IRIS Special

The publications in the IRIS Special series tackle current issues in media law and related legal fields.

The themes covered are of direct practical relevance and are explored with academic rigour. The particular value of the IRIS Special series lies in its international approach or the comparison of different legal systems as the case may be. Recognised as a reliable source of information, the series has a track record of supplying both the audiovisual industry and also legislators and other decision makers at national and European level with highly useful data, overviews, ideas and analyses. The European Audiovisual Observatory publishes one or two IRIS Specials annually. Depending on their theme, they each contain 50-150 pages. In many cases, background material – standard-setting legal texts for example – is included.


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DLI IRIS Special 2009 - Creativity Comes at a Price

IRIS Special 2009 - Creativity Comes at a Price

Author: Susanne NIKOLTCHEV (Ed.), European Audiovisual Observatory

Published: 12/03/2009

According to the European Social Charter, the goal of fair remuneration applies indiscriminately to all branches of the industry including the audiovisual sector. But is it also guaranteed for the many different professions that form that industry? For example, have states established satisfactory systems to acknowledge the value of creative intangible contributions to audiovisual works such as
those of performers? And what of the input of lighting designers, whose activity consists in providing the limelight even if they themselves do not always share it? How exactly does intellectual property law honour these indispensable contributions to audiovisual works? What rights are acknowledged and who takes them? What kind of use do they cover? Do professionals whose creativity leaves its mark on audiovisual works receive adequate payment when compared to the gains made by persons leading and financing audiovisual works such as producers?

Summarised in the language of the European Social Charter: how does the law secure the fair remuneration of script writers, set designers, cameramen, sound designers, lighting designers, editors, choreographers, costume designers, make-up artists, actors, dubbing artists, dancers, musicians, vocal performers, conductors and similar professional groups? And how high does it place their claims compared with the claims of directors and producers, who admittedly play the central role in the making and exploiting of audiovisual works?

Even in an ideal world with adequate rights and crystal clear rules, the combination of the mere number of persons potentially contributing to a single audiovisual work and the many different ways
of exploiting each work complicate the establishment of any remuneration system. Global services pose an additional challenge to the monitoring of uses that would necessitate the payment of rightsholders not least because national copyright systems still differ significantly.

If one looks at the way in which the different national regimes define the statute of the author, wone finds a wide array of solutions. The different approaches share the principle that an author must have contributed to the creation of a work but then diverge with regard to specific requirements and how to apply them to the professional groups concerned. As a result film directors are the only group of professionals considered unanimously to be authors. Producers are authors in Great Britain as well as in Turkey for films made until the law was changed in 1995. Authors of pre-existing works such as books adapted for a film, for example, are also authors of the resulting audiovisual works in France and Norway but not in Germany. Actors with a particular prominent role can be authors in Austria and Germany. Certain professionals providing technical services such as sound and light design are authors in many of the countries but not at all in Hungary or Spain. Choreographers, script and dialogue writers, editors, costume designers, make-up artists, film music composer etc. may or may not be authors depending on which law applies. A professional who made a contribution that would generally qualify him as an author might still not be considered as such, if he acted, for example, as an employee in the Netherlands. It is then the employer who takes authorship.

Not being an author, however, does not necessarily leave the person who made a creative contribution without rights given that he might still qualify as holders of neighbouring rights. Concerning neighbouring rights, however, we also note different national approaches and in spite of the existence of Directive 2001/29/EC on the harmonisation of certain aspects of copyright and related rights in the information society. For example, while most countries confer upon performers the right of reproduction and communication to the public of fixations of their performances, French
and Austrian copyright law assign (unless a contract stipulates otherwise) these exploitations rights
to the producer or production company if the performing artists knowingly participated in making a professionally produced film or other cinematographic work.

Nevertheless some harmonisation has been achieved thanks to certain EC Directives. This concerns specific areas of use such as cable rebroadcast and private use payments on blank carriers, where EC legislation requires uniformly fair remuneration of rightsholders.1 New online modes of exploiting audiovisual works raise new questions as to the scope of existing rights versus recognition of online rights. Attached thereto are problems of negotiating and collecting remuneration for new services. Again different states tend to draw different demarcation lines.

