In many settings, the acronym “KBYG” stands for “know before you go.” In the world of commercial contracts, an experienced Atlanta contracts lawyer can help you with an essential task that might potentially be abbreviated as “KBYS,” or “know before you sign.” The right legal counsel can tell you exactly what is in your agreement, what is not, and exactly where your rights and responsibilities start and stop. That way, you can be sure you’re armed with complete knowledge before you make a binding decision.
A recent breach of contract case before the 11th Circuit Court of Appeals potentially looks like an instance where this sort of problem arose. The underlying contract, inked in 2012, covered the co-production of a new telenovela that was based upon the life and times of a one-time leader of a Mexican drug cartel. The co-producing entities were a Colombian television network and a U.S.-based Spanish-language network
The networks’ contract said that the two entities would jointly own “all elements” of the telenovela series. If either network decided it wanted to create a spinoff or other “derivative work,” it had to offer the other network the option to co-produce the derivative series together.
The next year, the American network approached the Colombian network about a possible second season as a sequel to the original. The Colombian network declined. The networks eventually negotiated a deal for the American network to produce Season 2 on its own. In exchange, the Colombian network held the right to broadcast the sequel in Colombia.
That “Letter Agreement” said that the American network would “develop, produce, own, and distribute the sequel” and held the right “to use all elements (e.g., characters, story, scenarios, locales, etc.) derived from” the original season, as well as any “new elements” the American network added as part of the creation of the sequel.
The sequel was a success, leading the American network to make not just Season 2, but also Seasons 3,4,5, and 6, as well as a spinoff.
The Colombian network sued in U.S. federal court, alleging that the American network breached the contract. The Colombian network argued that the letter agreement authorized the American network to make only Season 2, not additional seasons or spinoffs.
An Assignment of ‘Underlying Works or Portions’ in Perpetuity
The Colombian network lost in the District Court, and the 11th Circuit Court of Appeals (whose rulings directly govern federal cases in Georgia, Florida, and Alabama,) affirmed that decision. The key to the outcome was the exact language used in the letter agreement.
The courts concluded that the language of the letter agreement was plain and unambiguous, and explicitly said that the American network “will own and control all exclusive, irrevocable and perpetual right, title and interest (including copyright), throughout the universe in and to the Sequel and all derivatives of the Sequel, and all elements, underlying works or portions thereof . . . in perpetuity.” In addition, the contract gave the American network “perpetual rights in the ‘underlying works or portions’ of ‘the Sequel and all derivatives of the Sequel.’”
The “underlying works or portions” language could only be interpreted as including the original series (Season 1.) That term meant that the Colombian network assigned its entire ownership interest in the series to the American network in perpetuity, and the American did not breach by making the later seasons and the spinoff.
If the Colombian network never meant to make such a deal, it never should have signed the letter agreement. To make sure you’re not binding yourself and/or your business to a contract that makes promises you never meant to make, or hands over rights you never meant to transfer, be sure you’re getting the legal advice and representation you need. The experienced Atlanta commercial contracts attorneys at Poole Huffman, LLC are here to provide exactly that kind of reliable advice and diligent advocacy to you and your business, so that you have full knowledge and end up with a genuinely fair agreement. Contact our attorneys online or by calling 404-373-4008 to schedule your confidential consultation and find out how we can help.
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