Abstract
On 20 February 2014, the Council of the European Union adopted the new Directive on Collective Rights Management. In its Proposal for this Directive, the Commission argued that cross-border collective rights management services are liberalised pursuant to Article 16 of the Services Directive of 2006. Yet, only one week after the adoption of the new Directive, the Commission’s view was rejected by the Court of Justice of the EU in the OSA judgment. This chapter analyses the relationship between the principle of free movement of services and national sector-specific regulation of CMOs in more detail in order to explore to which extent the principle of free movement of services and the need for specific rules for collective management of copyrights could be better coordinated in the future.
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Notes
- 1.
Proposal for a Dir on collective management of copyright and related rights and multi-territorial licensing of rights in musical works for online uses in the internal market, COM(2012) 372 final.
- 2.
This revised text implementing the compromise was not yet publicly available at the writing of this contribution in November 2013. Indeed, both the Council and the European Parliament had proposed changes to the initial Commission Proposal. On the position of the European Parliament in particular see M Gallo, ‘Draft Report’, Committee on Legal Affairs, European Parliament, 30 April 2013, Doc. 2012/0180(COD), http://www.europarl.europa.eu/RegistreWeb/search/simple.htm?reference=2012/0180%28COD%29¤tPage=2.
- 3.
Dir 2014/26/EU of the European Parliament and of the Council of 26 February 2014 on collective management of copyright and related rights and multi-territorial licensing of rights in musical works for online use in the internal market, [2014] OJ L 84/72.
- 4.
Case C-351/12 Ochranný svaz autorský pro práva k dílům hudebním o.s. (OSA), not yet reported.
- 5.
Dir 2006/123/EC on services in the internal market, [2006] OJ L 376/36.
- 6.
Note that the Commission’s Proposal uses the term ‘collecting societies’ instead of the internationally more accepted and also more appropriate term ‘collective management organisations’. However, according to later debate in the legislative process, it is very likely that the final version of the directive will use the latter term. This is why this contribution also uses this term. This is also the term used by the new directive, whereas the Commission Proposal used the term ‘collecting societies’.
- 7.
See also R Heine, Wahrnehmung von Online-Musikrechten durch Verwertungsgesellschaften im Binnenmarkt (Berlin, de Gruyter, 2008) 252; T Riis, ‘Collecting societies, competition and the Services Directive’ (2011) 6 Journal of Intellectual Property Law & Practice 482, 490 (arguing against a justification of the sector-specific regulation of CMOs under these rules). Case 351/12 OSA, para 65.
- 8.
See especially European Commission, Handbook on the implementation of the Services Directive (Brussels, 2007) 41. In legal writing, there have been many voices arguing that collective rights management should be considered exempted from the application of Art 16 as a matter of Art 17(11). See, for instance, S Alich, ‘Neue Entwicklungen auf dem Gebiet der Lizenzierung von Musikrechten durch Verwertungsgesellschaften in Europa’ (2008) Gewerblicher Rechtsschutz und Urheberrecht—Internationaler Teil 996, 1004; J Heyde, Die grenzüberschreitende Lizenzierung von Online-Musikrechten in Europa (Baden-Baden, Nomos, 2011) 376; against Heine, Wahrnehmung von Online-Musikrechten, 252 ff (pointing out that an exception for collective rights management was considered, but ultimately rejected, in the process of adopting the Services Directive). Cf also Riis, ‘Collecting societies’, 490 ff (hinting at the legal uncertainty that the text of the Services Directive and its history create).
- 9.
Recital 3 Commission Proposal (footnote omitted). See also the Commission Proposal, Explanatory Memorandum, 1.4.
- 10.
Commission Staff Working Paper, Impact Assessment, 11 July 2012, SWD(2012) 204 final, 11 n 43.
- 11.
See, for instance, J Drexl, S. Nérisson, F Trumpke and RM Hilty, ‘Comments of the Max Planck Institute for Intellectual Property and Competition Law on the Proposal for a Directive of the European Parliament and of the Council on Collective Management of Copyright and Related Rights and Multi-Territorial Licensing of Rights in Musical Works for Online Uses in the Internal Market’ (2013) 44 International Review of Intellectual Property and Competition Law 322, paras 20 and 22.
- 12.
GRUR (Verein für Gewerblichen Rechtsschutz und Urheberrecht), ‘Stellungnahme zum Vorschlag einer Richtlinie des Europäischen Parlaments und des Rates über die kollektive Rechtewahrnehmung von Urheber- und verwandten Schutzrechten und die Vergabe von Mehrgebietslizenzen für die Online-Nutzung von Rechten an Musikwerken im Binnenmarkt’ (2013) Gewerblicher Rechtsschutz und Urheberrecht 155, 156.’
- 13.
