Lagförslag
| EU
| 2019-10-29
The EU copyright law names the author as owner of exclusive rights and as the subject through whose free and creative choices the protected subject matter comes into existence. It is also the life (and death) of the author, which determines the length of copyright protection and it is the high level of protection of, specifically, authors, that has guided many of the recent CJEU decisions when defining the scope of the exclusive rights.
The contractual protection of authors in Copyright in the Digital Single Market Directive – does the reality live up to the expectations?
The EU copyright law names the author as owner of exclusive rights and as the subject through whose free and creative choices the protected subject matter comes into existence. It is also the life (and death) of the author, which determines the length of copyright protection and it is the high level of protection of, specifically, authors, that has guided many of the recent CJEU decisions when defining the scope of the exclusive rights.
At the same time, it is also the reality that in order to exploit the economic potential of their works most authors rely on other actors (publishers, record labels, etc.) and for that, contracts upon contracts of transfer of exclusive rights are signed in the EU every day without being read, without understanding what implications they might have in the future, or simply, without any power to negotiate on the conditions.
This imbalance of information and negotiation power is now to be taken care of with the help of articles 18- 23 of the new CDSM directive. But will it have the desired result?
The articles on contractual protection measures of the CDSM directive weren’t that widely discussed by the general public as the draft articles 13 (now article 17) and 11 (now article 15), but nevertheless have introduced harmonization where significant differences existed in the member states. It is also needless to say that the provisions aimed at protecting authors in contractual relationships was a necessary step towards the aim to achieve a more balanced sharing, between the author and the exploiter, of the revenues generated by exclusive rights. Some examples of analysis of the different national provisions before the CDSM Directive and problems caused by the previous lack of harmonisation can be found here, here, and here, and some examples of the positive reactions to the adoption of the CDSM Directive from the side of the authors and performers can be read here, here, and here.
Indeed, the Directive not only harmonized the existing national approaches but also fixed some loopholes which plagued them. Most notably, it now addresses not only the first contract of transfer of rights but, to some extent, also includes the subsequent transfers. It clarifies that all kinds of relevant revenue have to be taken into consideration when deciding on the appropriate and proportionate (as well as disproportionate) remuneration, and solves the issue of very varied level of protection to authors in different member states that allowed exploiters to forum shop (and even though variation in the national implementation will certainly occur, they will not be of the same extent as before).
However, there still remain hurdles to making these contractual protection measures work in the way that would put the author on a more equal footing in her contractual relationships.
Most importantly, the new provisions, as already remarked by other commentators, still do not do a sufficient job to address the full chain of economic exploitation of a work, nor are they sufficiently precise in their wording to avoid interpretations making authors’ protection ineffective.
Article 19: Transparency Obligation
The article deals with the obligation of transparency (duty to inform authors on the exploitation of their works) but only extends this obligation to the subsequent licensees upon author’s separate request which has to be issued each time the information that the original exploiter doesn’t have needs to be accessed. Even though this could be remedied by the possibility provided in art. 19(5) to use collective bargaining to agree on more specific conditions for the transparency obligation (possibly higher than the ones in the Directive, as provided in recital 77), it will remain to be seen how this tool will be eventually exploited. In any case, this reluctance to give full transparency right to authors is noteworthy having in mind that one of the main reasons of harmonisation of contractual protection was their adaptation to the digital environment. Indeed, one of the main problems authors wanted to be addressed was the digital exploitation of their works on such platforms as Netflix, Amazon, iTunes, etc. And these platforms are distributors who deal with producers of films and publishers of books, record labels and their successors in title, and are usually not in a direct contractual relationship with the author. Generally, not even the courts, it seems, always have the possibility to get full information on the revenues generated in the whole exploitation chain. Leaving it up to the author to make sure all relevant information about such digital exploitation of her work reaches her, leaves this seemingly strong obligation to report annually rather watered down and easy for the first exploiter to take less than seriously and, possibly, abuse.
Subsequently, if the obligation of transparency loses its teeth, all other provisions protecting authors might become ineffective, as they are based on the author’s knowledge on how the works are exploited and how much revenue they generate.
The issues of vagueness when it comes to some of the main concepts in these provisions are concerning as well.
The same art. 19 in its paragraphs 3 and 4 introduces possibilities for the member states to reduce the strength of this obligation even more. In the cases where the administrative burden of reporting would become disproportionate to the revenue generated, the obligation becomes limited to the “types and level of information that can be reasonably expected in such cases” (emphasis added). Moreover, member states may also remove this obligation in respect to authors whose contribution is not significant to the overall work. Besides the fact that it might often be hard to decide what is reasonable, proportionate and significant, the overall vagueness leaves a lot of space to further reduce the effectiveness of the transparency obligation with respect to certain groups of authors.
Article 18: Appropriate and proportionate remuneration
The appropriate and proportionate remuneration provided for in this article and explained in recital 73 also leaves room for too much flexibility. It seems to take the principle that all parties should receive remuneration based on their role in the creation and exploitation of the work as the departure point. As provided in, for instance, recitals 10 and 11 of the InfoSoc Directive and the recital 5 of the Rental and Lending Right Directive, the authors in the EU copyright system are to receive reward for the use of their work in order to be able to continue to create and to ensure their independence and dignity, whereas the producers are to receive a share of the economic value of the exclusive rights in order to be able to finance this work and receive return from their investment.
