A license agreement, unlike a copyright transfer agreement, is a continuous agreement, so it is justified to legally regulate the possibility and rules for its termination.
Pursuant to Article 68 of the Copyright and Related Rights Act:
- Unless the contract provides otherwise and the license has been granted for an indefinite period, the author may terminate it in accordance with the contractual deadlines, and in their absence, one year in advance, at the end of the calendar year.
- A license granted for a period longer than five years shall be deemed, after that period, to have been granted for an indefinite period.
In light of the above provision, it should be noted that in the case of contracts concluded for a fixed term not exceeding five years, their expiration will occur upon the expiry of the term for which the parties entered into them. Unless the parties to a given contract have provided for the possibility of early termination, the contract cannot be terminated unilaterally before the expiry of this term. It is also worth noting that a license agreement granted for a period longer than five years can be terminated after this period, just like a contract concluded for an indefinite period, one year in advance, at the end of the calendar year.
The regulation in question is particularly important for entities that enter into license agreements for very long periods (e.g., 20 years) in their business operations, with the goal of creating an agreement that will be valid for a very long time. In this context, the issue of the non-cancellability of a license agreement should also be addressed. The prevailing position in the legal literature seems to be that it is impossible to conclude a non-cancellable agreement, arguing that concluding such an agreement would restrict the freedom of the parties and infringe upon the fundamental rights of individuals (see E. Ferenc-Szydełko (ed.), Act on Copyright and Related Rights. Commentary. 4th ed., Warsaw 2021, art. 68). On the other hand, it can be pointed out that in the case of non-exclusive licenses granted en masse, the risk of violating the licensor's rights is low, and accepting the inability to conclude a non-cancellable agreement may actually limit the parties' freedom in structuring the legal relationship and prevent the implementation of certain business schemes and assumptions.
In its judgment of 17 December 2015 (VI ACa 1735/14, Legalis), the Court of Appeal in Warsaw recognized the possibility of concluding a non-cancellable license agreement. However, this concerned a specific situation where the license fee was set as a one-time payment, payable upon conclusion of the agreement, and with the assumption that the agreement was non-exclusive.
The discussed issue certainly still raises doubts, and the business practice of market participants, especially based on foreign experience, may translate into a desire to change the applicable law.
This alert is for informational purposes only and does not constitute legal advice.
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