Procurement contracting for commercials

Copyright issues in advertising campaigns.

A First Instance Court in Milan was called to deal with a dispute between a local company producing advids and a renowned foreign car manufacturer.
The dispute originated from the following factual background: the Italian subsidiary of a car manufacturer, selling its models under a worldwide famous brand, had commissioned a local company the assignment of producing a video commercial to promote its most recent models. After fulfilling the assigned task by providing 7-10 minutes versions of video commercials (though no written agreement was signed between the parties), the producer and the author the advids went to Court claiming infringement of their IP rights.

Advertiser and practitioners fighting it out in Court: I own the copyright, no I do!

Specifically, the plaintiffs argued that the client: (i.) had unduly altered the commercials, (ii.) had used them for diffusion on the Internet without proper consent for such use, and (iii.) had cancelled the author’s name at the end of the videos (therefore infringing on the author’s moral rights). Damage compensation was also sought.

The principals defense arguments.

The defendant objected to his defense that:
- the verbal agreements between the parties had to be considered as subject to the principles governing procurement contracts (all typical uses of the videos provided therefore being implied),
- the use for diffusion on the Internet had been agreed with the production company,
- under the provisions of the copyright act it was legitimate and possible for the principal modifying the submitted commercials to adapt them to the requirements of the various media used for diffusion,
- current business practices allowed to omit reference to the author for messages of extremely short duration fulfilling a promotional purpose.

The Court’s view on copyright ownership.

The Court agreed on defendant’s argument that the wording of the invoices issued by the plaintiffs clearly showed that the commercials’ use for diffusion on the Internet had been allowed and that copyright provisions permitted the principal to rework/partially modify the production company’s videos. Plaintiff’s claims on these points were subsequently dismissed.
However, once the name of the videos’ author was contained in the submitted original versions of the commercials, canceling such reference resulted in a violation of the latter’s moral rights. For such infringement, the Court awarded Euro 75.000 in damages.

The take away

Even in the frenzy world of Adland hastily achieved verbal agreement are never an advisable solution. By spending a little additional time to draft a clear (written) contract, marketers will save themselves from trouble (and unforeseen expenses) in the aftermath.