights to it. It is a limited permission to use the work under specific conditions: purpose, duration, territory, or means of exploitation.

Continuing with one of the previous examples, in “Volver,” one of Almodóvar's most iconic feature films, Estrella Morente's version of “Volver” plays throughout the film. This piece was used thanks to a synchronization license, which authorized its use in the context of the film, without the production company acquiring the exploitation rights to the song. 

This type of synchronization agreement in films requires (in favor of the production company) both the authorization of the copyright holder of the composition (lyrics and music), which is usually held by music publishers, and the authorization of the holder of the related rights to the recording, which usually corresponds to the production company or the record label.

In a film, it is very common for assignments and licenses to coexist, as each responds to different needs within the creative process. We detail this in our article on soundtracks, in connection with the Oscars. Understanding this difference is essential for authors and producers, who must be clear about the importance of protecting the rights of each party and avoiding future conflicts.

How can we help you?

In the audiovisual industry, ideas are transformed into content with high commercial value. At CECA MAGÁN Abogados, we understand the challenges of the sector and help you ensure that your projects have adequate legal protection. Contact us here.

Intellectual Property Area