Proportional remuneration of the author

Proportional remuneration is the principle according to which the assignment by the author of his or her rights must provide the author with a share proportional to the proceeds from the sale or exploitation of the work. It is laid down in Article L. 131-4 of the French Intellectual Property Code, which permits lump-sum remuneration only in exhaustively listed cases, and it is echoed in Article 18 of Directive (EU) 2019/790, which enshrines the right of authors and performers to appropriate and proportionate remuneration.

The principle and its basis of calculation

The author’s share must be calculated on the receipts from exploitation, which, in publishing, means that royalties are based on the retail price net of tax of each copy. The Court of Cassation holds that the basis must reflect the price paid by the public and not merely the net proceeds received by the exploiting party, save where the statute provides otherwise. The law imposes no rate, which is a matter for negotiation and for the customs of each sector, and extended inter-professional agreements may regulate the terms.

Cases where a lump sum is allowed

Article L. 131-4 IPC permits lump-sum remuneration where the basis for calculating the proportional share cannot be determined in practice, where the means of monitoring the application of the share are lacking, where the costs of calculation and monitoring would be out of proportion to the results to be achieved, where the nature or conditions of exploitation make the proportional share rule inapplicable, either because the author’s contribution is not one of the essential elements of the creation or because the use of the work is merely incidental, and in the case of an assignment of rights in software. A lump sum may also, at the author’s request, replace proportional remuneration with an annuity. For publishing, Article L. 132-6 IPC lists specific publications, such as scientific or technical works, anthologies, prefaces or illustrations, for which a lump sum is allowed for the first edition.

Corrective mechanisms and sanctions

An unfair lump-sum remuneration may be revised where the author has suffered a loss exceeding seven twelfths owing to unfairness or to an insufficient forecast of the proceeds of the work, under Article L. 131-5 IPC. The transposition of Directive (EU) 2019/790 added an adjustment mechanism where the remuneration originally agreed proves disproportionately low compared with all the revenue subsequently derived from exploitation, together with a transparency obligation on the assignee. Breach of these rules is sanctioned by a relative nullity that only the author may invoke.

Key points

The author’s remuneration is proportional to receipts, based on the retail price, and a lump sum is lawful only in the cases provided for by statute, including software. An unfair lump-sum remuneration, or one that has become derisory, may be revised. When drafting an assignment, check that each mode of exploitation carries a determined and compliant remuneration, and provide for the rendering of accounts.

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This glossary entry is general in scope and does not constitute legal advice.

Dhenne Avocats is a patent litigation firm. Matters outside that field, such as trade marks, designs, copyright and IT contracts, are handled by practitioners the firm works with regularly, and by the firm itself when they arise in a patent dispute.

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