The Indonesian Constitutional Court on Wednesday, November 30, 2022, has rejected a petition for judicial review against Law no. 28 of 2014 concerning Copyright, that mainly requested for Articles 18, 30 and 122 of the law to be declared inconstitutional and thus are no longer binding legally.
Articles 18, 30 and 122 addresses mainly with reversionary rights, wherein economic rights that has been previously assigned by the author to a new owner shall return to the author under certain condition or after a certain period of time. Article 18 of the law in particular provides that economic rights of literary or musical works that had been previously transferred through a purchase agreement with flat payment by the purchasing party shall automatically return to the author by the 25th anniversary of the purchase agreement, with Article 30 provides the same but aimed at works of performers. Article 122 further regulates the retroactivity of the reversionary rules so it shall applicable also towards agreements made before the passing of the current copyright law.
The petitioner in the judicial review case is one of the major recording companies in Indonesia, which was soon supported by an association of several other recording companies that joined the proceedings as a Related Party. The Indonesian government, on the other hand, as the defendant was supported by several Related Parties that include a number of individual musicians, as well as at least four associations of musicians and songwriters.
The petitioner argued that transfer of economic rights from author to recording company was based upon contractual agreement between both parties, which was made under the principles of freedom of contract, and shall be irreversible unless the parties agreed the otherwise. Therefore according to the petitioner, reversion of such contractual agreements as mandated by Articles 18, 30 and 122 of the Copyright Law to the effect that the economic rights return automatically to the author is a violation of the purchaser’s human rights as well as constitutional rights.
The Panel of Justices of the Constitutional Court nevertheless rejected the argument of the petitioner. The Panel of Justices contended that freedom of contract principles are not without limitation, and that intellectual property including economic rights as part of authors’ copyright is different in nature from properties covered by the common property law. The Panel agreed with the defendant as well as most of the Related Parties in acknowledging that assignment agreements between authors and recording companies are often made in unfair terms as well as unbalanced situation, wherein most of authors are in much lower bargaining position compared to the other parties. Therefore it was right for the state to intervene on behalf of the disadvantaged authors in order to put balance and fairness back to the table through the reversionary rights provisions.
The court position was reached by eight of all nine Constutional Court Justices, with one Justice dissented on the basis that the issue in question is a private law issue and therefore shall be determined instead by the Commercial Court. The decision was considered groundbreaking and shall be able to bring musicians and recording companies back to negotiation tables to discuss future use of musical works affected by the reversionary rights provisions.