A recent case, Ellington v. EMI Music, Inc. demonstrated the problems that can arise from unclear definitions of the term “affiliate”. The case involved a copyright renewal agreement between Duke Ellington and the predecessor to EMI Music. Ellington and his heirs were entitled to 50% of net revenues resulting from sales by EMI and its affiliates. EMI then granted sublicensees to several new, foreign entities and paid 50% of their share to the Ellington heirs. The heirs, however, argued that they were entitled to 50% of the foreign entities net revenue, not just EMI’s share. The court agreed with EMI, stating that the original agreement did not include future affiliates.
Licensing Agreements are usually directed at an entity and its “affiliates.” Make sure this term is addressed at the parties it is intended to.
Read the case here.