Newsletter
Exploitation of derivative works after licensing of original works to third parties
According to the Supreme Court's judgment (113-Tai-Shang 1449), since a copyright holder grants an exclusive license to another for reproducing his computer program work (Work A), his engagement of a third party to sell his derivative work (Work B) that he adapted from Work A may constitute an infringement of the exclusive licensee's right.
The Supreme Court's judgment overruled the judgment rendered by the Intellectual Property and Commercial Court (112-Min-Chu-Shang-Keng-2), which found that Work B is a derivative work of Work A, and that the two works are not the same or do not) contain substantial similarity. In addition, the exclusive license agreement entered into between the copyright holder and the licensee covers only the reproduction right of Work A and does not cover the adaptation right. Thus, the exclusive licensee cannot prohibit the copyright holder from adapting Work A for another work. Furthermore, the exclusive license does not extend to software that is not the same as nor substantially similar to Work A. Thus, the copyright holder did not breach the exclusive license agreement when he delivered Work B to a third party for sale.
Nonetheless, the Supreme Court ruled the following:
1. Adaptation is to create another work based on the original work. It requires the addition of a new creation to the original work. Thus, under the Copyright Act, a derivative work which is adapted from the original work contains the content or expression of the original work and the new creation which differentiates the derivative work from the original work. A derivative work is protected by copyright only for its new creation, and such protection does not prejudice the copyright received by the original work for its original creation.
2. When the copyright holder of a derivative work exploits the derivative work, such exploitation would inevitably involve the exploitation of the content or expression of the original work. If such exploitation is not authorized or licensed by the copyright holder of the original work, it would constitute a copyright infringement.
3. In this case, the copyright holder still enjoys the exclusive right to adapt his work to a derivative work. However, when he delivered Work B (the derivative work at issue) to a third party for reproduction and sale without obtaining consent from the exclusive licensee of Work A, it should be further examined as to whether such exploitation infringes the exclusive licensee's rights. The original judgment found that the copyright holder did not breach the exclusive license agreement by licensing a third party to reproduce and sell Work B. Such finding should be challenged because it is simply based on the fact that the copyright holder only granted the exclusive license for the reproduction of Work A and has not licensed the adaptation right therefor.