Commissioning Video Editing to Cloud Workers: Explaining 6 Points of the Japanese Business Outsourcing Contract

With the rising popularity of video sharing sites like YouTube, some of you may be considering posting your own videos.

While it’s possible to post videos without editing them, editing can help you create better quality videos.

However, video editing requires specialized knowledge and skills, such as operating editing software, and there’s an increasing trend of outsourcing video editing to crowd workers.

In this article, we will explain the contractual considerations for those who are thinking about outsourcing video editing to crowd workers.

Risks and Issues Associated with Video Editing Contracts

When entrusting video editing to a cloud worker, if a solid contract is not established, various risks may arise, and there is a possibility of getting involved in troubles.

In particular, due to the nature of video editing, issues related to copyright may arise, and it is necessary to thoroughly check even the minor details.

Six Key Points in Video Editing Outsourcing Contracts

When outsourcing video editing to a cloud worker, it is common to enter into a service outsourcing contract.

In a video editing outsourcing contract, the following six clauses are key:

• Clauses related to delivery and acceptance (such as deadlines)
• Clauses related to subcontracting
• Clauses related to confidentiality
• Clauses related to copyright (derivative works)
• Clauses related to the storage of original materials
• Clauses related to damage compensation

In the following, we will explain the points to be aware of and provide examples for each clause.

Provisions Regarding Delivery and Acceptance

As the party commissioning the video editing to a cloud worker, it is meaningless if the video is not delivered by the time you want to use it.

Therefore, it is necessary to stipulate provisions regarding the delivery date.

Specifically, for example, the following clause can be considered.

Article ● (Delivery)
The contractor must deliver the video in question by ● year ● month ● day, in the manner requested by the client.

In video editing, there is also a possibility that a product different from the client’s request may be delivered.

Therefore, provisions regarding acceptance are also important.

Specifically, for example, the following clause can be considered.

Article ● (Acceptance)
1. The client shall inspect the video in question within ● days after receipt, and accept those that have passed the client’s inspection. If there is a non-conformity with the content of this contract (hereinafter referred to as “contract non-conformity”) in the video, the client may request the contractor to complete the performance by re-editing the video. In this case, the contractor must complete the performance by re-editing the video for free within the separately agreed deadline.
2. The delivery of the video is completed at the point when the client has conducted the inspection in the preceding paragraph and judged it to be acceptable.

Provisions Regarding Subcontracting

In the case of video editing work, it is often considered a contract for work (Article 632 of the Japanese Civil Code) as the completion of the task of video editing is the objective.

As a general rule, if it is a contract for work, subcontracting can be freely conducted.

However, as a client, you may want a specific cloud worker to perform the video editing, and if subcontracting is carried out, the risk of information leakage may increase.

Therefore, if the client does not want the cloud worker to subcontract, it is possible to stipulate a clause prohibiting subcontracting.

Specifically, a clause like the following could be considered:

Article ● (Prohibition of Subcontracting)
1. The contractor shall not subcontract all or part of the work to a third party without the prior written consent of the client.
2. If the contractor subcontracts the work with the prior written consent of the client, the contractor shall manage and supervise the subcontractor to comply with the terms of this contract, impose obligations equivalent to those of the contractor under this contract on the subcontractor, and assume all responsibility to the client for all acts related to the performance of the work by the subcontractor as if they were performed by the contractor.

Confidentiality Clause

When a cloud worker is editing a video, they will naturally view the content of the video.

Depending on the content of the video, there may be information that you want to keep secret from third parties. In such cases, it is conceivable to establish a confidentiality clause.

Specifically, a clause like the following could be considered:

