Conditions of validity of the editorial preference contract and sanction

The conclusion of an editorial preference contract with an author gives the publisher a priority right to publish his or her future works in a given genre.

Falling under a special provision of the French Intellectual Property Code specific to publishing contracts, this preference contract tempers the general principle of nullity of the global assignment of future works, as set out in article L. 131-1 of the French Intellectual Property Code.  

To be valid, however, a preference contract between an author and a publisher must meet a strict condition: it must either be limited in time, for a maximum of 5 years, or be limited to five new works.

The Paris Court of Appeal recently reiterated this point in a case concerning music publishing, ruling on the notion of work and recalling the sanction associated with the absence of such a limitation (Paris Court of Appeal, Pôle 5, Chambre 2, March 29, 2024, n°22/00799).

In this case, the dispute was between an author-composer and music publishers who had signed an editorial preference contract and contracts for the transfer of rights and music publishing and for the transfer of audiovisual adaptation rights for several of the author's musical works at the same time as the preference contract was signed.

More specifically, this preferential publishing contract gave the publishers a preferential right to publish and exploit the author's future works for the time required to write and compose a commercial album, defined in the contract as " a collection of at least 10 works commercially released in normal distribution channels (physical and digital)", as well as an exclusive option for the musical works making up the author's next album.

The author then invoked the nullity of the preferential contract insofar as it provided neither for a time limit, nor for a limit of five new works for each genre, as well as the nullity of the assignment and music publishing contracts in view of their indivisibility with the said preferential contract.

This case is a good reminder of the conditions for the validity of a preference contract set out in the French Intellectual Property Code (I), and the penalties for non-compliance (II).

The Court of Appeal specifically recalls that the preferential right conferred on a publisher must be limited " to five new works from the date of signature of the publishing contract concluded for the first work, or to the author's production completed within a period of five years from the same date. "

In this case, the preference contract was neither limited in time nor limited to five works.

Firstly, the judges ruled that the stipulation in the contract that the preference pact is concluded for " the duration necessary for the writing/composition by the author " of a commercially released album had an indeterminate duration, not respecting the five-year limit.

Secondly, the Court of Appeal strictly assesses the notion of work within the meaning of article L. 132-4.

The parties disagreed on the definition of a work, as distinct from the notion of a work. The publishers took the view that the notion of work, a provision designed for book publishing, should be transposed to the music industry to define an album made up of a set of musical works, since the preference contract could not be limited to five works or songs.

On the other hand, the author felt that the term "work" was synonymous with a single musical "work", so that "work" could not refer to an album.

Recalling that the provisions of article L. 132-4 are to be interpreted strictly, enacted in the interests of the author, the Court of Appeal here adopted a restrictive definition of the notion of work in favor of the author's position: work within the meaning of article L. 132-4 of the French Intellectual Property Code cannot be interpreted in the same way as an album, unless a broad interpretation is adopted, which would not be in the author's interest. In such a case, the author would be committing herself to at least thirty musical works, as long as they were grouped together in an album, without any time limit.

Nor, according to the Court, can it be said that the album is a work falling within the predefined genre of "chansons" referred to in the contract, which contract would then cover more than five new works for this genre alone in this case.

It is important to remember from this decision that in music publishing, the notion of "work" refers strictly to a single musical work.

As the preference contract did not meet the requirements of article L. 132-4 of the French Intellectual Property Code, the Court of Appeal declared it null and void.

This solution is in line with established case law, which holds that a preference contract that fails to meet the conditions imposed by the article is null and void.

Furthermore, in this case, the author had signed, at the same time as signing the preferential contract, several assignment and publishing contracts and assignment of audiovisual adaptation rights relating to musical works created previously but not yet published.

In this case, the nullity of the preferential contract entails the nullity of the transfer and music publishing contracts.

The ruling states that, in this case, the assignment and music publishing contracts are closely linked to the preferential contract, since they " were agreed at the same time because of the author's confidence in the publishing companies to which she also assigned her future works".

The Court of Appeal noted that the contracts were indivisible insofar as they were necessary for the completion of the same operation, the author having entered into these publishing contracts solely because she believed herself bound to do so in performance of the preferential contract.

Consequently, the assignment of rights granted by the author to his works in execution of the contract of editorial preference, which is declared null and void, is devoid of cause and must therefore be considered null and void.

As a consequence of the nullity of the contractual ensemble and the annihilation of the contracts, the publishers are then obliged to return to the author all sums they may have received for the exploitation of the musical works covered by the assignment and music publishing contracts.

Revenues received by SACEM publishers for the mechanical reproduction and public performance of the works concerned, as well as sums received for the secondary exploitation of one of the works in a cinematographic film, are therefore paid back to the author.

It is important to stress the importance of respecting the conditions of validity of the preferential contract. Without a time limit or a limit of five new works, the sanction of nullity is inevitable, as the music publisher is rightly deprived of the editorial rights to the published works, and obliged to reimburse any sums he may have received from their exploitation.