A copyright licence agreement is a prime example of two fundamental legal principles: (i) the exclusive rights afforded to a copyright owner – to reproduce, publish, adapt and perform other actions in relation to the copyright work; and (ii) sanctity of contract – the rule that agreements entered into freely and voluntarily must be honoured and enforced.

But Mark Phillips recently learned that the right of copyright is not all-powerful and a contract is not always deemed sacred, when he refused to renew a copyright licence he had granted to a publisher in the matter of Phillips v Allcopy Publishers (Pty) Ltd and Others (00001/2024) [2025] ZAGPPHC 207 (7 March 2025).

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Copyright licence: The history

In 2016, Phillips concluded a 5-year exclusive licence agreement with Allcopy (a publisher) to print, market and distribute textbooks in South Africa and to generate e-publications in both English and Afrikaans for school grades 8 and 9, for the subject of Mathematics.

Over time, Basson and Odendaal (co-applicants in the matter with Allcopy) became involved in the development of the textbook as co-authors. In 2020, all the parties agreed that the terms of the original licence agreement to Allcopy would apply until 29 February 2024.

The relationship between Philips and the other parties broke down by September 2023, when Phillips indicated to Allcopy that he would not grant any rights in relation to the work which he co-authored, beyond the expiry of the licence on 29 February 2024. Phillips claimed that this notification provided sufficient time for Allcopy to phase out the publications.

In November 2023, Allcopy demanded another extension of the licence for a further period of 24 months, which was refused by Phillips. After the licence expired on 29 February 2024, the applicants applied to the Copyright Tribunal (under s33(3) of the Copyright Act, 89 of 1978) for the grant of a compulsory licence.

Tribunal’s approach

The Tribunal reiterated its purpose, which is to avoid abuse of monopoly rights, including, in its view, a situation where an author is seeking, in unreasonable circumstances, to exercise absolute control of the right to produce his or her work.

The Tribunal referred to a Canadian judgment[1] in which the Federal Court of Canada compared the unreasonable withholding of a licence in respect of a patent, to an unconstitutional deprivation of property. It went on to point out that Mr Phillips is not entitled to “absolute control of his works, such that, he can do what he wishes without any form of control” but rather that copyright is “a legislatively conferred right and not an innate right or common law right”.

The Tribunal dealt with each allegation that must be proven when making an application for a compulsory licence, as follows:

(a) The applicant requires a licence

The Tribunal was satisfied that the applicants require a licence until end December 2025, despite Phillips’s argument that the previous licence was granted for a fixed period and that the applicants knew from at least September 2023, that the licence would not be renewed and would therefore have had sufficient time before the expiry of the licence during which to phase out the licensed publications.

(b) A copyright holder has refused or failed to grant the licence.

It was common cause that Phillips refused to grant a licence to the applicants beyond 29 February 2024.

(c) The circumstances dictate that it is unreasonable that the licence should not be granted.

The Tribunal considered the meaning of “unreasonable” in law, concluding that:

“..the term refers to any action or result that exceeds a reasonable expectation. It refers to anything beyond what would be considered as common sense. Thus, the question whether an unreasonableness has reared its ugly head, is one that involves an investigation into the facts, and it ultimately involves making a value judgment.”

The applicants claimed that there is an ongoing demand for the publications from schools and that since most schools in South Africa buy new textbooks and materials on a 3 or 5 year cycle, it would be unfair (and unreasonable) to discontinue the supply of the publications.

The Court considered the issue of the impact on schools that purchase the publications and whether this impact would make it unreasonable for Phillips not to grant the licence. On this point, it was decided that the evidentiary burden must lie on Phillips to demonstrate that schools may accept a sudden change even though the change would mean a price increase.

Furthermore, in the Tribunal’s view, having regard to Phillips’s past conduct, the applicants would’ve had a legitimate expectation that the licence would be renewed or extended, especially since Basson and Odendaal had subsequently acquired rights due to their co-ownership of the work and Phillips’s refusal to grant a further licence would prejudice the other co-owners of the copyright in the work.

The proverbial nail in Phillips’s copyright coffin was his rationale for refusing to extend the licence: “The formal licence agreement came to an end. That is all. And I don’t want to continue. All of the Applicants have known for many years that I no longer want to be part of them. Yet they have done nothing to arrange their affairs accordingly.” The Tribunal viewed this attitude as arrogant and as “a clear demonstration of an abuse of an exercise of existing conferred rights”.

Tribunal’s decision

The Tribunal was satisfied that the applicants’ claim was well-founded in the circumstances, and granted a compulsory licence entitling the applicants to continue printing, marketing and distributing the textbooks until 31 December 2025 on the same terms as those agreed between the parties previously (save for the expiry date).

Conclusion

The monopoly rights afforded to a copyright owner are powerful indeed but cannot be exercised in its sole discretion. Our law provides mechanisms to prevent the abuse of monopoly rights, which means that these rights must be exercised with reasonableness. Despite having agreed to the expiry date of a licence, a licensee may seek recourse under the compulsory licensing provisions of our copyright legislation, to extend its rights beyond the expiry date, in circumstances where the licensor’s failure to renew the licence or extend the term, would be unreasonable.

[1] Smith, Kline & French v Attorney General of Canada (Smith) 1985 CanLII 5509 (FC)