In OSA, the Court held that effective protection of copyrights can even justify the grant of a legal monopoly to a national CMO at least with regard to uses that require supervision from within the national territory. See Case 351/12 OSA, paras 71–79.
- 14.
For such a discussion of the Commission Proposal see Drexl et al, ‘Comments’.
- 15.
The latter feature is not sufficiently expressed in the definition of ‘collecting societies’ in Article 3(a) of the Commission Proposal, above n 1. In this regard, see also the critique expressed by Drexl et al. ‘Comments’, para 28. Fortunately, the final text of the Directive has reacted to this critique. Article 3(a) of the Directive now stipulates that a CMO needs to manage rights ‘on behalf of more than one rightholder’.
- 16.
The OSA judgment of the CJEU now justifies the existence of such legal monopolies to a large extent. See above n 13.
- 17.
This legal monopoly has existed since the fascist era; it was instated in 1941. In 2012, a similar legal monopoly for related rights was abolished after scandals concerning the mismanagement of the revenues by this CMO had become public. See G Scorza, ‘Diritti d’autore: da oggi gli artisti liberi di scegliere’ (2012) ilfattoquotidiano.it (20/12/2012), www.ilfattoquotidiano.it/2012/12/20/diritti-dautore-da-oggi-artisti-liberi-di-scegliere.
- 18.
See s 3(2) of the Austrian Collecting Societies Act (Verwertungsgesellschaftsgesetz) of 2006; Art 98(6)(c) Czech Copyright Act. In Austria, there was an intensive debate on whether the legal monopoly is in compliance with the EU principle of free movement of services. See, eg, M Scholz, ‘Dienstleistungsrichtlinie und Verwertungsgesellschaften. Kann die Dienstleistungsrichtlinie das nationale Monopol aushebeln?’ (2011) Medien und Recht 73, 75 ff (justifying the monopoly by the legislature’s consideration according to which the monopoly should prevent fragmentation of the repertoire and enable a one-stop shop for users).
- 19.
A competitive market exists in the US, where three CMOs compete for owners of copyrights in musical works. There, the two larger CMOs, ASCAP and BMI, have comparatively large market shares.
- 20.
Decision 71/224/EEC, Case IV/26.760 GEMA [1971] OJ 134/15.
- 21.
Case 7/82 GVL v Commission [1983] ECR 483.
- 22.
Commission Decision, Case COMP/C-2/38.698 CISAC [2008] OJ C 323/12 (summary decisions); full prohibition decision: http://ec.europa.eu/competition/antitrust/cases/dec_docs/38698/38698_4567_1.pdf.
- 23.
For instance, authors of Latin American music often prefer to join the CMOs of the US and Spain instead of national CMOs in Latin America. The US CMOs for music, such as BMI, traditionally try to attract authors of Latin music. On the BMI policy in this regard see http://www.bmi.com/genres/entry/history_bmi_and_latin_music.
- 24.
In OSA, the CJEU has now confirmed that also the grant of licences by a CMO to a user has to be considered as a service falling within the scope of Article 56 TFEU. See Case C-351/12 OSA, para 60.
- 25.
Case C-198/89 Commission v Greece [1991] ECR I-727.
- 26.
Ibid, para 9 (citations omitted).
- 27.
Ibid, para 10.
- 28.
See s 149 Patents, Copyright and Designs Act 1988.
- 29.
See ss 14 through 15 Act on Collective Rights Management (Urheberrechtswahrnehmungsgesetz).
- 30.
See s 16 Act on Collective Rights Management (Urheberrechtswahrnehmungsgesetz).
- 31.
See Case 395/87 Tournier [1989] ECR 2521; Joined Cases 110/88, 241/88 and 242/88 Lucazeau [1989] ECR 2811; Case C-52/07 Kanal 5 v STIM [2008] ECR I-9275. Also the OSA decision adds to this case-law. See Case C-351/12 OSA, paras 87–89 (holding that national law to which excessive pricing by a monopolistic CMO could be attributed would violate Article 102 TFEU and Article 106(1) TFEU).
- 32.
See also Heine, Wahrnehmung von Online-Musikrechten, 254 (highlighting the negative impact of the Services Directive on competition among CMOs).
- 33.
The question of which national law applies to Internet use is not one of choice of law but substantive law. With regard to intellectual property, practically all jurisdictions apply the country-of-protection principle. Accordingly, the applicable law to IP infringement is the law of the country for which protection is sought. In the EU, this rule is fixed by Art 8(1) of Reg (EC) No 864/2007 on the law applicable to non-contractual obligations (Rome II), [2007] OJ L 199/40. If the plaintiff claims protection under the law of a specific country, because she is the owner of the respective rights in this country, the court then has to decide whether, according to the territoriality principle, there has been use of the right in this country under the substantive provision of the IP law of this country. This was recently confirmed by the CJEU in the Football Dataco judgment, where the Court was requested to decide under which conditions someone uses a sui generis database right on the Internet in interpreting the provisions of Dir 96/9/EC on the legal protection of databases, [1996] OJ L 77/20. See judgment of 18 October 2012, Case C-173/11 Football Dataco, not yet reported. According to the CJEU, mere accessibility on the Internet does not suffice. Rather, the Court requires that the act of the user ‘discloses an intention (…) to target persons’ in the specific territory. Ibid, para 40.
