Abstract
When the economic exploitation rights in a copyright-protected work belong to more than one person, must everyone agree before distribution rights can be granted to a third party? In Order No. 33231 of 16 December 2019, the Italian Supreme Court addressed precisely this issue and reached a less intuitive conclusion than one might expect: the ordinary commercial exploitation of a work may be decided by a majority, but this does not allow one of the co-rights holders to be excluded from the decision-making process or from the resulting proceeds.
When rights in a work belong to more than one person
The dispute arose from the co-production of a film whose rights were held by three companies. One of them, holding a 50% share, had entrusted another company with the exploitation of the film’s home video rights in Italy for three years. The agreement was subsequently ratified by a second co-producer, which held a 25% share, while the third – also holding a 25% share in the work, but entitled to 30% of the proceeds – had not participated in the decision.
The third co-producer therefore brought proceedings, arguing that, since the case concerned the economic exploitation of jointly owned property, the agreement could not have been entered into without the consent of all the co-owners. In its view, the three-year grant of home video rights affected the film’s economic value so significantly that it was, in substance, comparable to an act of disposal.
The question before the Supreme Court was therefore a very practical one: does the distribution of a film constitute an act of ordinary management of the work, or is it an act of such significance that it requires the unanimous consent of all rights holders?
Is unanimity required to exploit a work commercially?
The necessary starting point is Article 10 of the Italian Copyright Act (“Copyright Act”). Where a work is created through the indistinguishable and inseparable contributions of several persons, copyright is jointly owned by the co-authors and, unless otherwise provided, the rules governing co-ownership apply to its management (Articles 1100 et seq. of the Italian Civil Code).
In the case of cinematographic works, however, the different parties involved must be distinguished. Article 44 of the Copyright Act identifies the co-authors of a film (the author of the story, the screenwriter, the composer of the music and the artistic director), while Article 45 of the Copyright Act grants the producer the exercise of the economic exploitation rights in the work. The Supreme Court expressly recalled this distinction, referring to the principle that the producer holds “an original right of its own, based on the production function performed by it”.
In the case considered by the Supreme Court, however, the main issue concerned the relationship between multiple co-producers and the economic management of the work.
According to the Supreme Court, entrusting a third party with the distribution of a film – including through an atypical contract – is the normal means by which a cinematographic work is commercially exploited. Precisely because a film, unlike other assets, is not normally exploited directly by its producers, its commercial value is realised through distributors, television broadcasters, home video and other commercial channels.
The conclusion was therefore that granting distribution rights to third parties constitutes, in principle, an act of ordinary management.
For acts of ordinary management, Article 1105 of the Italian Civil Code allows a majority, calculated according to the value of the respective shares, to adopt decisions that are binding on the minority as well.
If a co-owner is excluded, is the distribution agreement invalid?
This is probably the most interesting aspect of the decision.
The fact that the majority may decide does not mean that the minority co-producer can simply be ignored. Article 1105 of the Italian Civil Code gives all co-owners the right to participate in the management of jointly owned property and requires them to be informed in advance of the subject matter of the proposed decision.
In the case at hand, the Supreme Court held that the initiative taken without involving the third co-producer had in fact infringed its rights: not only because it had been excluded from the decision concerning exploitation of the work, but also because the agreement allocated the consideration to the company that had taken the initiative, preventing the other company from participating in the economic benefits to which it was entitled.
The consequence, however, was not automatically the invalidity of the distribution agreement.
The Supreme Court upheld the award of damages made in favour of the excluded co-producer, but considered the majority decision to exploit the work commercially to be valid. In the specific case, the first co-producer’s 50% share, combined with the subsequent approval of the second co-producer holding 25%, was sufficient to reach the majority required to make the decision.
Being excluded from the decision-making process does not therefore automatically entitle a co-owner to invalidate the agreement entered into with the third party.
Moreover, in order to obtain the annulment of the resolution, the co-producer excluded from the decision would have had to bring proceedings within the thirty-day period provided for by Article 1109 of the Italian Civil Code. The Supreme Court held that the challenge had been brought too late because the company had already been aware of the transaction for several months when it commenced proceedings.
What if the distribution agreement diminishes the value of the work?
Unfortunately, the Supreme Court’s decision leaves one particularly interesting issue unresolved.
The excluded co-producer had argued that a three-year grant of home video rights could, depending on its specific terms, consume a substantial part of the film’s commercial value. In other words, could an agreement formally characterised as a distribution agreement have such a significant economic impact that it effectively becomes comparable to an outright disposal of the rights?
The distinction would be significant. Article 1108 of the Italian Civil Code requires unanimity, namely the consent of all co-owners for acts involving the disposal of jointly owned property, whereas a majority is sufficient for ordinary management.
The Supreme Court, however, did not rule on this specific issue. The argument concerning the possible exhaustion of the residual value of the work would have required prior findings of fact and had not been adequately raised before the lower courts. The relevant ground of appeal was therefore declared inadmissible.
It would therefore be incorrect to derive from the Order a general rule that any licence or distribution agreement may always be approved by a majority, regardless of its duration, exclusivity, territorial scope or capacity to absorb the economic value of the work.
This is precisely where the decision becomes particularly useful from a contractual perspective. Where several persons share rights in a work, it is not enough simply to establish their respective percentages. It is also advisable to specify who may negotiate with third parties, which transactions require unanimity, which may be approved by a majority, how revenues are to be allocated, and how all rights holders must be involved in decision-making.
As is more generally the case with agreements concerning creative works, the practical ability to exercise rights depends not only on the law, but also on the content of the agreements between the parties.
Order No. 33231/2019 therefore shows that, in the joint management of a work, majority and unanimity are not interchangeable concepts. But it also demonstrates something equally important: holding a minority share does not mean being without protection. The precise scope of that protection will depend on the nature of the transaction, the content of the agreements, the manner in which the decision was taken and, above all, how promptly any infringement is challenged.
Reviewed by: Daniele Camaiora
Publication date: 1 September 2026
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Margherita Manca
Avvocato presso lo Studio Legale Canella Camaiora, iscritta all’Ordine degli Avvocati di Milano, si occupa di diritto industriale.