But how exactly the rule will be interpreted will be for the member states to decide. As per recital 73, the only aspect that is clear from this formulation is that a share of revenue is a more appropriate form of remuneration to an author than a lump sum, but this is only a presumption. In the end, what is the “appropriate” proportion for remuneration in each case will depend largely on the “specificities of each sector”. Since the specificity of most sectors right now seems to be the attitude that the value of the author’s contribution is much smaller in comparison to the investment the exploiter is making and the risk it is taking, the force to redefine this notion of “appropriate” will have to come from the national legislator, dispute resolution system, and CMOs.
Moreover, a good balance has to be maintained between what is appropriate and what is proportionate. Is, for instance, a provision of only a share of revenues (without any lump sum payment) always an appropriate remuneration when it is not certain if a work will generate any revenue? After all, the commercial exploiter is the one who takes the risks for exploitation and the author should be able to receive some sort of payment for the work she has already done even if the work will not in the end generate any revenue. If this provision would be used to make the author to also take the same risk of commercial failure as does the exploiter, it would miss the point of the balance between the authors and other rightholders already enshrined in the EU copyright law (see the elaboration of the different roles the author and the producer has in the preambles of the InfoSoc (recitals 10 and 11) and Rental and Lending Rights (recital 5) directives and the CJEU Luksan judgement (paragraphs 77-79)
Article 20: Contract adjustment mechanism
This article that introduces a so-called “best-seller” clause faces the same problem of vagueness, being triggered when remuneration for the author is disproportionately low compared with the revenues derived from the exploitation of a work. One might question if this provision is ever possible to use in the case where the remuneration to the author is set on a certain share of the final revenue. If the remuneration is set as a lump sum, this article might be indeed very useful when the commercial success of a work is greater than could have been foreseen in the moment of signing the contract. On the other hand, if the remuneration includes royalties proportionate to the revenues the work generates, it could be very hard to claim that remuneration is “disproportionate”.
If it is to be interpreted favourably towards the interests of the author, though, this provision should rather be understood as possible to use if the new circumstances would have been known in the moment of the conclusion of the contract, the contract would not have been concluded under those conditions (as interpreted by the Polish courts so far and also seemingly accepted by the Dutch courts). In such case, even when the author has agreed to a low remuneration proportionate to the success of the work (let’s say 1% of the total revenues), if the work achieves exceptional success, or if new forms of exploitation become possible, it could be argued that such royalty would never have been acceptable to an author (depending on the contribution the author made in the final work), if she would have foreseen such future of the work.
Article 22: Right of revocation
Similar vagueness and flexibilities especially in the notions of lack of exploitation and reasonable time and the possibility to exclude certain authors from the enjoyment of this right, can be also observed in the art. 22 providing authors the right to revocation of an exclusive license. It will come, again, to national implementation to make it really effective in the context of on-demand printing and various digital exploitation possibilities (is merely offering a work for access on some sort of platform enough of an exploitation not to trigger this clause?).
Conclusion
Overall, the step to protect the interests of the authors in their contractual relationships (and harmonise the existing protection) is a positive one. The uncertainties that remain could not only cause problems for national implementation (especially where similar norms don’t already exist), but might also create situations of legal uncertainty and result in the reality that authors will often have to rely on dispute resolution institutions to determine if something is “disproportionate” or “appropriate” in a certain case.
Knowing the overall reluctance of authors to use courts and the possible detrimental consequences they face when trying to defend their rights, even the alternative dispute resolution system provided for in the article 21 of the CDSM Directive might not be enough to make sure the new author-protective provisions are used to a sufficient extent. In the member states, however, there are possibilities, specifically through setting transparent industry or sector standards and through collective bargaining, to use the vagueness remaining in the CDSM directive for the benefit of the authors. (For more ideas in this respect watch the contributions of S. Dusollier and M. Senftleben to a Columbia Law School Colloquium in 2017.)
On the other hand, when looking at the even broader picture, there are those who have suggested that the current protective provisions might even harm the position of the authors, as merely the potential that different contract adjustment mechanisms could be used, will motivate the exploiters to actually reduce the standard of remuneration in the exploitation contracts.
But as a final point, it has to also be recognised that in the context of the CDSM Directive, the contractual protection measures are introduced together with the controversial article 17 and, presumably, as the way to ease the reception of the methods proposed in it for closing the “value gap”. After all, the benefits reaped from the licensing of works to content sharing platforms and the supposed increase in the legal consumption of works following the implementation of art. 17 will be proportionally shared with the authors. Or..?
The same rhetoric was the reason why the term of protection of the neighbouring rights was in 2011 extended by the Term of Protection Directive by 20 more years. The recitals 5-7 of the preamble of this directive indicate that this was done for the benefit of the performers. Clearly, the accompanying provisions with certain protection measures for the performers (valid only in the last 20 years of the protection of a fixation!) were to ensure that the benefits of this extension would reach the performers as well.
However, the recent study of implementation of the Term of Protection Directive has essentially found that so far there have been many problems in implementation of the provisions protecting the performers and they have been hardly used in practice. Even the very clear duty to distribute 20% of all revenues from exploitation to the performers through the national CMOs has not, so far, been very useful in many of the surveyed member states. On the other hand, the term of protection was successfully extended in all the surveyed countries (where it was applicable).
Indeed it might be too early to draw any conclusions from this pattern of further expanding the reach of copyright and neighbouring rights “for the benefit of the performers and authors”, but one has to at least make sure that the possibilities for the authors and performers to actually reap the benefits of the new provisions are exploited to the fullest possible extent.