- 34.
Commission Decision 2003/300/EC IFPI ‘Simulcasting’ [2003] OJ L 107/58. See also Riis, ‘Collecting societies’, 487 ff.
- 35.
Commission Recommendation on collective cross-border management of copyright and related rights for legitimate online music services, [2005] OJ L 276/54. See also Corrigendum, [2005] OJ L 284/10 (correcting the date of the adoption of the Recommendation from May to October).
- 36.
See the website of CELAS at http://www.celas.eu. On the kind of licences granted by CELAS see Alich, ‘Neue Entwicklungen’, 1001 ff.
- 37.
On the reasons for the limitation to the Anglo-American repertoire see the very thorough legal analysis by Heyde, Die grenzüberschreitende Lizenzierung von Online-Musikrechten in Europa, 167–212.
- 38.
See, for instance, the summarised criticism by CB Graber, ‘Collective Rights Management, Competition Policy and Cultural Diversity: EU Lawmaking at a Crossroads’ (2012) I-call working paper No 2012/04, 9, www.unilu.ch/files/i-call_Working_Paper_2012_04_CBG_CRM_Competition_Policy.pdf. For an early critique on the Recommendation see J Drexl, ‘Auf dem Weg zu einer neuen europäischen Marktordnung der kollektiven Wahrnehmung von Online-Rechten der Musik? Kritische Würdigung der Kommissionsempfehlung vom 18. Oktober 2005’ in K Riesenhuber (ed), Wahrnehmungsrecht in Polen, Deutschland und Europa (Berlin, de Gruyter, 2006) 193.
- 39.
See, in particular, European Parliament resolution on the Commission Recommendation of 18 October 2005 on collective cross-border management of copyright and related rights for legitimate online music series (2005/737/EC), P6_TA(2007)0064, [2007] OJ C 301 E/64.
- 40.
For a critique on Title III see Drexl et al. ‘Comments’, paras 46–65.
- 41.
Case COMP/C-2/38.698 CISAC.
- 42.
Judgment of 22 April 2013, case T-442/08 CISAC v Commission, not yet reported, para 133.
- 43.
Ibid, paras 140–169.
- 44.
M Martín-Prat, Head of Unit, Letter on behalf of the European Commission, Directorate General Internal Market and Services, 30/11/2012, www.vg-media.de/images/stories/downloads/121130_european-commission_vgm.pdf.
- 45.
Art 9(1) of Dir 93/83/EEC concerning copyright and rights related to copyright applicable to satellite broadcasting and cable retransmission, [1993] OJ L 248/15.
- 46.
Art 5(2)(b) of Dir 2001/29/EC on copyright and related rights in the information society, [2001] OJ L 167/10.
- 47.
In other instances, copyright directives explicitly allow Member States to entrust the exercise of such remuneration rights to CMOs and to regulate the collective management of such rights in more detail. See, for instance, Art 5 of Dir 2006/115/EC on rental right and lending right and on certain rights related to copyright in the field of intellectual property, [2006] OJ L 376/28 (regarding the non-waivable right of authors and performers to equitable remuneration for the rental).
- 48.
Case IV/26.760 GEMA.
- 49.
Case 7/82 GVL.
- 50.
Ibid, paras 44 ff. Indeed, participation in the German revenues via bilateral reciprocal representation agreements was not an option. The case arose prior to the harmonisation of the related rights of performing artists in the EU. At that time, several of the Member States had not yet provided for rights of performing artists regarding secondary use of their performances and only a few bilateral representation agreements existed between the CMOs of the different Member States. See the preceding Decision of the Commission, Case IV/29.839 GVL [1981] OJ L 370/49, paras 7 and 11 (relying on these facts to argue an abuse of market dominance).
- 51.
Ibid, para 53.
- 52.
Joined Cases C-92/92 and C-326/92 Phil Collins and Patricia In- und Export [1993] ECR I-5145.
- 53.
See s 6(1) Act on Collective Rights Management (Urheberrechtswahrnehmungsgesetz).
- 54.
Case 127/73 BRT v SABAM [1974] ECR 313, para 11.
- 55.
This started with Case IV/26.760 GEMA.
- 56.
Case COMP/C2/37.219 Banghalter & Homem Christo v SACEM, http://europa.eu.int/comm/competition/antitrust/cases/dec_docs/37219/37219_11_3.pdf (only available in French).