Article ● (Confidentiality)
1. The contractor shall not disclose or leak any information (hereinafter referred to as “confidential information”) related to the business or technology or any other business information of the client that they have learned in connection with this project to a third party without the prior written consent of the client, and shall use it only for the performance of their duties and not for any other purpose. The method of disclosing confidential information is not limited to writing, verbal communication, or electronic media.
2. Notwithstanding the provisions of the preceding paragraph, the following information does not fall under the confidential information in this contract:
(1) Information that was already publicly known at the time of disclosure
(2) Information that was already in possession at the time of disclosure
(3) Information that became publicly known after the disclosure, not due to the contractor’s fault
(4) Information obtained from a third party with legitimate authority without a duty of confidentiality
(5) Information developed independently without using the information disclosed by the client
3. Notwithstanding the provisions of paragraph 1, the contractor may disclose confidential information to a third party without the written consent of the client in any of the following cases:
(1) When disclosing confidential information to the extent necessary for the performance of duties to officers, attorneys, accountants, or tax accountants, etc. of the client or the client’s affiliated companies. However, this is limited to cases where the recipient has at least the same duty of confidentiality as stipulated in this article based on laws or contracts.
(2) When disclosing the confidential information to the extent reasonably necessary in accordance with the provisions of laws and regulations (including the rules of the Financial Instruments Exchange) when the government, competent authorities, regulatory authorities, courts, or the Financial Instruments Exchange demand or request the disclosure of the confidential information. In such cases, the contractor must notify the client in advance of the content of such disclosure (or as soon as possible after the disclosure if it is difficult under laws and regulations).

Provisions on Copyright (Derivative Works)

When you commission a cloud worker to edit a video, depending on the content of the edit, the edited video may be considered a derivative work.

Derivative works are defined in Article 2, Paragraph 1, Item 11 of the Japanese Copyright Law as follows:

(Definition)
Article 2 In this law, the meanings of the terms listed in each of the following items shall be as prescribed in the respective items.
…
Item 11 Derivative Works: Works created by translating, arranging, transforming, dramatizing, cinematizing, or otherwise adapting a work.

A derivative work (the edited video) is a separate work from the original work (the pre-edited video), so the copyright of the edited video belongs to the cloud worker who edited the video.

This could potentially limit the client’s use of the video. Therefore, it may be advisable to stipulate that the copyright of the edited video belongs to the client.

However, when stipulating a clause on the transfer of copyright, care must be taken in relation to Article 61, Paragraph 2 of the Japanese Copyright Law.

(Transfer of Copyright)
…
2 In a contract to transfer copyright, if the rights prescribed in Article 27 or Article 28 are not specifically mentioned as the object of the transfer, these rights are presumed to be reserved by the transferor.

In relation to Article 61, Paragraph 2 of the Japanese Copyright Law, it is important to note that if the transfer of the rights stipulated in Articles 27 and 28 of the Japanese Copyright Law is not explicitly stated, it will not be transferred.

For example, the following clause could be considered for the transfer of copyright of the edited video:

Article ● (Transfer of Copyright)
The contractor shall transfer to the client all copyrights related to the video in question (including the rights stipulated in Articles 27 and 28 of the Japanese Copyright Law).

https://monolith.law/corporate/copyright-infringement-precedent[ja]

Clause on Original Video Storage

Depending on the method of delivery of the edited video, it may be considered necessary to require the cloud worker to store the edited video for a certain period of time.

Specifically, a clause like the following could be considered.

Article ● (Storage of Original Video)
The contractor shall, as a rule, store the original video of the subject matter with responsibility for ●● years after the delivery of the subject video. The storage of the original video after the storage period has passed shall be determined separately by discussion between the client and the contractor.

Clause on Damages

In the case of a contract related to video editing, there is a possibility that a breach of contract may occur, such as the cloud worker delivering the video late or leaking information about the video.

Considering that damages to the client may occur due to the cloud worker’s breach of contract, it is considered to establish a clause on damages.

Specifically, for example, the following clause can be considered.

Article ● (Liability for Damages)
The client or the contractor shall be liable for compensating any damages (including attorney’s fees, but not limited to these) caused to the other party in relation to this contract.

Conclusion

In this article, we have explained the contractual considerations for those considering outsourcing video editing to cloud workers.

When entering into a contract with a cloud worker, there are cases where no contract is created or a simple contract is used. However, to avoid legal troubles, it is essential to conclude a contract with solid content. Therefore, if you are considering outsourcing video editing to a cloud worker, we recommend consulting with a lawyer who has specialized knowledge.

Introduction to Our Firm’s Measures

Monolith Law Office is a legal office with high expertise in both IT, particularly the Internet, and law. When utilizing cloud workers, it is necessary to create a contract. Our firm handles the creation and review of contracts for various cases, from companies listed on the Tokyo Stock Exchange Prime Market to venture companies. If you have any trouble with contracts, please refer to the article below.