Rightsholders are often not equipped to know about and even less to pursue the claims to which they are entitled in return for their contributions to audiovisual works. Therefore, they unite in order
to manage their rights collectively and build up a more powerful negotiating position. This is the cue to bring on the collecting societies. They are the middlemen between rightsholders and users of audiovisual works. For many professional groups of the audiovisual sector, working through collecting societies is the main if not the only way to recoup payment for their creative contributions. Collecting societies, as traditionally conceived, act on behalf of their members. They “negotiate rates and terms of use with users, issue licenses authorizing uses, collect and distribute
royalties. The individual owner of rights does not become directly involved in any of these steps.”2 Nowadays, many variations of this traditional concept exist. Collecting societies may allow different levels of members’ participation in management decisions. Members may transfer all or only part of
their rights to collecting societies. They may entrust them with the exploitation of their rights even on a case by case basis. Collecting societies may be established by law or founded by their members.

In contrast, some features of collecting societies seem invariable. They are organised country by country and often profession by profession, sometimes with more than one collecting society representing a certain professional group. This IRIS Special informs about the national collecting societies that are most important for the audiovisual sector in each country. This, of course, does not mean that other collecting societies do not exist.

For Poland this publication reports on the 14 collecting societies currently registered for the audiovisual sector. For Germany and Great Britain it contains information on the 12 main collecting societies, for the Netherlands on 11 and for Turkey on nine collecting societies. The Austrian and Spanish contributions cover eight, and the Swiss five collecting societies. The Norwegian report covers one collecting society named Norway Copyright (“NORWACO”), even though Norway has 34
rightsholders organisations which negotiate distribution plans for their respective members. Yet all of them operate through NORWACO when it comes to collecting and distributing royalties and enforcing copyrights. Likewise for France which is particularly rich in collecting societies, this IRIS Special focuses on the three collecting societies which essentially carry out collective management for audiovisual works. Finally, two relevant collecting societies are discussed for Hungary and Italy.

Normally rightsholders may choose between managing their rights individually, on the one hand, and using collective management, on the other. If they choose to place their rights in the hands of collective management societies they might have an additional choice between different organisations. However, the law might impose mandatory rights management for certain types of rights. Usually the collection of remuneration for cable rebroadcast comes under a mandatory management scheme. Often mandatory rights management is handled by collecting societies established by law. For example, the Dutch government set up five collecting societies to deal with mandatory rights management.

Collecting societies expand their territorial reach (which is restrained to their country of establishment) by cooperating with other collecting societies of other countries. To this end, they conclude bi-lateral agreements with reciprocal obligations and rights. As a result each of them can pay its members remuneration which is due and collected in a country for which one of its partners administers the rights.

In summer 2008, this well-established practice came under scrutiny. Upon request of RTL and Music Choice, the European Commission examined reciprocal representation agreements that collecting societies operating under the umbrella of the International Association of Collecting societies of Authors and Composers (CISAC) had concluded. Most of them were based on CISAC’s
model contract. The Commission found a violation of the European rules on restrictive business practices (Art. 81 ECT) inasmuch as the agreements contained membership clauses, which according to the Commission deprived rightsholders of a free choice between different collecting societies. Furthermore, the Commission concluded that the anti-trust law was infringed by the exclusivity clauses used in the agreements. With these clauses collecting societies empowered each other to administer their respective repertoires on an exclusive basis for the respective territories. This practice, according to the Commission, prevented collecting societies from offering licences to users outside their domestic territory and therefore cemented territorialisation of European markets.3 The Commission also stated that the CISAC decision does not call into question the general system of bi-lateral agreements but it bans the membership and exclusivity clauses.

Territorial fragmentation of the European market along national borders as discussed in the CISAC decision is a permanent concern to the European Commission. It was also an issue at a major conference organised by the Slovenian EU Presidency. The increasing need for cross-border licensing raises a challenge for the current licensing system which is rather arranged on a country-by-country basis. Yet as was concluded during the conference, multi-territory licensing needs further reflection especially taking into consideration that a European legislative framework will not be binding in the US and might therefore be disadvantageous for the EU market.4

This IRIS Special analyses neither the CISAC case nor the general multi-territory licensing issue. Instead it seeks to illustrate current practices of collective rights management. It thereby necessarily sheds some light on the practical consequences which changes to the legal framework for the existing system might entail.