- 57.
Ibid, 11.
- 58.
CMOs must be private law associations of rightholders in Bulgaria, Croatia, Hungary and Poland.
- 59.
CMOs must be non-profit organisations in Austria, Bulgaria, Estonia, Lithuania, Slovakia and Spain.
- 60.
See s 3(1) Act on Collective Rights Management (Urheberrechtswahrnehmungsgesetz).
- 61.
See, for instance, ss. 7 through 9 of the German Act on Collective Rights Management (Urheberrechtswahrnehmungsgesetz). s. 7 of this Act provides that CMOs have to adopt a distribution plan that must not be arbitrary. This provision is most important with regard to the distribution of revenue among different categories of rightholders. In Germany, as in many other Member States, authors and publishers are traditionally members of the same CMO.
- 62.
See the case-law cited above n 31.
- 63.
There are however exceptions. In Ireland, until a change of competition law in 2002, CMOs had to notify their agreements to the competition authority and apply for an exemption. This led to an ex ante review system and considerable case-law on the appropriateness of royalty rates under Irish competition law. See J Drexl, Copyright, Competition and Development, Report of the Max Planck Institute for Intellectual Property and Competition Law for WIPO (2013) 251 ff.
- 64.
In copyright cases, the application of the traditional price-cost analysis for identifying a case of excessive pricing usually does not work. The costs of producing a copyrighted work are largely unrelated to how much the exploitation of the work should cost. Competition law enforcers therefore rely on a comparison with the royalty rates of CMOs in other countries where the level of economic development is comparable. See especially the two judgments in Tournier Lucazeau and OSA.
- 65.
The situation is very different in Austria. There, in addition to the fact that an authorisation can only be granted to one CMO for the management of the rights with regard to a particular field of activity, according to s 2(2) of the Collecting Societies Act, the supervisory body even has the power to close down CMOs that do not hold an authorisation.
- 66.
Cf also Heine, Wahrnehmung von Online-Musikrechten, 254 (hinting at a regulatory gap regarding the duty to grant licences to all users); U Himmelmann, ‘Die Aufsicht über die GEMA’ in R Kreile, J Becker and K Riesenhuber (eds), Recht und Praxis der GEMA, 2nd ed (Berlin, de Gruyter, 2009) ch 18 para 215 (alluding in general to the unfortunate interplay of the country-of-origin principle under the Services Directive and the territoriality principle of copyright law).
- 67.
See s. 11 of the Act on Collective Rights Management (Urheberrechtswahrnehmungsgesetz).
- 68.
LG Munich I, 25/6/2009, (2009) Zeitschrift für Urheber- und Medienrecht 788.
- 69.
OLG Munich, 29/4/2010, (2010) Zeitschrift für Urheber und Medienrecht 709. The case was further appealed to the German Federal Supreme Court (Bundesgerichtshof), but finally settled by the parties. Hence, there is no final decision on the case from the highest German court. See also the English translation at (2014) 45 International Journal of Intellectual Property and Comeptition Law 97.
- 70.
- 71.
See text above at n 36.
- 72.
See s. 31(1), 1st sentence, German Copyright Act (Urheberrechtsgesetz) of 1965. The provision reads: ‘The author may grant a right to another to use the work in a particular manner or in any manner (exploitation right).’ English translation of the Act available at: http://www.gesetze-iminternet.de/englisch_urhg/englisch_urhg.html.
- 73.
See also RM Hilty, ‘Kollektive Rechtewahrnehmung und Vertügungsregelungen: Harmonisierungsbedarf und möglichkeiten’ in M Leistner (ed), Europäische Perspektiven des Geistigen Eigentums (Tübingen, Mohr Siebeck, 2011) 123, 157 ff (agreeing with the Courts in this regard, but maybe not necessarily with the final result of rejecting the infringement claim).
- 74.
See also the very thorough analysis of the different traditions in the Anglo-American system and the Continental system by Heyde, Die grenzüberschreitende Lizenzierung von Online-Musikrechten in Europa, 153–212.
- 75.
An example would be D.E.A.L., which constitutes a similar joint venture of Universal as a music publisher with SACEM, the French CMO for works of music. See Heyde, Die grenzüberschreitende Lizenzierung von Online-Musikrechten in Europa, 140 ff.
- 76.
For the same critique see Graber, ‘Collective Rights Management’, 13 fn 35.
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Drexl, J. (2014). Collective Management of Copyrights and the EU Principle of Free Movement of Services after the OSA Judgment—In Favour of a More Balance Approach. In: Purnhagen, K., Rott, P. (eds) Varieties of European Economic Law and Regulation. Studies in European Economic Law and Regulation, vol 3. Springer, Cham. https://doi.org/10.1007/978-3-319-04903-8_22
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