Licensing Copyright in Japan: Essential Terms for Your Agreements

Japanese Attorney at Law - Bengoshi L.L.

• 8 min read

Copyright licensing (利用許諾 - riyō kyodaku) is the cornerstone of commercializing creative works. Whether you are a licensor seeking to monetize your intellectual property or a licensee aiming to legally utilize copyrighted material, a well-drafted agreement is paramount, particularly in a jurisdiction like Japan with its own specific copyright framework. Understanding the nature of copyright licenses under the Japanese Copyright Act (著作権法 - Chosakuken-hō), the distinctions between exclusive and non-exclusive grants, and the key terms that should be addressed can prevent disputes and ensure clarity in business dealings.

Article 63, Paragraph 1 of the Japanese Copyright Act provides the statutory basis for licensing: "The copyright owner may grant to another person permission to exploit the work."

A crucial aspect to grasp is the fundamental nature of a copyright license in Japan:

  • Primarily a Contractual Right: A license, in its basic form, grants the licensee a contractual permission from the copyright owner (licensor) to use the work within the agreed scope. It essentially functions as an agreement by the licensor not to sue the licensee for copyright infringement for acts that fall within the license's terms. It does not, by itself, typically create a new proprietary right in the work for the licensee that is assertable against all third parties.
  • No General Registration System for Licenses: Unlike copyright assignments (transfers of ownership), which can be registered to gain effect against third parties (Article 77), there is no general system in Japan for registering copyright licenses. An important exception is the "right of publication" (出版権 - shuppan-ken) under Articles 79-88, which is a specific type of exclusive license for publishing literary or artistic works, possesses characteristics similar to a real right (droit réel), and can be registered. However, for most other types of copyright licenses, registration is not an option. This lack of registration impacts a licensee's ability to directly enforce rights against third-party infringers.

Types of Licenses and Their Implications

Copyright licenses in Japan, as elsewhere, are broadly categorized as non-exclusive or exclusive:

1. Non-Exclusive License (非独占的利用許諾 - hi-dokusenteki riyō kyodaku)

Under a non-exclusive license, the copyright owner grants permission to one licensee but retains the right to grant similar licenses to other parties and also to exploit the work themselves.

  • Rights Against Third-Party Infringers: A non-exclusive licensee generally has no direct standing to sue a third party for copyright infringement. Their recourse is typically to inform the licensor and rely on the licensor to take action.

2. Exclusive License (独占的利用許諾 - dokusenteki riyō kyodaku)

In an exclusive license, the copyright owner agrees not to grant the same rights to any other party within the defined scope (e.g., for a specific territory, duration, or type of use). Often, the licensor also agrees not to exploit the work themselves in a manner that would compete with the exclusive licensee.

  • Rights Against Third-Party Infringers: The position of an exclusive licensee regarding third-party infringers is more complex and has been a subject of legal debate in Japan.
    • Direct Standing: There is no clear statutory right for an exclusive licensee to directly sue infringers in their own name for copyright infringement (unlike, for example, an exclusive patent licensee under certain conditions).
    • Damages: Some legal theories suggest that an exclusive licensee might be able to claim damages from an infringer if the infringer was aware of the exclusive license and the infringement caused direct harm to the licensee's business.
    • Injunctive Relief via Creditor's Subrogation (債権者代位権 - saikensha daii-ken): A potential avenue for an exclusive licensee to seek injunctive relief is through a "creditor's subrogation claim" under Article 423 of the Civil Code. If the license agreement obligates the licensor to prevent third-party infringement, and the licensor fails to do so, the exclusive licensee (as a creditor of this obligation) might be able to step into the licensor's shoes to pursue an injunction against the infringer. However, success depends on establishing the licensor's clear obligation and their failure to act. Court decisions have been cautious; for example, the Tokyo District Court in the Tonttu Plush Toy case (January 31, 2002) and the Smartphone Case case (September 28, 2016) denied such subrogated claims based on the specific contractual terms and facts presented, finding no clear obligation on the licensor to pursue every infringement for the licensee's benefit.

Given these uncertainties, it is crucial for exclusive license agreements to explicitly detail the licensor's obligations regarding third-party infringement and any rights the licensee might have to compel action or act on the licensor's behalf.

Transferability of Licensed Rights

Article 63, Paragraph 3 of the Copyright Act stipulates that a licensee may not transfer its right to exploit the work to a third party without the consent of the copyright owner (licensor). This reflects the often personal nature of the licensing relationship and the licensor's interest in controlling who exploits their work. Therefore, any rights for the licensee to sublicense must be explicitly granted in the license agreement.

A comprehensive and clearly drafted license agreement is vital to prevent misunderstandings and disputes. Key terms to address include:

