Diesen Beitrag in Deutsch lesen
Authors: Petra Sitte, Simon Weiß
In this article series, we will discuss the contents of the new draft of the DSM Directive. What was the Directive initially about, what does the current draft say, what has been changed compared to earlier drafts, and what needs to be amended in our view? While part 1 focused on Article 17 and the upload filters, we now turn to copyright contract law.
What is it about?
Copyright contract law has received far less attention in the context of the reform of copyright legislation than issues such as upload filters or ancillary copyright law. This is, of course, due to the fact that although many people use the Internet, only few negotiate copyright contracts. Nevertheless, what is at issue here is the question of fair distribution of revenues, which (leaving privacy rights issues aside) is at the core of copyright law: who is entitled to the revenue generated by the use of creative works?
In this context, creative individuals usually negotiate with exploiters who wield greater economic power, such as publishing houses and television broadcasters, and thus find themselves in a much weaker position. As in labour law, they must therefore be protected by legislation in order to be able to enforce their claims. Germany’s copyright law contains a number of provisions to this end. But despite a number of reforms that have attempted to address the problem in recent years, current copyright contract law still fails to sufficiently ensure that creative individuals receive an equitable share of the profits.
While the law does contain well-sounding provisions, such as the right to equitable remuneration, rights to information about revenues and joint remuneration agreements (remuneration agreements that creative individuals can negotiate collectively), the main problem is enforcement. In order to claim their rights, authors would have to be prepared to engage in years of legal proceedings with an unclear outcome—and one can imagine the impact this would have on their career opportunities during this time.
Principally, joint remuneration agreements are a good approach to solving this problem. Since the copyright contract law was last amended in 2016, associations negotiating joint remuneration agreements finally have the possibility to take legal action if these agreements are violated. However, there is no mechanism in place that actually obliges exploiters to conclude such joint remuneration agreements. Although it is possible to appeal to an arbitration board which then submits a settlement proposal, the outcome remains non-binding.
The European copyright reform does not address these fundamental problems. It defines a baseline copyright contract law that essentially reflects the German regulations, with some of those rules being weaker and some stricter. The only new aspect is the introduction of an active duty to inform creative individuals about the revenue they have earned, whereas German law previously only required exploiters to provide such information on demand. Negotiations at European level did briefly consider better approaches, which would have made so-called “total buy-outs” (the granting of all rights in return for a flat-rate remuneration) much more difficult. However, in the end, the exploiters, lobbying as intensely as always, prevailed.
What does the draft say?
Consequently, the draft primarily includes minor changes aimed at aligning current German copyright contract law with the new EU requirements. There will not be many changes going beyond this.
There has been added a passage on equitable remuneration, according to which each possibility of use is to be considered separately, “unless a flat-rate remuneration is justified by the specificities of the respective sector”. While this is certainly a good approach, its vague wording will hardly push anyone to voluntarily change their remuneration model.
Another addition has already been mentioned above: the obligation for exploiters to provide information, which according to the draft can be ruled out in the case of secondary contributions to works and in the event of disproportionate expense. In addition, the Directive contains new provisions on mediation procedures, a slight extension of the right of revocation, as well as new provisions on arbitration bodies and the right of authors to be represented by associations in the event of a dispute.
A detail worth noting is that, due to an exception in the European regulations, software programmers are now completely excluded from copyright contract law, even from the basic right to equitable remuneration. While this may not be a major issue given the nature of employment relationships in this sector, it clearly shows the extent to which industry interests have influenced an initiative which actually intends to strengthen creative individuals.
What has changed?
Compared to the discussion draft, the draft bill contains a number of improvements reflecting the Justice Ministry’s response in particular to the detailed criticism coming from creative industries associations.
The draft now provides that in the context of common joint remuneration agreements, parties can negotiate individual rights to information other than those provided for by the Directive. Even though opening up the possibility to deviate from legal regulations in contracts usually does not serve the interests of the weaker party, we believe such a provision is desirable in order to urge exploiters to negotiate joint remuneration agreements in the first place.
In addition, the right to information has also been strengthened vis-à-vis third parties in the licensing chain. This is particularly important if the original contracting party does not exploit the work directly and instead only re-licenses it through contracts, which is especially the case in the film industry. The current draft also introduces a right to injunctive relief for breaches of the obligation to provide information and expands the range of subjects that can be covered by joint remuneration agreements, while an amendment was withdrawn which would have allowed parties to conclude contracts under the copyright contract law of other Member States, even if the work in question is exploited in Germany.
This said, the draft is a step forward compared to the discussion draft, but important issues remain unaddressed.
What needs to be done?
We believe that copyright contract law needs fundamental reform. We already presented a concrete draft law on this in 2012 and retabled our amendments in 2016. They have lost none of their relevance since then.
Flat-rate remunerations as part of total buy-out contracts must be excluded. Exceptions should only be possible if joint remuneration agreements provide for this, which would be one way of taking into account the “specificities of the respective sector” mentioned in the current draft.
Rights of revocation must be strengthened. Also, in order to better enforce the pro-active obligation to provide information, which we were already calling for in 2012 and 2016, it would make sense to adopt a provision briefly discussed at European level that would allow creative individuals to revoke a contract if these obligations to provide information are breached.
Joint remuneration agreements must be made mandatory. So far, exploiters have been able to avoid such agreements, and settlement proposals drawn up by arbitration boards remain non-binding. Our draft at the time would have enabled the Federal Ministry of Justice to draw up its own agreements or declare settlement proposals binding if the parties previously failed to reach an agreement. It would also strengthen the negotiating position of creative industries associations if deviations from the obligation to provide information and flat-rate remunerations were made possible only in the context of joint remuneration agreements.
As mentioned in our text on Article 17, the draft provides for direct remuneration to creative individuals for licensed uses on platforms. Seeing that this, too, is a model that can help to reach more equitable remuneration, its extension to other forms of exploitation should be considered.