Another major issue for collective rights management also addressed in this IRIS Special is how to resolve situations where the rightsholders are unknown. In some countries collective management offers a solution to this problem. For example, Norway introduced the so called extended collective licences which may supplement agreements between users and authorised copyright organisations
and are binding not only on the parties but also on non-organised rightsholders from within or outside Norway. This enables the user to acquire all rights for the envisaged use of an audiovisual work. At the same time it puts the rightsholders who have been bound by the extended collective licence without being a member to the collecting society and without having negotiated the agreement on the same footing as organised rightsholders. Both groups have the same rights concerning the distribution of remuneration collected and distributed by the rightsholders’ organisation.

The key to successful rights management is the actual remuneration. Who receives payment and for what uses? If rights are collectively managed, how and by whom are the amounts determined and what procedures are applied? These are questions that can make their way up even to a constitutional court as was the case in Poland, where the conditions for preparing and adopting remuneration tables for the use of works or performances covered by collective management were found to violate the Constitution. The main reason was that rightsholders lacked influence on the process.

Remuneration also represents a particular challenge as far as the online exploitation of creative works are concerned. This IRIS Special describes the European mix of contractual and statutory arrangements of individual and collective management that might cause rightsholders to shy away from collecting remuneration in different countries. Reciprocal agreements between collecting societies address the problem to some extent and in addition, they facilitate clearance for the exploitation of protected words, which is essential for online services and thus for the generation of remuneration claims by rightsholders. National laws differ as to whether or not and under what conditions rightsholders can sign away their rights for unknown uses. Italy is currently in the process of modernising its law to better address online and VoD exploitation. In addition, national laws do not necessarily use the same rules for fixing remuneration in return for future rights. In France, for example, online operators and production companies have to pay to the French authors’ society a percentage of the price paid by the public to access the content while in Germany the transfer of rights for unknown means of exploitation entitles to a “reasonable separate remuneration”.

As this publication also reveals, collecting societies generally do not restrict their services to the pure management of rights. Often, they offer social benefits to their members and support their branch of the industry financially through special funds. Different mechanisms secure participation rights of members to collecting societies.

This IRIS Special paints the broad picture of remuneration for creative contributions to audiovisual works spanning from (I) the legal framework establishing and governing copyrights and neighbouring rights to (II) the practical management of these rights to (III) the role, organisation and functioning of relevant collecting societies to finally (IV) the very specific perspective of rightsholders to audiovisual works or performances. Country-by country reports on the rules and practices in 12 European countries, namely, Austria, France, Great Britain, Germany, Hungary, Italy, the Netherlands, Norway, Poland, Spain, Switzerland and Turkey, make clear that remuneration for intellectual property rights is a difficult issue and one that is quite entangled with the cultural and political tradition of each country. To every possible extent, the reports follow the same structure reflected in points (I) to (IV) mentioned above.

We are very grateful to all our authors for having supplied the country reports to this publication and thus helping us to cater to the need auf the audiovisual industry for factual background to the ongoing discussions. This IRIS Special is definitely a work of co-authorship in various senses. In particular, it is a product of the cooperation between the Observatory and its partner institution, the EMR. Together we developed the concept, won the support of the authors, briefed them and edited their contributions. Translators and proof readers complete the team that made this IRIS Special possible and we extend our thanks to them.

Finally it needs to be pointed out that other recent Observatory publications are also important to the questions of remuneration of creative contributions to audiovisual works.

This is true in particular for the IRIS plus on “The Legal Status of the Producer of Audiovisual Works in the Russian Federation” authored by Dmitry Golovanov from the Moscow Media Law and Policy Centre” and his preceding IRIS plus on “Transformation of Author’s Rights and Neighbouring Rights in Russia”. Stef van Gompel of IViR wrote another important IRIS plus on “Audiovisual Archives and the Inability to Clear Rights in Orphan Works”. All three articles are available on the Observatory’s website. Furthermore, several copyright issues were already raised by the IRIS Special “Legal Aspects of Video on Demand”. The forthcoming IRIS plus by Francisco Cabrera from the Observatory on Music & Film, soon to be available, completes the picture.