Ineffectiveness of the contractual stipulations providing non-existent or unknown forms of exploitation or modalities of use of copyright: Colombian Constitutional Court recent decision 

Por: Luisa Herrera - Docente Investigadora

Using contract law to limit the freedom of private autonomy of parties in intellectual property law has been under debate. Is the intervention of the State justified even where there is no evidence of violation of any law nor of an abuse of rights situation? In the landmark case in the English contract law –Lloyds Bank Ltd v Bundy (1975) QB 326- Lord Denning sought to identify a general principle to justify the accommodation or the interpretation of contracts: “Now let me say at once that in most cases a customer who signs a bank guarantee or a charge cannot get out of it. No bargain will upset which is the result of the ordinary interplay of forces (…) the Common Law will not interfere (…). Yet there are exceptions to this general rule. There are cases in our books in which the courts will set aside a contract, or a transfer of property, when the parties have not met on equal terms – when the one is so strong in bargaining power and the other so weak – that, a matter of common fairness, it is not right that the strong should be allowed to push the weak to the wall”.

Recently in Colombia, Constitutional Court resolved a claim of unconstitutionality against article 181 of Law 1955 of 2019, “through which the National Development Plan for the period 2018-2022 was issued.” Said rule establishes the ineffectiveness of the contractual stipulations that provide forms of exploitation or modalities of use of copyright or related economic rights that are non-existent or unknown at the time of agreeing on the transfer, authorization, or license.

The plaintiff argued that this provision was not constitutional because of its contradiction to articles 58, 61 and 150.24 of the Colombian Constitution because in his opinion, the said law was providing an unreasonable limitation to intellectual property rights which shall be protected above all. Furthermore, the plaintiff argued the provision under examination violated article 16, 61 and 333 since it negatively affected the freedom of IP rights holders to dispose of the economic rights over their works. 

Conversely, the Constitutional Court considered there was not unreasonable legal measure and on the contrary, this was intended to protect intellectual property rights from abuses and arbitrariness. In that sense, in application of the proportionality test, the Constitutional Court established that the law is constitutional, and its goal is to protect authors from contractual imbalances. 

Consequently, this decision is an important precedent of the constitutionality in the intervention of the states in the license contracts or transfer of intellectual property rights to guarantee justice and balance, thus avoiding the abuse of rights.