License Contracts in the Entertainment Business
In the entertainment industry the flow of rights is governed by license contracts: it is through this instrument that a producer, platform or distributor obtains the right to use a work, and it is in this contract that the limits of that right remain fixed. The Georgian law on copyright and neighbouring rights distinguishes an exclusive from a simple license, prescribes the mandatory content of the contract, and sets the default rules that apply when a term is left unwritten. For an industry player this is a practical necessity: whether the term, territory and manner of use are written down determines who owns the commercial future of the project.
Under an exclusive license contract, the author or another holder of copyright grants only the licensee the right to use the work in the manner and within the limits defined by the contract, and confers on the licensee the right to prohibit such use by other persons, including the author. A simple license contract grants the licensee the right to use the work on equal footing with the persons who have received the right to use it in the same manner. The distinction is commercially decisive: an exclusive license means exclusivity on the market, a simple license means competitive access — and where the contract does not specify the type, the transferred right is deemed simple. Choosing the wrong label, or leaving it out, thus directly reshapes the market position of both sides.
The Mandatory Content of a License Contract
The law directly names the terms a license contract must contain: an exact description of the work to be used — its title, volume and genre; the specific manner of use of the work; the term and territory of the contract; the procedure for determining the royalty or the amount of the royalty for each manner of use, together with the payment procedure and deadline; as well as other conditions that the parties regard as material. This list is the yardstick of contract quality: omitting any element creates legal uncertainty that the law then fills with default rules, at the risk of harming the interests of a party.
It also matters that the right to use the work in every manner not directly envisaged by the license contract belongs to the author or to another holder of copyright. Rights granted under the contract may be transferred to other persons wholly or partially only where this is directly provided for in the contract. And where the royalty for reproduction is determined as a fixed sum, the contract must set the maximum print run of the work — otherwise the fixed royalty falls out of balance with the scale of exploitation. Producers of physical and digital copies alike should treat this as a hard compliance checkpoint rather than drafting folklore.
Default Rules on Term, Territory and Manner
When the parties fail to state the specific manner of use, the contract is deemed concluded for such use as may be considered necessary for the fulfilment of the intention the parties had at its conclusion. Where the territory is not defined, the contract operates only on the territory of Georgia. The sharpest consequence attaches to the term: where the contract does not provide for its term of validity, the author or another holder of copyright may terminate the contract after 3 years from its conclusion, and the licensee must be notified in writing 6 months before termination.
For an investor planning long-term control over content, the absence of a term and territory is not flexibility but danger: once the statutory period passes, the author acquires the right to terminate the contract. For the author, conversely, the default is protective — after a certain period the author is released from an exploitation that has outgrown the original intention. Negotiating these clauses consciously is the core of licensing strategy for both sides.
The Broadcasting Organization's Special Rights
The law grants a broadcasting organization a special right to use its own program in any form, including the right to receive remuneration for every form of use of the program. This right means the capacity to permit or prohibit: the recording of the program; the reproduction of the recording, except where the program was recorded with the organization's consent and reproduction occurs for the same purpose for which the recording was made; the simultaneous retransmission of the program by air and by cable by another organization; the communication of the program by air or by cable; the public communication of the program in places where entrance is paid; the distribution of the recording in society through sale or another form of transfer of ownership; the rental of the recording or its transfer in another form of possession; and the transmission of the recording by wire or wireless means in such a way that it is accessible to any person from a place and at a time chosen by that person.
For television companies and radio stations this norm is the legal boundary of their channel: the recording, retransmission or online availability of a program by another medium is legitimate only with the permission of the right holder. This right is also the basis for receiving remuneration — every form of use becomes a source of revenue, and a properly structured contract ensures its effective collection across platforms, cinemas and public venues.
Frequently Asked Questions
What is the difference between an exclusive and a simple license?
Under an exclusive license the right is granted to the licensee alone, who may prohibit use by other persons, including the author; a simple license places the licensee on an equal footing with the persons who received the right to use the work in the same manner.
What happens if the contract states no term?
The author or another copyright holder acquires the right to terminate the contract after 3 years from its conclusion, and the licensee must be notified in writing 6 months before termination.
On which territory does the contract operate if none is specified?
Only on the territory of Georgia; for use in other countries the territory must be expressly indicated in the contract.
What does the broadcasting organization's special right regulate?
Every form of the program: recording, reproduction, simultaneous retransmission by air and cable, communication in places with paid entrance, distribution of the recording, rental, and accessibility from any place and at any time chosen by the user — including the right to receive remuneration.
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