Copyright Law – Continuity of sublicenses in case of a termination of the main license (07/2012)

The legal situation

Sec. 33 2nd sentence of the German Copyright Act stipulates that copyright licenses shall retain their effect if the right holder who granted the license changes or if he waives his right (“principle of succession protection”). However, this regulation does not concern the legal fate of sublicenses granted by the holder of a (main) license in case that the main license is validly terminated later on.

Judgment of the German Federal Supreme Court (BGH)

In a judgment of July 19, 2012 (I ZR 70/10 – M2Trade) the BGH (1st Senate, responsible for, i.a., copyright law, trademark law, design patent law) now decided that, at least generally speaking, copyright sublicenses will continue if the main license is terminated, regardless of the reason for the termination of the main license. The judgment’s reasons refer to the principle of succession protection for licenses as implemented by the German legislator in several intellectual property right regulations. This commonly accepted principle serves to protect the licensee’s trust in the continuity of his license. The court further explains that and why the sublicensee’s interests in the continuity of the sublicense usually outweigh the copyright holder’s interest in the termination of (also) the sublicense.

Consequences for trademark, design patent and patent sublicenses

The fact that the judgment refers to the general principle of succession protection in the field of intellectual property law and to the sublicensee’s interests in the continuity of the sub-license suggest that the decision’s findings are not limited to copyright sublicenses but also apply to sublicenses in other intellectual property rights such as trademarks, design patents and patents. This is further confirmed by the fact that, in para. 23 of the judgment, the 1st Senate informs that, prior to its rendering of the decision, it asked the 10th Senate of the BGH, responsible for patent law, on its legal opinion on this issue. In response, the 10th Senate did not raise any concerns against the 1st Senate’s legal view.