What are Ancillary Rights?
How do you legally define it?
What are the essential elements you should know!
In this article, we will break down the legal definition of Ancillary Rights so you know all there is to know about it!
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What Are Ancillary Rights
Ancillary rights is a term referred to all rights a person or entity can exercise in connection with the exploitation of property.
For example, in the film industry, the term “ancillary rights” or “allied rights” in contracts to refer to other rights associated with the creation of an original feature film, such as:
- Creating sequels
- Merchandising the film
- Creating television series
- Writing books based on the film
- Creating soundtracks
- Publishing content on the web
In essence, “ancillary” rights refers to “supplemental” rights or other rights that are connected to the primary right to the property.
The fact that the right is ancillary means that the “other” rights depend on the primary right or are closely linked to one another.
The term “ancillary” is defined as something that is “subordinate” or “aiding” something else.
Ancillary Rights Definition
Ancillary rights are rights that are “supplementary” or “derived from” the primary right.
In entertainment law, an author will have primary rights on the script it writes for a movie.
Based on the author’s primary right, the author can expect to receive a share of the profits if the script of the movie is used to publish a book, create video games, make T-shirts, posters, action figures, or other rights deriving from the primary right.
In entertainment law and in the film industry, ancillary rights are quite significant.
Authors, actors, writers, filmmakers and other stakeholders will often consider the terms of their contract carefully to ensure they do not lose out on ancillary rights they may normally expect.
An author writing a story for a movie may be solicited to provide its content for television shows, books, screenplays, newspaper articles, or other uses such as the creation of video games.
In such instances, it’s important to evaluate the scope and extent of the “allied rights” or “ancillary rights” in the ancillary rights agreement to fully understand the author’s rights when making a movie, merchandising it, making shows, or other work products.
If the author retains its rights on what’s ancillary, then it can expect to receive a share of the profits for the movie (the original purpose of the work) and all ancillary commercial endeavors (TV shows, video games, books etc).
Ancillary rights can also be seen in the context of legal proceedings.
For instance, imagine a plaintiff wins a lawsuit against the defendant in the context of a negligence lawsuit.
The plaintiff is therefore entitled to get compensatory damages from the defendant.
If the defendant fails to comply with the judgment rendered against it, the plaintiff will have ancillary rights in filing for a writ of attachment to seize the defendant’s property and legally sell it.
The seizure proceedings and sale of property is considered ancillary rights to the initial award of damages in a judgment.
Ancillary Right Clause
Contracts may specifically address ancillary rights in an ancillary rights provision.
Generally, the clause is drafted in such a way that the primary right and the ancillary rights are defined between the parties.
Let’s look at some sample contract clauses.
Example 1: Share Pledge Agreement
As long as no Enforcement Event has occurred which is continuing, the Pledgor shall retain and exercise its voting rights in respect of the Shares to the extent that the Pledgor in exercising those rights does not: (i) cause an Enforcement Event to occur, or (ii) materially prejudice the validity or enforceability of the Pledge.
Example 2: Sale and Purchase Agreement
The Sold Shares are sold together with all ancillary rights attaching to the Sold Shares, in particular the right to participate in any dividends or other distributions and any subscription or pre-emption rights. The Purchaser is exclusively entitled to any profits accruing for the present financial year, as well as to all profits accrued and not yet distributed for any previous financial year.
Ancillary Right Takeaways
So, what is an Ancillary Right?
Let’s look at a summary of our findings.
Ancillary Rights Meaning
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