  1. Identification of the Work(s) and Parties: Precisely identify the copyrighted work(s) being licensed and the full legal names of the licensor and licensee.
  2. Grant of Rights: This is the core of the license and requires utmost specificity:
    • Licensed Rights: Clearly enumerate which of the copyright owner's exclusive rights (as defined in Articles 21-28, e.g., right of reproduction, right of public transmission, right of adaptation, right of distribution) are being granted. Vague language can lead to disputes.
    • Scope of Use: Define the permissible manner of exploitation.
    • Territory: Specify the geographical area where the licensee is permitted to exploit the work.
    • Duration: State the term of the license (e.g., a fixed period, for the life of copyright, terminable on notice).
    • Field of Use: Restrict the license to particular purposes or markets if intended (e.g., "for educational use only," "for incorporation into mobile applications").
  3. Exclusivity: Clearly state whether the license is exclusive or non-exclusive. If exclusive, define the scope of exclusivity precisely (e.g., exclusive for a particular territory or type of use).
  4. Sublicensing Rights: Explicitly state whether the licensee has the right to grant sublicenses. If so, outline the conditions, such as the licensor's approval of sublicenses or the licensee remaining liable for sublicensees' actions.
  5. Consideration/Royalties:
    • Detail the payment structure (e.g., lump sum, running royalties based on sales or usage, minimum guarantees).
    • Specify royalty rates, calculation methods, payment schedules, and currency.
    • Include provisions for reporting, auditing, and record-keeping if royalties are based on usage or sales.
  6. Warranties and Indemnities:
    • Licensor Warranties: Commonly include warranties that the licensor owns or has sufficient rights to grant the license, and that the licensed work (to the best of their knowledge) does not infringe any third-party intellectual property rights.
    • Licensee Warranties: May include warranties regarding the manner of use, compliance with laws, etc.
    • Indemnification: Clauses specifying which party will bear the costs and liability if third-party claims arise (e.g., if the licensed work is found to infringe another's copyright, or if the licensee uses the work outside the licensed scope).
  7. Moral Rights: Since moral rights are inalienable and remain with the author, it is standard practice in Japan to include a clause where the author (if the licensor or if the licensor has the authority to procure such an agreement from the author) agrees not to exercise their moral rights (不行使特約 - fukōshi tokuyaku) against the licensee and its permitted sublicensees for uses that are within the scope of the license agreement. This is particularly important for the right of integrity, as many exploitations may involve some form of alteration or adaptation.
  8. Third-Party Infringement: Define the parties' responsibilities if the licensed work is infringed by a third party. This may include obligations for the licensor to take enforcement action, or rights for an exclusive licensee to request such action or potentially participate in or control litigation under certain conditions (subject to the legal limitations on standing mentioned earlier).
  9. Termination: Specify the conditions under which the agreement can be terminated (e.g., material breach, insolvency, expiration of term) and the consequences of termination (e.g., cessation of use, return or destruction of materials, survival of certain clauses).
  10. Governing Law and Dispute Resolution: Specify the governing law (often Japanese law for domestic licenses) and the method for resolving disputes (e.g., court litigation in a specific jurisdiction, arbitration).

Implied Licenses (黙示の利用許諾 - mokushi no riyō kyodaku)

While explicit written agreements are always preferable, Japanese courts may, in certain circumstances, find that an implied license has been granted based on the conduct of the parties and the context of their relationship. This is a fact-intensive inquiry. Courts have found implied licenses in various situations, such as:

  • Where a freelance photographer delivered film to a magazine for publication and discussions about payment ensued, implying permission for that specific use (Magazine Blanca Photo case, Tokyo District Court, January 25, 1993).
  • Where an employee, upon leaving, provided lecture materials they created to a successor for continuing company training, implying permission for the company's continued use and reasonable modification (Instrumentation Industry Association Lecture Material case, IP High Court, October 19, 2006).
  • Where a photographer was commissioned to take photos for a specific purpose (e.g., for a race organizer's website) and delivered the data for a fee, implying permission for that intended use (Motorcycle Photo case, IP High Court, December 24, 2009).

However, relying on implied licenses is inherently risky due to the uncertainty involved.

It's important to understand the distinction between a mere breach of a license term and an act that constitutes copyright infringement:

  • Acts Outside the Scope of the License: If a licensee exploits the work in a manner that is outside the granted scope of the license (e.g., reproduces more copies than permitted, uses it in an unauthorized territory, or for an unauthorized purpose), such acts are generally considered copyright infringement because they are not covered by the permission granted.
  • Breach of a Contractual Term Within the Scope: If the licensee's act itself is of a type permitted by the license (e.g., reproduction), but they breach another contractual obligation related to that act (e.g., failure to pay royalties on time, failure to provide reports), this is primarily a breach of contract. Legal commentary based on the provided PDF suggests that such a breach does not automatically transform the otherwise permitted exploitation into copyright infringement unless the license agreement itself is validly terminated or rescinded as a result of the breach, thereby revoking the permission to exploit. Once the permission is gone, continued exploitation becomes infringement. This nuanced distinction means that a licensor's primary remedy for certain breaches might be contractual (e.g., suing for unpaid royalties) rather than a direct copyright infringement claim, unless the breach is so fundamental as to justify termination of the license.

The specific wording of the license agreement regarding what constitutes a material breach and the consequences thereof (including rights to terminate) is therefore critical.

Brief Comparison with U.S. Licensing Practices

While many core concepts in licensing are similar internationally, some differences in U.S. practice include:

  • Writing Requirement for Exclusive Licenses: In the U.S., an exclusive license is considered a transfer of copyright ownership (17 U.S.C. § 101) and thus generally requires a signed writing to be valid (17 U.S.C. § 204(a)). Non-exclusive licenses in the U.S. can be granted orally or implied by conduct, though writing is always advised.
  • Recordation of Licenses: In the U.S., documents pertaining to copyright, including exclusive licenses (as transfers), can be recorded with the Copyright Office. Recordation provides constructive notice and can affect priority between conflicting transfers. As noted, Japan lacks a general registration system for most copyright licenses.

Conclusion

Copyright licensing in Japan is governed by a framework that, while sharing common international principles, has its own specificities, particularly regarding the nature of the license as a contractual right, the general non-registrability of licenses, and the rules surrounding an exclusive licensee's ability to enforce rights. The adage "get it in writing" is paramount. Meticulously drafted license agreements that clearly define the scope of permitted uses, financial terms, responsibilities regarding moral rights, and mechanisms for enforcement and dispute resolution are essential for both licensors and licensees to protect their interests and foster successful commercial relationships involving copyrighted works in Japan.