Mumbai: The controversy surrounding Ranveer Singh's exit from Don 3, which prompted producers to take the matter public and led to a brief non-cooperation move against the actor, has again brought the spotlight on Bollywood's lack of a structured and equitable exit mechanism in film contracts.

This development, at a time when the industry is grappling with soaring costs and a shortage of stories that can be developed into commercially viable franchises, however, may prompt stakeholders to ensure clearer and prominent exit clauses in future film contracts, lawyers told ET.

Among the various provisions that could help avert such disputes, artists' exit rights and creative control mechanisms rank high on the list, they said.

"Creative control disputes are among the most litigated yet contractually overlooked areas in Indian entertainment law. A well-drafted artist agreement should set a clear deadline tied to the start of principal photography, beyond which an artist can no longer exit the project on grounds of creative disagreement," said Priyanka Sinha, cofounder and partner at law firm A&P Partners.

"Before that deadline, a clean exit option, backed by an advance refund obligation, gives both parties a legally sound way out, limiting exposure to consequential damage claims on either side. The clause reflects a simple principle: creative freedom and commercial certainty can coexist; it just takes precise drafting," she added.

Lawyers also pointed to the importance of including an "exclusivity period" clause in film contracts.

"It is critical to spell out the period for which an artist will be associated with a film. This will help avoid clashes between artists and producers," said a lawyer who did not want to be named.

In 2018, actor Sara Ali Khan began shooting for director Rohit Shetty's film Simmba after her debut film Kedarnath, directed by Abhishek Kapoor, was delayed. Subsequently, Kapoor demanded exclusive dates from Khan for Kedarnath. These dates coincided with her shooting schedule for Simmba. Consequently, Kapoor initiated legal proceedings against the actor.

Legal experts also stressed that film contracts should include provisions for the reimbursement of documented costs.

"Given the significant investments made in development, financing, marketing and production planning based on the cast, agreements should provide for reimbursement of documented costs, along with other pre-agreed remedies, in the event of an unjustified withdrawal by an artist," said Nitika Nagar Mohandas, associate partner designate at Anand & Naik.

Film contracts involve personal services and therefore cannot be specifically enforced, said experts.

"In India, the legal position regarding contracts involving personal services, such as those of actors, directors and other creative professionals, is that they cannot be specifically enforced. A court will not compel an artist to continue performing in a project against his or her will," said Anushree Rauta, head of media and entertainment practice at ANM Global.

"While Indian courts have historically recognized and enforced negative covenants during the subsistence of a contract, such enforcement is not automatic and is subject to important limitations, particularly where the effect would be to force the artist to remain idle or indirectly compel performance," she added.

Companies are increasingly hiring law firms to help them handle the legal hurdles of using popular movie characters in advertising, as brands seek stronger associations with such figures to maintain recall and relevance in a crowded, distraction-heavy market, say legal experts.

Character merchandising is growing in popularity, as businesses recognize the commercial appeal of film characters and the need to incorporate them into marketing and promotional campaigns but are unsure about the legal implications.

Law firms say there is a steady rise in queries from clients, especially in the FMCG, telecommunications and consumer electronics sectors, about the legal aspects of character merchandising from popular films.

“They want to know about potential copyright and trademark violations. They also enquire about the necessity of obtaining explicit licences from film producers or rights holders, and the risk of litigation or reputational harm if they proceed without proper authorization,” said Priyanka Sinha, partner at law firm A&P Partners.

Lawyers and brand merchandising experts said companies are becoming more aware of the strong commercial appeal of movie characters and the benefits involved in integrating them into their advertising and promotional activities.

In recent years, movie and web series characters such as Vikram Rathore (Jawan), Vicky (Vicky Vidya Ka Woh Wala Video), Aasmaan Singh and Parvaiz (The Ba***ds Of Bollywood) have been commercially exploited. The latest is the character Jamil Jamali from Dhurandhar, used widely in brand promotions by companies such as India Post and Bharat Sanchar Nigam Ltd.

“We are aware of the widespread usage of characters from the Dhurandhar franchise. It reflects how strongly they have connected with audiences and entered the larger cultural conversation,” said a spokesperson from Jio Studios, producers of the Dhurandhar movie franchise. “While we deeply value this popularity, all associated rights remain with us. We approach such matters with due consideration,” the spokesperson for the media and content unit of Reliance Industries said.

“Character merchandising is an important issue. A film’s producer owns the exclusive rights of the film’s characters. Therefore, companies must obtain a licence to exploit movie characters commercially from producers,” said Rahul Chaudhry, managing partner of law firm Rahul Chaudhry & Partners. “If a company commercially exploits a film’s character without a licence, then the producer can legitimately contend it,” he explained.

Indian filmmakers do not fully realize the commercial potential of movie characters that have become popular and a part of public discourse, said brand merchandising experts.

“The biggest difference between the West and India is that, in India, merchandising and licensing is a part of marketing rather than a revenue stream,” said Navin Shah, joint managing director at EMC Solutions Worldwide, a company in branded entertainment.

“Also, we don't make too many character-based films. In fact, merchandising and licensing in our film industry is largely an afterthought,” he added.

According to brand merchandising experts, merchandising and licensing contribute 20-25% to total film revenues in Hollywood.

In India, the share is less than 1%. At present, merchandising and licensing can contribute 10% to the total film segment revenues of Rs 20,000 crore, which can go up to 25% in the next five years, said Shah.