Co-producers of films spar over profit distribution, intellectual property rights

In recent times, there have been multiple legal disputes among Indian film producers, stemming from disagreements over intellectual property rights (IP), commercial terms, and revenue-sharing agreements. Many of these conflicts have arisen due to poorly drafted co-production agreements or unwritten commercial understandings, leading to ambiguity and potential disputes.


For example, Super Cassettes Industries Pvt Ltd (SCIPL), also known as T-Series, attempted to stop the release of the film “Amar Singh Chamkila” on Netflix, claiming a share of the film’s revenue based on a loan agreement SCIPL had with Reliance Entertainment, the movie’s producers. Similarly, the OTT release of the T-Series film “Animal” faced challenges when Cine 1 Studios claimed a stake in the profit share and intellectual property rights. Furthermore, producers of the upcoming film “Ramayana,” starring Ranbir Kapoor, are currently involved in disputes over copyright infringement.


According to Dhiraj Mhetre, a partner at Khaitan Legal Associates, there has been a noticeable increase in legal conflicts among co-producers in the Indian film industry recently. These disputes commonly revolve around specific intellectual property rights, commercial disagreements, distribution rights, and creative differences. Issues often arise from contracts that are poorly drafted or lack clarity, and the absence of comprehensive legal guidance during the formation of these agreements often leads to uncertainties and subsequent conflicts.


Additionally, it has been observed that legal actions are sometimes filed just a day or two before a film’s release as a tactic to pressure for settlements, as any delay in release results in substantial financial loss. Ruby Singh Ahuja, a senior partner at Karanjawala & Co, mentioned that most cases are filed alleging violations of copyright or defamation.


Royalty disputes due to misuse of intellectual property

Legal disputes between co-producers can often arise from royalty disagreements, which stem from the unauthorized use of intellectual property or failure to acknowledge the original author by the other party. Amit Panigrahi, a partner at Luthra and Luthra Law Offices in India, explains that disputes can also occur due to breach of contract regarding deadlines, deliverables, and scope of work.


Experts note that the typical consequences of producer disputes can include release delays, restrictions on screening and distribution, and prolonged legal battles. These issues can result in the blocking of both the producers’ and investors’ capital for extended periods.


Aishwarya Kaushiq, an advocate at BTG Advaya, further points out that delayed projects may lead to selling distribution rights at undervalued prices, causing significant losses for all parties involved. Additionally, these situations can impact liquidity for studios and production houses, resulting in missed opportunities and loss of goodwill.

Legal experts emphasize that although studios regularly seek legal assistance, they sometimes encounter issues due to outdated contracts or lack of expertise in film-specific legalities within their legal teams. This can lead to disputes, particularly regarding important terms such as determining a party’s “producer” status under the Copyright Act of 1957, and the subsequent distribution of revenue and profits.


Anupam Shukla, a partner at Pioneer Legal, suggests that studios and production houses should always involve experienced entertainment lawyers to create strong co-production agreements that reflect their specific legal understanding. Clear and comprehensive contracts can significantly reduce the potential for conflicts, especially considering the significant amounts of money involved and the fate of the film at stake.


Ranjana Adhikari, a partner at INDUSLAW, acknowledges that while legal assistance can help clarify terms and obligations, conflicts may still arise due to differing interpretations of contract clauses or changes in circumstances. To prevent such conflicts, it is crucial to have clear, comprehensive, and enforceable contracts that cover all aspects of collaboration, including revenue sharing, net profits, intellectual property rights, dispute resolution mechanisms, and exit strategies.


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