The First Civil Senate of the Federal Court of Justice, which is responsible for copyright law, among other things, has ruled that the expiry of a main licence does not generally lead to the expiry of sub-licences derived from it. The Federal Court of Justice had to deal with this issue in two cases, which is of great economic importance because the fate of the sub-licence in the event of the insolvency of the main licensee has been disputed up to now.
One of the disputes concerns the rights to use a computer program:
The plaintiff is the owner of exclusive rights of use to the computer program "M2Trade". It has granted another company (main licensee) rights to use the software in return for continuous payment of licence fees. This company in turn granted a third company (sub-licensee) - with the involvement of another company - a non-exclusive right to use the program. The plaintiff gave notice of termination of the licence agreement to the main licensee on 30 June 2002 after it had ceased to receive payments from the latter. The defendant is the administrator in the insolvency proceedings over the sub-licensee's assets.
The plaintiff is of the opinion that due to the termination of the contract with the main licensee not only the exclusive right of use of the main licensee to the computer program reverted to it, but also the rights of use derived therefrom including the simple right of use granted to the sub-licensee. The defendant had therefore used the program without authorisation since 1 July 2002 and had thus infringed the existing copyright in it. The plaintiff filed a claim against the defendant for, among other things, payment of damages. The Regional Court dismissed the action. The appeal was unsuccessful.
The other case concerns the publishing right to a composition:
The plaintiff is the owner of the worldwide rights to use the composition "Take Five" by composer Paul Desmond. It granted exclusive music publishing rights for Europe to a music publisher. The main licensee granted the defendant's legal predecessor the exclusive sub-publishing rights for Germany and Austria. In 1986, the plaintiff agreed with the principal licensee that all mutual obligations under the publishing agreement relating to the musical work "Take Five" were terminated.
The plaintiff is of the opinion that with the cancellation of the main licence agreement and the expiry of the main licence, the defendant's sub-licence also expired. Among other things, the plaintiff sought a declaration that the defendant was no longer the owner of the music publishing rights to the work "Take Five" for Germany and Austria. The Regional Court granted the application. The court of appeal dismissed the action.
The Federal Supreme Court dismissed the appeal of the respective plaintiff in both proceedings.
The Federal Court of Justice has already ruled in the "Reifen Progressiv" judgment of 26 March 2009 (I ZR 153/06, BGHZ 180, 344) in a case where the principal licensee had granted the sublicensee a non-exclusive right of use against payment of a one-off licence fee and the principal licence had lapsed due to an effective recall of the right of use by the author for non-exercise (Section 41 UrhG) that the lapse of the principal licence does not lead to the lapse of the sub-licence. It has now ruled that the lapse of the main licence does not lead to the lapse of the sub-licence even in cases where the main licensee has granted the sub-licensee a simple right of use against continuous payment of royalties ("M2Tade") or an exclusive right of use against participation in the licence proceeds ("Take Five") and the main licence does not lapse due to a recall for non-exercise, but expires for other reasons - as here due to an effective termination of the main licence agreement for default ("M2Trade") or due to an agreement to terminate the main licence agreement ("Take Five").
In industrial property and copyright law, the principle of succession protection applies (Section 33 UrhG, Section 30(5) MarkenG, Section 31(5) GeschmMG, Section 15(3) PatG, Section 22(3) GebrMG). It states, among other things, that exclusive and simple rights of use remain effective if the owner of the right who granted the right of use changes. The purpose of the protection of succession is to protect the right holder's trust in the continued existence of his right and to enable him to amortise his investment. A weighing of the typically affected interests shows - according to the Federal Court of Justice - that the interest of the sub-licensee in the continuation of the sub-licence, which is considered worthy of protection by the law, generally outweighs the interest of the principal licensor in a reversion of the sub-licence in the event of the lapse of the principal licence. The interest of the principal licensor is largely safeguarded as he can claim the principal licensee for assignment of his claim against the sublicensee for payment of royalties after the lapse of the principal licence. The continued existence of the sub-licence when the main licence ceases to exist thus does not lead to the inequitable consequence that the main licensee who is no longer entitled benefits from royalty payments of the sub-licensee and the main licensor who is entitled again comes away empty-handed. The sub licensee can regularly neither influence nor foresee the cause for the extraordinary termination of the contract concluded between the principal licensor and the main licensee and the premature termination of the former right of use. He would often suffer considerable economic disadvantages as a result of the premature and unexpected termination of his right, which could even lead to the destruction of his economic existence if he depends on the continuance of the licence.
Judgment of the Federal Supreme Court of 19 July 2012 - I ZR 70/10 - M2Trade
Lower courts:
Potsdam Regional Court - Judgment of July 20, 2006 - 2 O 120/05
OLG Brandenburg - Judgment of March 30, 2010 - 6 U 76/06
and
Judgment of the Federal Court of Justice of 19 July 2012 - I ZR 24/11 - Take Five
Lower courts:
LG München I - Judgment of March 17, 2010 - 21 O 5192/09, juris
OLG Munich - Judgment of January 20, 2011 - 29 U 2626/10, juris
Source: Press release of the BGH
Goldberg Attorneys at Law
Attorney at Law Michael Ullrich, LL.M. (Information Law)
Specialist lawyer for information technology law
E-mail: info@goldberg
